Environmentally Sustainable Investments (Also known as EU Taxonomy-Aligned Investments)

The EU Taxonomy is a green classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities for investment purposes. It recognises green, or ‘environmentally sustainable’, economic activities that make a substantial contribution to at least one of the EU’s six climate and environmental objectives while at the same time not significantly harming any of these objectives and meeting minimum social safeguards.

These six goals are: [ ] Climate change mitigation, [ ] Climate change adaption, [ ] Sustainable use of water and marine resources, [ ] Transition to a circular economy, [ ] Pollution prevention, [ ] Protection & restoration of biodiversity and ecosystems

* ‘Circular economy’ means an economic system whereby the value of products, materials and other resources in the economy is maintained for as long as possible, enhancing their efficient use in production and consumption, thereby reducing the environmental impact of their use, minimising waste and the release of hazardous substances at all stages of their life cycle, including through the application of the waste hierarchy.

Sustainable Investments (investments aligned to Sustainable Finance Disclosure Regulations - SFDR)

An investment in an economic activity that:

• Contributes to an environmental objective - such as the efficient use of energy, renewable energy, use of raw materials, and/or

• Contributes to a social objective - such as tackling inequality or fostering social cohesion, social integration, and labour relations.

These investments must also do no significant harm to any environmental or social objective while employing good governance practices.

There are three classifications of investments under SFDR:

• Article 9 investments: These investments specifically have sustainable investments as their objective (for example investing in companies whose goal it is to reduce carbon emissions).

• Article 8 investments: These investments promote environmental or social characteristics and can integrate sustainability into the investment process in a binding manner.

• Article 6 investments: These investments are not promoted as having ESG factors or objectives.

Principal Adverse Impacts PAIs

This investment considers the negative impact (adverse impacts) that it may have on environmental and social matters. So, this preference does not just focus on economic activities that aim at contributing to any environmental or social objective but considers the adverse effects of the investment on:

[ ] ENVIRONMENTAL including; [ ] Greenhouse gas GHG emissions, [ ] Carbon footprint, [ ] GHG intensity of investee companies, [ ] Exposure to companies active in fossil fuel sector, [ ] Share of non-renewable energy consumption and production, [ ] Energy consumption intensity per high impact climate sector, [ ] Activities that negatively effect biodiversity-sensitive areas, [ ] Emissions to water,

[ ] Hazardous waste and radioactive waste ratio.

[ ] SOCIAL AND EMPLOYEE MATTERS including; [ ] Adherence with UN Global Compact principles and Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises, [ ] Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact principles and OECD Guidelines for Multinational Enterprises, [ ] Unadjusted gender pay gap, [ ] Board gender diversity, [ ] Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons)

[ ] GOVERNANCE including; [ ] Corruption and bribery matters, [ ] Tax evasion, [ ] Breaches of regulation, international norms and conventions

Applying ESG and sustainability criteria in the investment process may result in the exclusion of securities in which the Fund might otherwise invest.

The lack of common or harmonised definitions and labels regarding ESG and sustainability criteria may result in different approaches by managers when integrating ESG and sustainability criteria into investment decisions. The performance of similar Funds may deviate more substantially.