Sustainable, Responsible &/or ESG Policy:

WisdomTree Battery Solutions UCITS ETF promotes the environmental characteristics of reduction in carbon emissions generated, primarily, by road transportation and power production, scaling up renewable energy delivery and energy transition Reduction in carbon emissions is necessary to combat the impact of climate change. The Fund promotes these characteristics by offering an investment case supporting the evolution of Battery and Energy Storage Solutions (BESS). Development of BESS products and services supports goals of action to combat climate change and ensuring access to affordable, reliable sustainable and modern energy for all. The Index, has been designated for the purpose of attaining this environmental characteristic promoted by the Fund.

The Index additionally promotes environmental, social and governance (ESG) criteria as it excludes companies based on ESG criteria and non-compliance with the Global Standards Screening (GSS) as identified by third party ESG data providers and explained further below. This process is built into the construction of the Index methodology and applies throughout the lifecycle of the Fund. 

In accordance with the following principles, companies that are non-compliant with the Global Standards Screening (GSS) or are involved in Controversial Weapons, or are significantly involved in Thermal Coal, Tobacco, and unconventional Oil & Gas, as identified by the 3rd party ESG data providers, are excluded from the eligible investment universe. The implementation of these exclusions is limited to the companies that are covered by the ESG data provider. In the event a company is not covered by the ESG data provider, that company may be included in the eligible investment universe.

• Global Standards Screening (GSS): WTI will exclude companies that are non-compliant based on the ESG data providers’ GSS assessment. GSS identifies companies that violate or are at risk of violating commonly accepted international norms and standards, such as the United Nations Global Compact (UNGC) Principles, the UN Guiding Principles on Business and Human Rights (UNGPs), the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and their underlying conventions.
• Controversial Weapons: WTI will exclude the companies that are involved in controversial weapons, such as the activities in anti-personnel mines, biological and chemical weapons, cluster weapons, depleted uranium, nuclear weapons and white phosphorus weapons.
• Small Arms: WTI will exclude the companies that derive over 5% of their revenue from activities connected to small arms. Such activities include the manufacturing and selling of small arms, or the manufacturing and selling of key components involved in small arms manufacture or being involved in the distribution of small arms.
• Tobacco: WTI will exclude the companies that are involved in tobacco production and supplying of tobacco-related products/services, or companies deriving over 5% of their revenue from tobacco distribution, as identified by the ESG data providers.
• Thermal Coal: WTI will exclude the companies deriving more than 5% of their revenue from thermal coal extraction or having more than 5% of their revenue or capacity from thermal coal-based power generation or having more than 5% of their revenue from providing tailor-made products and services to support thermal coal extraction.
• Oil Sands: WTI will exclude the companies deriving more than 5% of their revenue from extracting oil sands.
• Arctic Oil & Gas Exploration: WTI will exclude the companies deriving more than 5% of their revenue from unconventional oil and gas exploration in Arctic regions.
• Shale Energy: WTI will exclude the companies deriving more than 5% revenue from the shale energy exploration and / or production.

Process:

The Index applies exclusionary screening criteria to verify companies eligible for inclusion in the Index including WisdomTree proprietary indices as well as third-party equity indices used for the WisdomTree UCITS range. Where companies meet certain thresholds relating to these activities or do not meet specific environmental principles set by the relevant index, these companies are excluded from the eligible investment universe. Certain of these unsustainable activities are excluded from the Index in their entirety and some are excluded based on certain revenues derived from these activities as set out in the methodology for the Index:

Principle-based exclusions (using Global Standards Screening such as UNGC):

Companies found to be non-compliant with the following principles:

Human Rights

• Principle 1 - Support and respect the protection of internationally proclaimed human rights.
• Principle 2 - Make sure that they are not complicit in human rights.

Labour

• Principle 3 - Uphold the freedom of association and the effective recognition of the right to collective bargaining.
• Principle 4 - Elimination of all forms of forced and compulsory labour.
• Principle 5 - Effective abolition of child labour.
• Principle 6 - Elimination of discrimination in respect of employment and occupation.

