Sustainable, Responsible &/or ESG Policy:

In order to achieve the investment objective, the Fund employs a replication method that looks to invest as far as possible and practicable in the constituents of the Reference Index. As such, the fund replicates the Sustainable, Responsible &/or ESG Policy embedded in its Reference Index.

This Fund promotes environmental and/or social characteristics but does not have as its objective sustainable investment, however the Fund intends to make sustainable investments. The environmental and/or social characteristics promoted by the Fund are to gain exposure to issuers demonstrating a robust ESG profile, i.e. issuers with limited/ no involvement in certain business activities and with no involvement in severe ESG controversies. The Fund also aims to gain increased exposure to those issuers generating revenue from green projects, and those that exhibit lower levels of carbon emissions and fossil fuel reserves, relative to the companies that comprise the FTSE All-Share ex Investment Trusts Index (the “Parent Index”). The Fund achieves this by tracking the Reference Index, which has a methodology that is consistent with attaining the environmental and social characteristics promoted by the Fund.

Through a combination of the exclusion criteria detailed in the methodology of the Reference Index and the qualitative assessment and/or engagement of Invesco’s ESG team, it is ensured that investee companies follow good governance practices. The Fund takes into account the PAI indicators defined in Table 1 of Annex I of the RTS and ensures alignment with the OECD guidelines and UNGP, thereby ensuring that the sustainable investments do not cause any significant harm to environmental and/or social objectives.

A minimum of 90% of the Fund’s NAV will be selected according to the binding elements of the investment strategy. Up to 10% of the Fund’s NAV may not be aligned with the environmental and/or social characteristics of the Fund, this portion of the Fund may be invested in financial derivative instruments for hedging and/or efficient portfolio management purposes and cash for ancillary liquidity purposes. A minimum of 10% of the Fund’s NAV will be in sustainable investments.

Process:

The Fund’s objective is to achieve the net total return performance of the Reference Index, less fees, expenses and transaction costs. In order to achieve the investment objective, the Fund will employ a replication method that looks to invest as far as possible and practicable in the constituents of the Reference Index. The Fund intends to replicate the Reference Index by holding all of its constituent securities in a similar proportion to their weightings in the Reference Index.

The Index methodology of the Reference Index applies exclusion criteria to the FTSE  All-Share ex Investment Trusts Index (the “Parent Index”) to exclude securities that:

• have faced very severe controversies pertaining to ESG issues (including UN Global Compact violations);
• are involved (as defined by the Index Provider) in any of the following business activities: Arctic oil and gas exploration, adult entertainment, controversial weapons, small arms, gambling, military contracting, nuclear power, oil sands, thermal coal, recreational cannabis and tobacco ; and
• do not have a FTSE Russell ESG Rating.

The Reference Index then applies a target exposure approach that assigns re-weighting factors to each of the remaining eligible securities. These factors are determined such that the Reference Index targets as near as possible:

• an uplift in the FTSE Russell ESG Rating, relative to the Parent Index, of the minimum of either 10% or one market cap weighted standard deviation;
• an increase in the weighted average percentage of revenue generated by green projects of 50%, relative to the Parent Index, based on data available to the Index Provider;
• a reduction in both the weighted average carbon emissions intensity (measured as Greenhouse Gas (GHG) Protocol Scope 1 and 2 emissions and calculated as operational carbon emissions in metric tons per million dollars revenue) and the weighted average fossil fuel reserve intensity of 50%, relative to the Parent Index, based on data available to the Index Provider.

The Reference Index is subject to the following constraints when applying the target exposure approach:

1) at each quarterly rebalance the two-way turnover (i.e. the sum of the individual weighting changes across all index constituents) of the Reference Index will not exceed 10%, unless it is not possible for the resultant target exposures, detailed above, to be achieved without a significant deviation from the targeted level for each, in which case this turnover constraint is relaxed in stages, whereby it is first set to 15% and then removed entirely if no feasible solution can be found. This process is set out in detail in the index methodology linked herein;

2) to limit industry divergence, aggregate Industry Classification Benchmark (“ICB”) industry weightings will not deviate by more than 2% from those in the Parent Index;

3) the weight of each individual constituent will not deviate by more than 3% from its weight in the Parent Index and will not exceed its weight in the Parent Index multiplied by a factor of five; and 4) the weight of each individual constituent will be capped at 7.5% and a floor of 0.05% will be applied such that eligible constituents with weights below the floor are removed. These conditions mean that any constituent with a weight in the Parent Index of less than 3% could be completely removed from the Reference Index.

