Sustainable, Responsible &/or ESG Policy:

The fund is actively managed and invests at least 80% of its assets in a concentrated range of equity and equity related securities of companies worldwide that have certain ‘Value’ characteristics. Value is assessed by looking at indicators such as cash flows, dividends and earnings to identify securities which the manager believes have been undervalued by the market. The fund typically holds 30 to 70 companies. The fund may also invest directly or indirectly in other securities (including in other asset classes), countries, regions, industries or currencies, collective investment schemes (including Schroder funds), warrants and money market instruments, and hold cash. The fund may use derivatives with the aim of reducing risk or managing the fund more efficiently.

The fund invests at least 70% of its portfolio in assets that the investment manager classifies as sustainable. A company is considered to be sustainable if it makes a positive contribution to: – Planet. This includes contributions to the environment - such as reducing greenhouse gas (GHG) emissions, which helps slow down climate change. and/or – People. This includes contributions to one or more of the following: – employee wellbeing - such as paying more than living wages or providing training to employees, which supports their professional development and prosperity. – customer wellbeing - such as developing new products and services that improve customers’ quality of life, for example medical drugs, therapies, diagnostic tools and healthy food. – healthy, inclusive and connected communities – such as providing access to clean water and sanitation (which promotes good health). – effective and accountable institutions – such as promoting financial stability, which supports people’s prosperity and financial security.

Process:

A company is classified as sustainable if it achieves a positive score in Schroders’ systematic model (SustainExTM). SustainExTM produces an assessment of the company’s effect on a defined set of benefits and costs for people and the planet, which are then combined to calculate an overall sustainability score for the company. A company must achieve a positive score to be deemed sustainable. The model is based on in-depth internal research, which has included establishing the relevance of various factors to the sustainability outcomes referred to above. In some exceptional cases, SustainExTM does not provide a fair reflection of a company’s contribution to people and/or the planet. The investment manager can refer such companies to Schroders’ Sustainable Investment Panel (the Panel), an independent panel of experts. The Panel reviews additional robust evidence provided by the investment manager to determine whether, if such evidence was available to SustainExTM, the company would achieve a positive score. This could be relevant where SustainExTM does not capture an area of positive contribution – such as where a company produces a particularly sustainable product whose importance to people or the planet is not fully captured by the company’s overall score. Alternatively, it could be relevant where the investment manager is able to supply additional data to enhance a calculation – such as where a company does not publish details of employee salaries, but the investment manager is able to obtain or more accurately estimate this from other sources.

For this fund, the investment manager will also assess whether potential investments are “ESG Leaders”. This process is separate to the assessment of whether a company meets the fund’s sustainability objective (as described above), and is not relevant in determining whether the fund has invested at least 70% of its assets in line with that objective. The ESG Leaders assessment determines whether a company provides an overall benefit to society and is best in-class versus industry peers in its approach to sustainability. ESG leadership is assessed holistically by: (1) assessing the quality of the company’s relationship with key stakeholders such as employees, communities, suppliers, customers and regulators; (2) analysing a range of sustainability-related materials including company disclosures and sustainability analysis carried out by third party experts; and (3) avoiding companies with a MSCI ESG score lower than ‘A’ in order to help avoid exposure to material ESG risks. A company must be classified as an ESG leader to be eligible for investment. The ESG Leaders assessment uses a broad range of data sources, including Schroders’ systematic models, third party sustainability rating data and company disclosures.

Resources, Affiliations & Corporate Strategies:

Sustainability is fundamental to our investment principles at Schroders and we have an experienced and well-resourced Sustainable Investment team, who are embedded within our Investment function. We are a global team, spread across four regional hubs in London, Paris, Singapore and New York, aiming to ensure that sustainability is embedded through our global investment teams and client functions.

The team is led by Andrew Howard, Global Head of Sustainable Investment. As team head, he oversees our approach to ESG integration, active ownership, our sustainability research and tools, and our reporting and product strategy.

Our central Sustainable Investment team sits alongside investment teams rather than operating in a silo, which facilitates regular dialogue with our analysts and portfolio managers.

It is organised into four pillars:

We outline their key responsibilities and areas of focus below.

1. Sustainable investment management

Our Advisory and Integration team acts as a central contact point and consultant for a range of stakeholders across the business. This includes advising investment teams on ESG integration best practice; compliance, risk and legal teams on ESG regulation; and working with our regional experts; across Asia Pacific, Europe and North America, as outlined under pillar four.

Our Models and Analytics team is responsible for the maintenance and evolution of our suite of proprietary tools. They are also responsible for ESG data, ensuring we harness sustainability data effectively from both conventional and unconventional sources.

Our Strategy and Research team is responsible for undertaking sustainability research to: inform firmwide strategy and commitments; provide insights for investment teams to analyse sustainability-related risks and opportunities; and provide research-related and technical support for other stakeholders across the firm.

2. Active ownership

Our Engagement team partners with investors to have dialogue with the companies in which we invest, seeking to understand how prepared they are for a changing world and pushing them towards more sustainable practices. The team track the progress of these engagements and hold companies to account.

Our Corporate Governance team is responsible for voting in line with our Voting Policy and Principles.

3. Impact

Our Impact team is responsible for scaling our impact product offering in line with best-practice impact principles. The team works closely with investment desks and is responsible for developing and implementing our impact management and measurement framework, including impact assessment and monitoring at transaction and portfolio level, product development, impact strategy and impact reporting.

