LEADERS UNIVERSE SUSTAINABLE EQUITY

Simply stated: Brown Advisory believes that sustainable investing is smart investing. Investors have historically had to choose between investing according to their values and attractive performance. Brown Advisory fundamentally disagrees that there is a trade-off: investors can have both and may be able to achieve better results through sustainable investing.

We believe ESG information is useful for more than aligning investment choices with a client’s values; we have found that this information can be extremely helpful in identifying company-specific risks and in highlighting drivers of a company’s future growth that may not be readily apparent through traditional research. We believe that using ESG research to supplement our fundamental due diligence on a company can help us make better investment decisions. And because our ESG research helps us look at companies from a different angle than most other investors, we believe our efforts can provide us with an informational advantage.

Our approach to ESG research is consistent with our approach to research in general: we seek to gather relevant data from secondary sources, combine it with our own primary research and interviews, and synthesize all of this information in a manner that is useful for investment decisions.

We believe that our research efforts have helped us gain a voice in the broader sustainable investing conversation occurring across our industry. Most importantly, we believe that these additional layers of ESG research give us a powerful foundation for steering capital toward stronger, more robust companies that are built to last.

Over the last 30 years, we have built a comprehensive responsible investment approach consisting of three pillars:

• ESG integration
  Incorporating financially material ESG factors into the investment decision-making process to help mitigate risk and potentially uncover opportunities.
• Active ownership
  Addressing ESG issues by actively engaging with issuers and investee companies and exercising shareholder rights.
• Solutions
  Providing focused responsible investment strategies including exclusions, best-in-class ESG, sustainability-themed and impact investments.

 Our research framework:

ESG factors are systematically integrated into our bottom-up research process for fixed income and equity issuers. We aim to develop our own holistic house view of issuers’ ESG profiles. By integrating ESG considerations with economic factors, and drawing from specialized ESG research sources, the research teams seek to identify financially material ESG factors and arrive at an independent, comprehensive view of the investment.

We seek to answer three key questions:

• What are the potential economic impact of the ESG issue and its associated effect on the issuer’s long-term growth potential, profitability or creditworthiness?
• Are ESG risks and opportunities accurately reflected in valuations?
• Is engagement beneficial to generate long-term economic value?

We view ESG analysis as a risk management tool and a potential alpha source. By integrating ESG factors into the traditional financial analysis framework, we aim to identify financially material factors which could affect the issuer’s long-term growth potential, profitability, or creditworthiness, and to assess if they are appropriately priced.

Our ESG integration process focuses on managing financial risks and identifying opportunities by including additional information in investment analysis to help inform our decision making. ESG integration does not seek to make ethical judgements and imposes no ESG-related restrictions on the investment universe. It seeks to systematically uncover ESG risks and opportunities to ensure they are appropriately priced in the investment being considered.

For further details please download our Responsible Investment Report 2020 here.

VLK IM is an asset manager with a long-term investment approach. We strongly believe in engaged shareholdership that benefits all stakeholders. As a long-term responsible investor, we firmly believe that active ownership and shareholder engagement contribute to positive change across the board. To implement our vision we engage with our investees on strategic, financial and environmental, social, governance (ESG) topics. Our long-term investment worldview combined with a thorough analysis and experienced ESG team allow us to leverage our fully integrated active ownership approach as a means to consistently encourage positive change. Through this process of integrating material governance and sustainability factors in our investment decisions and constructive engagement we’re able to contribute to the development of principles and standards of corporate responsibility at the companies that we invest in.

Our responsible investment activities fall under the following four categories:

• Exclusion and Avoidance – Those companies we don’t invest in
• ESG Integration – Ensuring sustainability risks and opportunities are adequately considered in our investment analysis and processes
• Active Ownership – Being responsible stewards of our clients’ capital and using our influence to improve corporate behaviour on specific ESG issues
• Positive impact – Investing with an objective to achieve positive real world outcomes and impact, such as contributing to the UN Sustainable Development Goals

Founded in 1924, MFS is a global, active investment manager guided by a single purpose: to create value by allocating capital responsibly for clients. Through a powerful investment platform, MFS combines collective expertise, thoughtful risk management and long-term discipline to uncover what we believe are the best investment opportunities in the market.

At MFS, the term sustainable investing encompasses our ESG integration processes, proxy voting activity and issuer engagements. We believe that owning and engaging with companies to improve their ESG performance can sometimes be a more effective path to positive outcomes for all stakeholders than exclusion and divestment.