Environment

• Principle 7 - Support a precautionary approach to environmental challenges.
• Principle 8 - Undertake initiatives to promote greater environmental responsibility.
• Principle 9 - Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

• Principle 10 - Businesses should work against corruption in all its forms, including extortion and bribery.

In accordance with the following principles, companies that are non-compliant with the Global Standards Screening (GSS) or are involved in Controversial Weapons, or are significantly involved in Thermal Coal, Tobacco, and unconventional Oil & Gas, as identified by the 3rd party ESG data providers, are excluded from the eligible investment universe. The implementation of these exclusions is limited to the companies that are covered by the ESG data provider. In the event a company is not covered by the ESG data provider, that company may be included in the eligible investment universe.

• Global Standards Screening (GSS): WTI will exclude companies that are non-compliant based on the ESG data providers’ GSS assessment. GSS identifies companies that violate or are at risk of violating commonly accepted international norms and standards, such as the United Nations Global Compact (UNGC) Principles, the UN Guiding Principles on Business and Human Rights (UNGPs), the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and their underlying conventions.
• Controversial Weapons: WTI will exclude the companies that are involved in controversial weapons, such as the activities in anti-personnel mines, biological and chemical weapons, cluster weapons, depleted uranium, nuclear weapons and white phosphorus weapons.
• Small Arms: WTI will exclude the companies that derive over 5% of their revenue from activities connected to small arms. Such activities include the manufacturing and selling of small arms, or the manufacturing and selling of key components involved in small arms manufacture or being involved in the distribution of small arms.
• Tobacco: WTI will exclude the companies that are involved in tobacco production and supplying of tobacco-related products/services, or companies deriving over 5% of their revenue from tobacco distribution, as identified by the ESG data providers.
• Thermal Coal: WTI will exclude the companies deriving more than 5% of their revenue from thermal coal extraction or having more than 5% of their revenue or capacity from thermal coal-based power generation or having more than 5% of their revenue from providing tailor-made products and services to support thermal coal extraction.
• Oil Sands: WTI will exclude the companies deriving more than 5% of their revenue from extracting oil sands.
• Arctic Oil & Gas Exploration: WTI will exclude the companies deriving more than 5% of their revenue from unconventional oil and gas exploration in Arctic regions.
• Shale Energy: WTI will exclude the companies deriving more than 5% revenue from the shale energy exploration and / or production.

WisdomTree uses data sources from reputable data providers to screen companies according to GSS and specific criteria motivated by ethical, impact, compliance or ESG risk considerations. WisdomTree utilises this data to exclude securities having such involvement from the investable universe. In addition, we have also partnered with:

• Irish Life Investment Managers (ILIM) have appointed Institutional Shareholder Services (“ISS”) – an expert in proxy voting – to provide advisory and proxy voting services, working to offset CO2 emissions, reduce poverty through employment, provide wildlife habitats in the new forests etc. For details on the relevant voting policies and guidelines employed by the portfolio manager, For details on the relevant voting policies and guidelines employed by the portfolio manager, please see latest ILIM Responsible Investment Policy 2023 here:  https://www.irishlifecorporatebusiness.ie/sites/default/files/investment_centre_v2/02_Related_Documents/C1P3_Responsible_Investment_ESG/40_Responsible_investment_policy.pdf

• Wood Mackenzie as our product expert partner for the Battery and Energy Storage theme and Battery & Energy Transition metal baskets to assess and quantify the role these metals will play in the energy transition: https://www.wisdomtree.eu/-/media/eu-media-files/other-documents/investment-case/volt-investment-case.pdf

Resources, Affiliations & Corporate Strategies:

WisdomTree’s European business has a dedicated team in charge of implementing WisdomTree's ESG policy at the entity and fund level and providing training and guidance on any new regulation in the space. WisdomTree's ESG team is comprised of two full-time members (Head of Product Development & ESG) and a senior associate (Product Legal & ESG) and supported by two ESG Leaders; Head of Indices and Head of Product respectively at WisdomTree Europe. The ESG team is additionally supported by six research team members in charge of ESG research and screening our investment universe, as well as members of the product development, product legal and compliance team.