4. Regional Expertise

Our Regional Experts based in Asia Pacific, Europe and North America have a deep understanding of local market characteristics and nuances, and are responsible for staying abreast of sustainability-related developments. Our experts work with clients and internal teams to navigate and support clients’ ESG aspirations and challenges, utilising Schroders’ proprietary tools and research to develop investment solutions that meet their needs. They also engage with regulators and industry bodies to shape and support the global sustainable finance agenda. Our regional experts are a critical extension of the central team in London as the firm continues to evolve its global ESG strategy.

We have a number of governance structures in place for decision-making and oversight of our approach to sustainable investment. The Board of Schroders plc (the Board) has collective responsibility for the management, direction and performance of the Group, and is accountable for our overall business strategy. The Group Chief Executive is responsible for proposing the strategy for the Group and for its implementation, supported by the Group’s senior management team and a number of Committees, some of which are noted below.

The Group Sustainability and Impact (GSI) Committee provides advice to the Group Chief Executive on sustainability and impact matters. The Committee considers, reviews and recommends the overall global sustainability and impact strategy, including key initiatives, new commitments and policies for approval. The Global Head of Sustainable Investment and Global Head of Corporate Sustainability are members of the Committee and report to the Board.

The Sustainability Executive Committee (ExCo) develops and oversees the delivery of our Group-level sustainable investment management strategy. The ExCo also advises on the development of our sustainability and impact investment and product frameworks. The ExCo has senior representation from across the business including Investment, Client Group, Wealth Management, Schroders Capital and Corporate Sustainability.

The Group Regulatory Oversight Committee (GROC) oversees the progress of sustainability regulatory change programmes, as well as facilitating the monitoring of emergent sustainability regulations and ensuring we have appropriately determined the impact on our Group sustainability strategy and supporting operations. The GROC receives input on planned or potential sustainability-related regulation from our Public Policy and Compliance teams, which actively engage with relevant regulators, industry trade associations and other bodies in our key markets of the UK and EU. Once the business implications of new legal and regulatory requirements are defined, the relevant sustainability regulations programme workstreams deliver the necessary change to our business operations. The GROC oversees the progress of the programme, including monitoring and mitigating associated risks and issues. Where necessary, risks and key issues from the GROC can be escalated to the Group Risk Committee for resolution.

Certain Schroders entities, businesses and Investment teams also have their own committees which consider their sustainable investment activities. For example, the Private Assets Sustainability and Impact Steering Committee (PA S&I SteerCo) develops and oversees the implementation of the Private Assets Sustainability and Impact strategy. In addition, the Wealth Management Sustainable Investment Committee (WMSIC), a sub-committee of the Wealth Management Investment Committee (WMIC), has delegated responsibility for recommending Wealth Management's Sustainability models, as well as providing investment strategy and direction for client portfolios that are linked to the sustainable models.

Alongside our central Sustainable Investment team, sustainable investing is also overseen and delivered by dedicated teams and expert individuals embedded throughout the firm (including across Investment teams and Client Group functions).

We have a long-standing commitment to support and collaborate with several industry groups, organisations and initiatives to promote well-functioning financial markets.

Our key stakeholders include exchanges, regulators and international and regional trade associations. For example, Schroders is a member of trade bodies such as the Investment Association in the UK, the European Fund and Asset Management Association (EFAMA), the Asia Securities Industry and Financial Markets Association (ASIFMA) in Hong Kong and the Securities Industry and Financial Markets Association (SIFMA) in the US. Through this participation we share our insights to support the development of policy recommendations, share best practice and build coalitions of like-minded market participants to advocate for better functioning markets.

Our activity with policymakers aims to help them ensure that the measures they take support businesses and provide clear direction. By monitoring and influencing regulatory initiatives at their inception, we aim to support the development of a business environment which is conducive to Schroders’ clients’ best interests.

We aim to engage with the regulatory environments in which we are operating and raise awareness on sustainability matters. We believe well-designed regulation is an important cornerstone to promoting healthy markets, and have asked publicly that policy makers support sustainable finance legislation and regulation and deliver on commitments, including around climate mitigation.
We consider this to be key in improving responsible investment standards across sectors, establishing a consistent dialogue with companies, and in promoting the ongoing development and recognition of sustainability and Environmental, Social and Governance (ESG) topics within the investment industry. A full list of organisations and initiatives of which Schroders is a member or signatory is available here (https://www.schroders.com/en/global/individual/corporate-transparency/working-with-policy-makers/memberships/)

Dialshifter

This fund is helping to ‘shift the dial from brown to green’ by…

…investing in undervalued sustainable leaders in global equities. These are companies Schroders Global Value team identify as having a positive societal benefit as measured by our proprietary tool and are in our view industry leading in sustainability, these are companies that must have net positive societal benefits for society and/or the environment and be best-in-class versus peers. They combine ethical screening to avoid significant exposure to fossil fuels, weapons, alcohol, gambling, adult entertainment, or tobacco with their independent fundamental research to select true sustainable leaders. Engagement for progress is critical and the team engage with every company in the portfolio to improve sustainability outcomes over time.

SDR Labelling:

Sustainability Focus label

SDR Literature:

• Consumer Facing Disclosure
• Fund Factsheet