Our investment teams rely on deep fundamental research and a long-term perspective to select securities that can produce sustainable returns throughout an economic cycle. Although our overall approach to investing has always been well aligned with a sustainability-oriented mindset, in 2009 we formed the MFS Responsible Investing Committee to ensure that financially material ESG topics were being systematically integrated into our equity and fixed income investment processes. We believe collaboration results in better insights, which is why our investment team has always been integrated across asset classes. As a result of that long-held belief, our ESG analysts are expected to drive collaboration on sustainability-related topics, not create an internal ESG outsourcing group. For us, integration means each of our analysts and portfolio managers are considering these topics throughout the entire investment decision-making process.

Visit www.mfs.com/sustainability for more information including ESG videos and thought leadership.

Responsible Investing lies at the heart of NN Investment Partners’ investment beliefs. We started to manage our first sustainable equity strategy more than 20 years ago, which have been able to show consistent outperformance throughout the full market cycle. It proved resilient during the financial crisis in 2008 and also held up well in the first quarter of 2020, outperforming its traditional counterparts, as the impact of the coronavirus hit markets.

At the core of our investment philosophy is the underlying belief that sustainable companies perform better in the long term. In our view, long-term winning companies are ones that are able to sustainably create value through providing sustainable solutions, exhibiting sustainable behaviour and
possessing a sustainable competitive position. We strongly believe that societal and financial returns can be achieved simultaneously and that both factors reinforce each other.

NN (L) Global Equity Impact Opportunities philosophy demonstrates that societal and financial returns can be achieved simultaneously and that both factors reinforce each other. For us, both types of re-turns are equally important. The best (managed) companies take a holistic view to value creation, including their impact on broader society. And companies that provide valuable solutions for society are more likely to get paid.
We aim to exploit mispriced externalities and invest along the Sustainable Development Goals (SDG’s). By doing so, we are positioned for growth, optimize potential impact, and minimize sensitivity to in-creasing internalization of social and environmental costs.

Mackenzie Financial Corporation was founded in 1967 and has been managing money for institutional clients for over 45 years. Mackenzie provides investment management and related services through diversified investment solutions relying on proprietary investment research and experienced investment professionals to deliver various product offerings. With $166 billion USD in assets under management as of December 31, 2022 Mackenzie distributes its investment services through industry channels to both retail and institutional investors.

Our firm aspires to be a more purposeful organization by creating a more invested world; we believe that our role as an asset manager can have a significant effect in protecting and creating value for our stakeholders – our clients, our employees, our shareholders, our partners, our communities, and our planet – and as such, we have adopted a set of principles:

• We prioritize creating value for our clients by achieving long-term risk-adjusted returns across a diversified investment platform
• We mandate our investment boutiques to integrate factors material to risk and return – this includes environmental, social, and governance (ESG) factors. We believe that material ESG factors present financial risks and opportunities
• As long-term investors and stewards of capital, we believe in company engagement and proxy voting to promote good governance and management of material ESG issue
• We offer sustainable, thematic, and impact solutions that generate returns alongside impact for clients that want to align their values to their investments
• We believe that good corporate governance is a signal of quality management and that well-managed companies produce long-term, sustainable returns
• We believe that climate related risks present physical and transitions risks that have a direct impact on the value that we are able to generate for our clients
• We advocate for diverse, equitable and inclusive companies that respect the rights of all humans and prioritize the best interests of their employees, clients and communities

Visit Sustainable Investing | Mackenzie Investments for more information and our thought leadership.

BNP Paribas Asset Management (BNPP AM) is BNP Paribas Group’s dedicated asset management arm. It has EUR 488bn assets under management and around 3000 staff in 30 countries.

In a fast changing world, our aim is to achieve long-term sustainable returns for our clients by placing sustainability at the heart of its strategy and investment decision-making.

BNP Paribas Asset Management’s investment approach to sustainability began in 2002 with the launch of our first sustainable fund and the creation of our dedicated environmental, social and governance (ESG) research team – the precursor of our Sustainability Centre. In 2006, we were a founding signatory to the UN-supported Principles for Responsible Investment (PRI). Since then, we have continued to strengthen our commitments.

Our sustainability expertise is driven by the Sustainability Centre (around 30 experts).

Our ‘Global Sustainability Strategy’ (GSS) details our sustainable approach, setting clear objectives and commitments, and focusing on three key sustainability themes: Energy transition, Environmental sustainability and Equality and inclusive growth (the ‘3Es’).