Sustainability and corporate responsibility are embedded throughout our business. We believe this benefits our investors, employees, shareholders, and the wider society. Responsible investing is a key principle of WisdomTree’s investment governance. Below is a recent summary of WisdomTree’s approach to Responsible Investing:

United Nations Principles for Responsible Investment

WisdomTree Investments, Inc. became a proud Signatory of the United Nations Principles for Responsible Investment (“UNPRI”) on February 15, 2019. Founded in 2005, the UNPRI is a United Nations-supported network that encourages asset managers and other institutional investors to engage with corporations on environmental, social and governance (ESG) issues to create a more sustainable global financial system and support long-term investment value.

ESG and Corporate Social Responsibility

WisdomTree is committed to the continued evolution and improvement of our product offering. In our view, Environmental, Social and Governance (ESG)ESG represents a marked shift in investor sentiment, and it is our responsibility to reflect this in our investments. 

At WisdomTree, we have observed ESG concerns being front of mind for the majority of our investors. We share these concerns as being fundamentally aligned with our own and have taken the step to align our proprietary equity indices with these views through the use of exclusion criteria. Over time, our ESG approach will evolve, however, we strongly believe that ESG principles need be addressed holistically and not simply applied to a subset of impact investments only. Investors need ESG partners, not simply ESG products, and WisdomTree is committed to building a business focussed on delivering the best solutions for our investors.

WisdomTree leverages the portfolio manager’s membership of initiatives listed below including CDP (formerly the Carbon Disclosure Project) Non-Disclosure Campaign, Climate Action 100+ (CA100+), the Institutional Investors Group on Climate Change (IIGCC) and collaborative engagements led by Sustainalytics:

• OECD Principles of Corporate Governance;
• OECD Guidelines for Multinational Enterprises;
• Universal Declaration of Human Rights;
• UN Guiding Principles on Business and Human Rights;
• Children’s Rights and Business Principles;
• ILO conventions on labour standards;
• Rio Declaration on Environment and Development;
• UN Convention on Corruption;
• Convention on Cluster Munitions; and
• Paris Agreement under the United Nations Framework Convention on Climate Change.

Proxy Voting

WisdomTree Europe's voting and engagement activities are conducted by the portfolio manager. The portfolio manager recognises and adheres to the principle of active ownership and exercising the right to vote on issues submitted to shareholder vote as a way of promoting good ESG policies.

The portfolio manager has appointed Institutional Shareholder Services ("ISS"), an expert in proxy voting, to provide advisory and proxy voting services, including voting recommendations, vote execution and reporting.

The portfolio manager has adopted the ISS Sustainability Policy, which involves:

• Monitoring portfolio companies’ boards for their performance in relation to ESG issues and independence
• Generally supporting shareholder proposals regarding disclosures on social, environmental and labour/human rights issues.

Further details on the policy are available below and on request.

WisdomTree’s Proxy Voting dashboard is available on our website and provides a breakdown of its proxy voting results. A link to the  proxy voting dashboard is available here: https://www.wisdomtree.eu/es-es/proxy-voting-dashboard

ISS' Sustainability Proxy Voting Guidelines

ISS has developed proxy voting guidelines that are consistent with the objectives of sustainability-minded investors and fiduciaries.

On matters of ESG importance, ISS' Sustainability Policy seeks to promote support for recognized global governing bodies promoting sustainable business practices advocating for stewardship of environment, fair labour practices, non-discrimination, and the protection of human rights. Generally, ISS' Sustainability Policy will take as its frame of reference internationally recognized sustainability-related initiatives such as the United Nations Environment Programme Finance Initiative (UNEP FI), United Nations Principles for Responsible Investment (UNPRI), United Nations Global Compact, Global Reporting Initiative (GRI), Carbon Principles, International Labour Organization Conventions (ILO), CERES Principles, Global Sullivan Principles, MacBride Principles, and environmental and social European Union Directives. Each of these efforts promote a fair, unified, and productive reporting and compliance environment which advances positive corporate ESG actions that promote practices that present new opportunities or that mitigate related financial and reputational risks.