The index methodology of the Reference Index includes good governance criteria whereby companies are assessed against indicators such as sound management structures, employee relations, remuneration of staff and tax compliance. Companies that are deemed not to meet good governance practices according to the methodology of the Reference Index will be excluded.

In addition to the assessment of good governance practices of companies by the index provider, the Investment Manager also implements a review of the constituents of the Reference Index at each rebalance to identify any gaps from a data coverage perspective in the methodology of the Reference Index. In the unlikely event that a company is not assessed in relation to good governance practices by the index provider, the Investment Manager and Invesco’s ESG team implements an internal process to review publicly available data and perform checks against UN Global Compact principles to verify that those companies follow good governance practices.

Resources, Affiliations & Corporate Strategies:

Invesco Global ESG Team

Created in 2013, Invesco’s dedicated Global ESG team is responsible for leveraging best practices in ESG capabilities across Invesco including ESG integration, voting and engagement, supporting distribution teams with client engagement, and advising product teams on ESG innovation.

Our Global ESG team acts as a center of excellence to guide, support and inform Invesco's investment teams on all work in this area. The team is organized across five pillars:

• Client: Guides messaging and training for distribution teams, engages clients on ESG issues, and supports product strategy.
• Research: Conducts proprietary ESG research and collaborates with investment teams on engagements.
• Proxy: Provides guidance on governance issues and supports development of our PROXYintel voting platform and Global Proxy Voting Policy.
• Analytics: Manages ESG analytics, data vendor selection, portfolio screening and reviews.
• Operations: Project manages ESG initiatives and manages the scheduling and organization for the ESG team.

The team includes 35 ESG professionals (as at 30 June 2024) located in North America, Asia Pacific, and EMEA who provide localized support and analysis to our investment teams across the globe. 

Our ESG professionals collaborate closely with these investment teams, providing support, insights and analysis while investment teams maintain discretion on portfolio decisions. Our governance structure enables oversight and accountability through the ESG Steering Committee, while allowing our investment teams to integrate ESG approaches tailored to their asset classes and styles. 

The Global ESG team's five pillars allow the team to support ESG efforts across specific functions firm-wide. The team's geographic structure also ensures that most Invesco teams have an appropriate local contact. The ESG Steering Committee, asset class-specific investment teams, and firm-wide functional units also collaborate with Global ESG team members from each of the five pillars. 

Each investment team has a unique approach to incorporating ESG considerations, as defined in its investment process and appropriate for the respective asset class. To support this effort, Invesco has dedicated ESG specialists and ESG champions within individual investment teams across the globe. These individuals are closely connected with the Global ESG team and formally collaborate via the ESG Steering Committee.

Governance oversight structure

Invesco’s Executive Leadership Team (ELT) is tasked with establishing the firm’s culture and ensuring all employees are aware of their own responsibilities for risk management, including on ESG matters. As such, with the oversight of Invesco’s Board of Directors, the ELT is responsible for establishing and maintaining our risk management framework and for ensuring that risk management is embedded in our day-to-day decision-making, as well as our strategic planning process. Invesco’s global risk management framework supports our focus on key risks in all areas of the business, including strategy and governance, investments, clients, people, operations and financial risk, and enables consistent and meaningful risk dialogue up, down and across the organization.

Our risk management framework leverages two primary governance structures: The Global Performance and Risk Committee, which oversees the management of core investment risks, and the Enterprise Risk Management Committee (ERMC), which oversees the management of all other business and strategy related risks. A network of regional, business unit and specific risk management committees, with oversight of the ERMC, provides ongoing identification, assessment, management and monitoring of risk to ensure both broad and in-depth, multi-layered coverage of the risks existing and emerging in the various domains of Invesco’s business.

Given the importance that Invesco places on ESG at an investment level, Invesco has a governance structure across multiple dimensions, which enables oversight and accountability for effective stewardship.