Our firm wide sustainable approach is based on 6 pillars:

1. ESG* Integration
2. Stewardship
3. Responsible Business Conduct (“RBC”)
4. Forward-looking perspective (the ‘”3Es”)
5. Investment solutions for sustainability
6. CSR** – Walking the Talk

It reinforces our commitment to invest for the long-term, engage with companies and regulators to promote best practice, and raise awareness of the role that finance can play in achieving a sustainable world.

We report on our approach annually in our sustainability report available here.

At the heart of our philosophy is the principle of stewardship – careful, considered and responsible management of our clients’ funds in accordance with our Hippocratic Oath. This philosophy has stood the test of time since its origins in 1988. We only invest in high-quality companies that contribute to, and benefit from, sustainable development. This means that companies with material exposure to harmful or controversial products and services are naturally avoided. Investing in companies that fail to discharge their environmental stewardship and human rights responsibilities is also inconsistent with our philosophy. The stewardship of a company is a fundamental element in our assessment of quality. ESG issues, ethical conduct and integrity of stewards are key considerations when assessing the quality of management.

Our consideration of sustainability is holistic; it includes ESG but is more than ESG. We consider financial sustainability – conservatism around the balance sheet, for example – and stewardship by management – the treatment of all stakeholders through a crisis, for example – to be as essential to the sustainability positioning of a company as the product or service the company sells.
We avoid companies that have products and services that do not contribute to sustainable development and we engage with companies to improve sustainability outcomes. This leads us to seek out companies with exceptional cultures, run by responsible stewards, where the products, services and operations help reduce ecological footprints or solve environmental problems, or advance human development, or both.

LGT Capital Partners is a leading alternative investment specialist with over USD 60 billion in assets under management and more than 550 institutional clients in 39 countries. Headquartered in Pfaeffikon (SZ), Switzerland, the firm has offices in New York, Dublin, London, Paris, Vaduz, Dubai, Beijing, Hong Kong, Tokyo and Sydney. An international team of over 550 professionals is responsible for managing a wide range of investment programs focusing on private markets, liquid alternatives and multi-asset class solutions. Since 2003, LGT Capital Partners has been encouraging the integration of ESG in its offering and its promotion in the financial industry. In 2008, the firm was one of the first signatories of the UN PRI. Moreover, since 2018 LGT Capital Partners engages with PRI as a member of its Board. Our sustainable approach forms a key part of our corporate culture and is clearly reflected in our investment activities.

LGT Capital Partners has for a long time adopted a sustainable investment approach. We integrate principles of sustainability into a variety of asset classes and investment structures. Consideration of ESG (environmental, social and governance) factors are applied in the area of alternative investments, equities and bonds, fund of funds solutions and direct investment solutions based on a process tailored to the asset class.

In terms of investment products, our global investment universe excludes companies involved in the production, storage and supply of controversial weapons such as nuclear weapons, land mines, cluster bombs/munitions and biological and chemical weapons as well as companies involved in thermal coal production and power generation from thermal coal.

ESG Report 2020

For what is already the eighth time, the annual ESG Report from LGT Capital Partners shows how LGT’s portfolio managers incorporate sustainability factors into their investment processes.

Read the entire ESG Report 2020 (PDF) online.

ESG factors are among the many drivers considered by FI’s IPC and Analysts throughout the investment process.

FI monitors key social policies driving wealth creation and economic growth, including infrastructure investment, tax policy, free trade, property rights, government reform, and social factors. Political factors affecting these social policies are integral to top-down analysis (election cycles/legislative gridlock), while maintaining regulatory risk awareness. Environmental factors frequently influence FI’s macro-economic research. FI monitors advancing energy efficiency, especially within Industrial/Technology companies, nuclear power risks, resource extraction implications (labour strikes/resource nationalisation) and litigation risk tied to environmental impact, among other factors. These ESG factors are incorporated into the sector weight preferences as well as individual security selection.

FI routinely evaluate governance issues and off-balance-sheet risks during security selection. These include consideration of company auditors’, whether opinions are qualified or have potential conflicts of interest, shareholder concentration, regulatory filings reviews, and reviews of news flows for ESG concerns.

FI then performs qualitative, fundamental research on prospective investments identifying securities with strategic attributes consistent with FI’s top-down views and with competitive advantages relative to their peer group. This research process involves reviewing and evaluating ESG factors prior to purchasing a security to identify securities benefitting from ESG trends. These factors include corporate stewardship, environmental opportunities/liabilities and human/labour rights controversies.