On matters of portfolio companies’ corporate governance, executive compensation, and corporate structure, the Sustainability Policy guidelines are based on a commitment to create and preserve economic value and to advance principles of good corporate governance.

These guidelines provide an overview of how ISS approaches proxy voting issues for subscribers of the Sustainability Policy. We note there may be cases in which the final vote recommendation at a particular company varies from the voting guidelines due to the fact that we closely examine the merits of each proposal and consider relevant information and company-specific circumstances in arriving at our decisions. To that end, ISS engages with both interested shareholders as well as issuers to gain further insight into contentious issues facing the company. Where ISS acts as voting agent for clients, it follows each client’s voting policy, which may differ in some cases from the policies outlined in this document. ISS updates its guidelines on an annual basis to consider emerging issues and trends on environmental, social and corporate governance topics, as well as the evolution of market standards, regulatory changes and client feedback.

Engagement with Portfolio Companies

Engagement with portfolio companies is handled by WisdomTree’s portfolio manager. The portfolio manager recognises and adheres to the principle of active ownership and believes in constructive engagement as a way of promoting good ESG policies in the companies in which they invest. The size of the portfolio manager’s holdings and the materiality of any ESG issue or risk, both within the company and within the company’s industry or sector peer growth, will determine the companies with which they actively engage. The approach to engagement is considered, constructive and pragmatic, with the extent of any engagement determined on a case-by-case basis. The portfolio manager targets companies that have been identified as experiencing key ESG risks to their businesses, and which have been identified as laggards on key ESG themes within their respective industries. For the purposes of the engagement activities of the portfolio manager, the following key objectives have been identified:

Environmental: positively addressing issues relating to climate change including the impact of carbon emissions and the use of global water resources.

Social: advancing the longer-term sustainability of the economy through respect for basic human and labour rights and seeking to effectively address bribery and corruption.

Governance: encouraging good corporate governance and ESG risk management in companies globally.

For details on the relevant voting policies and guidelines employed by the portfolio manager, please see latest ILIM Socially Responsible Investment Policy and Report 2023 here:  https://www.ilim.com/media/4vxltcpo/ilim-2023-stewardship-and-responsible-investment-report.pdf

LBMA Responsible Gold Sourcing - WisdomTree’s Position

In 2012 the London Bullion Market Association (LMBA) implemented its Responsible Gold Guidance (RGG). This is a mandatory framework for all Good Delivery listed refiners wishing to sell into the London Bullion Market designed to combat money laundering, terrorist financing and human rights abuses globally. The latest version of the RGG, version 8 which was published in December 2018 and is applicable from 1st January 2019 has broadened the scope of the responsible sourcing requirements to include further ESG considerations This version has expanded the definition of due diligence by requiring refiners to not only assess risks identified in the Organisation for Economic Co-operation and Development (Due Diligence Annex II regarding money laundering, but also to include an assessment of their Environment, Sustainability and Corporate Governance responsibilities.

WisdomTree’s entire physical gold ETC offering is now 100% backed by LBMA responsible gold and WisdomTree is now working with our custodians to maximize our exposure to post 2019 bullion across our range.

In December 2020 WisdomTree launched WisdomTree Core Physical Gold which has the highest responsible gold standards applied with custodians asked to act on a best-efforts basis to only allocate 2019 or later bars. As of 31 August 2022, WisdomTree Core Physical Gold was 100% backed by post 2019 bars. For more information about our responsible gold approach, please visit this page: https://www.wisdomtree.eu/en-gb/products?esg=Responsible%20Gold

SDR Labelling:

Not eligible to use label