Investment Team Leadership. Invesco believes the best outcomes are achieved through distinct investment teams across the globe, with discrete investment perspectives, operating under a disciplined philosophy and process. Teams incorporate environmental, social, or governance related considerations where relevant or required to achieve portfolio objectives. Investment team leaders have responsibility for overseeing the implementation of investment strategies including those with ESG related objectives or incorporating ESG factors.

Invesco’s Global ESG Team acts as a center of excellence, responsible for investment team support and analysis related to ESG risks and opportunities, voting and engagement, supporting the distribution teams with client engagement, and advising product teams on ESG innovation, while investment teams maintain discretion on portfolio decisions. The team comprises circa 30 professionals located across three regions: North America, Asia Pacific and EMEA. The team is organized across four pillars that define their major responsibilities: Client, Research, Proxy and Analytics.

The ESG Executive Steering Committee (ESG Executive Steerco) establishes strategic direction for and implementation of ESG related investment management initiatives at Invesco. The Committee is composed of representatives from Investments, Distribution, and many functional areas. It provides direction for resource allocation and operational implementation while facilitating communication across the firm. The Committee aids in fostering global collaboration on ESG issues, enabling us to benefit from diverse perspectives and maintain consistent standards. Alongside various cross-functional working groups, it encapsulates our inclusive approach to ESG, ensuring a purposeful, holistic strategy that aligns with client objectives.

We have created a variety of working groups across the organization in support of delivering ESG related investment capabilities. Some groups are tasked with delivering on a specific initiative or facilitating collaboration across an asset class or region. Others are designed for providing broad communication about current themes or regulation, tools or resources such as data, or they focus on evergreen priorities including proxy voting.

Invesco's Global Invesco Proxy Advisory Committee is guided by our philosophy that investment teams should manage proxy voting. It is a global investments-driven committee comprised of representatives from various investment management teams and chaired by the Director of Proxy Voting and Governance. The committee provides a forum for investment teams to monitor, understand and discuss key proxy issues and voting trends within the Invesco complex, to assist us in meeting regulatory obligations, and to consider conflicts of interest in the proxy voting process.

Assurance

Invesco’s Internal Audit department provides independent, objective assurance and consulting services which are designed to add value and improve the firm’s operations. Internal Audit provides these services on an ongoing basis through a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. All business units globally, including ESG investing and proxy voting activities, are subject to Internal Audit oversight. The department generally performs testing related to ESG matters as part of Invesco’s annual audit plan.

Additionally, the Global Compliance department's annual testing plan seeks to assess compliance in key risk areas, avoiding duplication of testing and considering other control reviews, including internal audits. Our Compliance Monitoring team seeks to apply testing standards consistent with regulatory expectations in each region in which Invesco operates, and reports findings to senior management of Compliance and other impacted business functions. For example, in 2020 the Compliance Monitoring team conducted an advisory review of proxy voting in North America. The purpose of this review was to provide guidance and recommendations around the region's proxy voting process, to evaluate whether policies and procedures were reasonably designed and to determine how effectively the controls in place comply with regulations.

Invesco is an active member and supporter of several external organisations, largely via our global investment teams. Following is a representative list of current affiliations.

A member of:

• 30% Club Japan Investors Group
• Asian Corporate Governance Association (ACGA)
• Asia Investor Group on Climate Change (AIGCC)
• Better Building Partnership (BBP)
• Bipartisan Policy Center ESGTask Force
• Carbon Disclosure Project
• Coalition for Climate-Resilient Investment (CCRI) (founding member)
• Climate Bonds Initiative
• Confluence Philanthropy (Associate Advisor Menu)
• Corporate Responsibility Interface Center (CRIC) (DACH countries)
• Council of Institutional Investors (CII) (US)
• Disclosures and Labels Advisory Group (DLAG)
• Farm Animal Investment Risk & Return Initiative (FAIRR)
• Global Real Estate Sustainability Benchmark (GRESB)
• EFAMA Sustainable Finance Committee
• ESG Disclosure Study Group (Japan)
• Hong Kong Green Finance Association (HKGFA)
• Investment Company Institute (ICI) (ICI Fund Disclosure Working Group, ICI Global ESG Task Force, and ICI Proxy Issues Working Group)
• Investment Association (UK)
• Investor Forum (UK)
• Institutional Investors Group on Climate Change (IIGCC), including Net Zero Investment Framework working group
• Italian Sustainable forum (ItaSIF)
• Investment Management Education Alliance (IMEA)
• Irish Funds ESG Legal committee
• Quoted Companies Alliance (QCA)
• Responsible Investment Association (RIA) (Canada)
• Responsible Investment Association Australasia (RIAA)
• SASB Alliance
• Task force on Climate-Related Financial Disclosures (TCFD) (Supporter and Discloser), TCFD Consortium
• Transition Pathway Initiative
• Task force on Nature-Related Financial Disclosures’ (TNFD) Forum
• UK Sustainable Investment and Finance Association (UKSIF)
• World Economic Forum Financing the Transition to a Net Zero Future Working Group