We have an integrated approach to responsible investment and ESG research that is embedded within our investment approach, and is supported by our culture of collaboration, sharing of research and ideas, and robust debate. In developing our understanding of a business we take into account its approach to managing environmental, social and governance issues, as well as any controversies that may have arisen.

In 2018 we launched a proprietary and innovative responsible investment (RI) ratings system that combines an assessment of a company’s financial stewardship with an analysis of how well it manages its material ESG risks (using the SASB framework). Combining both aspects into a single, forward-looking company rating from 1 ( strong) to 5 (weak), reflects our conviction that prudent management of financial and ESG factors is important to a company’s ability to create long-term, sustainable value. Utilising data science and cloud computing, the RI analytics and ratings add to our fundamental research, providing our global investment teams with a more robust and evidence based RI capability, with coverage across 5,500 global listed equities.

Fidelity International’s vision is to deliver innovative client solutions for a better future. Sustainable investing, which factors in Environmental, Social and Governance (ESG) performance, is therefore an integral part of approach as a company that focuses on long-term sustainable outcomes.

Fidelity has developed a proprietary sustainability rating leveraging our internal research and interactions with issuers. The proprietary sustainability rating is based on the following principles:

Focusing on material issues

The rating focuses on 5 to 10 material ESG issues for 99 different subsectors. The list of ESG issues has been selected by the Sustainable Investing Team and the analysts based on their relevance, materiality and forward-looking nature.

Leveraging internal research capabilities

Analysts have access to a variety of sources of information to evaluate the ESG risks and opportunities of issuers under their coverage. Equity and fixed income analysts work together to rate and provide a qualitative comment on each ESG issue.

When rating companies, analysts consider the following components:

1. Awareness: Is the company aware of its material risks? Are commitments to address these risks institutionalized across its operations?
2. Action: How well does the company implement its policies to address key risks/take advantage of opportunities?
3. Results: How effective are the company’s policies and programs in practice? Has the company been subject to significant controversies?

Analysts then assign an overall A to E rating (C being understood as the sector average) for each rated name on a sector relative basis. Whilst an equally-weighted average of the issue-level ratings is automatically provided, analysts have the discretion to override the overall rating if they consider that one issue may be more prevalent for a company.

Providing a forward-looking assessment 

The rating is designed to generate a forward-looking and holistic assessment of ESG risks and opportunities. Analysts qualify the direction of change of companies’ ESG performance (positive, neutral or negative trajectory).

Incorporating engagement insights

Where the information is not available due to a lack of disclosure, analysts are encouraged to contact the company and ask questions about these issues to complete their assessments. Our analysts conduct about 15,000 company meetings a year and regularly use these meetings to gain information about companies’ ESG management.

Fidelity has developed an ‘ESG Rating App’ available to the investment team on our internal research system Insight. Analysts use the ESG Rating App to populate the ratings and record their commentaries. They can also flag companies they consider as good candidates for engagement. Names rated below C are automatically flagged for our Sustainable Investing Team to follow up with the company.

Visit www.fidelity.lu/sustainable-investing for more information including our ESG proprietary rating video.

Sands Capital considers environmental and social issues along with traditional financial measures to comprehensively evaluate an investment’s value, risk, and return potential. Poor practices or negligent oversight of ESG issues can pose significant financial, legal, and reputational risks. We research each issue from the bottom up and then evaluate its impact on our fundamental investment case. Input from research reports from external proxy advisors, company filings and sustainability reports, research from other investors, non-governmental organizations, and the Sands Research Team drive our votes on proposals about environmental or social issues.

Harding Loevner LP

Harding Loevner’s responsible approach to investing encompasses the following dimensions:

Responsible Investment Selection

• • ESG screening: eliminating securities of poorly governed companies;
  • ESG integration: considering Environmental, Social and Governance risk and return factors in the security selection process; and
  • Accountability for ESG incorporation: overseeing and implementing responsible investment

Active Ownership

• • Voting: voting all proxies in the interests of our clients, the asset owners, as we best determine or as they direct;
  • Company engagement: engaging with managements of companies in which we have invested for the purpose of influencing their behavior for the benefit of public shareholders such as our clients, the asset owners, including with respect to managements’ consideration of ESG issues that affect expected risks and returns; and
  • Institutional support for active ownership: adhering to the Principles for Responsible Investment and the UK Stewardship