A signatory to:

1. Principles for Responsible Investment (PRI)
2. EFAMA Stewardship Code
3. Indian Stewardship Code
4. Japan’s Stewardship Code
5. UK Stewardship Code
6. Net Zero Asset Managers Initiative

Additionally, GRESB provides the basis for the reporting, scoring and peer ranking of Invesco Real Estate's (IRE’s) ESG management and policies:

• IRE has submitted data to GRESB since 2012 and has been a GRESB member since 2014.
• In 2023, four IRE-managed strategies achieved five out of five Green Stars, placing them in the top 20% of all global submissions in 2023.

Source: Invesco as at 30 June 2024. 

ESG Resources

ESG data continues to evolve at a rapid pace, while the industry also faces challenges such as data comparability and coverage. At Invesco, we believe having quality data on ESG factors is critical for effective investment analysis to support our stewardship efforts in the area of ESG. We continue to enhance our ESG data and analytics capabilities by building out and updating our proprietary tools.

ESGintel

Launched in 2020, ESGintel is a proprietary ESG research and ratings platform that provides insights on key ESG topics for corporate and sovereign issuers across a range of metrics and data points. Available to all investment teams, this tool enhances the ESG investment process by:

• Highlighting ESG factors with potential investment implications
• Storing ESG engagement notes
• Facilitating ongoing monitoring of issuer progress towards sustainable value creation

ESGintel Corporate ratings

When assessing ESG funds and strategies, ESGintel Corporate provides users with ESG ratings based on Invesco’s internally developed methodology, ratings trends and momentum information, and access to the underlying company-level data. Sector and sub-sector materiality lenses are applied within the framework, ensuring that companies are evaluated on the most relevant ESG topics according to their business activities. A variety of underlying indicators feed into the topic-level assessments, providing a holistic view in each of these key areas. Topic-level ratings are aggregated into E, S and G theme ratings and input, operations and output value chain ratings.

ESGintel ratings are provided on a 1–5 scale at the overall, theme, value chain, topic and indicator levels. Computations are based on absolute, sector/sub-sector relative or region-relative performance as appropriate, specified on an indicator-by-indicator basis. ESG Corporate ratings are updated weekly to reflect the most current information available. In addition to ratings, company rankings are provided at the sub-industry and country levels. The ESGintel platform has built-in analytical capabilities that enable point-in-time and historical comparisons between companies and user-selected peers.

Not all issuers are covered on ESGintel; currently, approximately 15,000 companies meet our minimum coverage criteria for creating an overall ESG rating. Furthermore, the tool leverages a machine-learning algorithm to impute missing datapoints for a company based on data observations at companies with similar characteristics. ESGintel’s transparent interface highlights where such approximations are used and enables analyst scrutiny of the underlying inputs.

ESGintel Sovereign ratings

Responding to feedback from investment teams, Invesco has also expanded ESGintel beyond corporate ratings to cover other asset classes, including sovereign debt. With over 20 inputs, ESGintel Sovereign (previously called SovereignIntel) generates a score for countries across E, S and G categories that can then be aggregated into an overall ESG score. ESGintel Sovereign provides an internal rating, a rating trend and a global ranking out of 160 countries that are updated on a monthly basis.

Engagement Notes

With the Engagement Notes function, investment teams can upload any of their own company-level ESG research or engagement notes to share this insight with others across Invesco. Using this function, the Global ESG Research team has uploaded all of its historical ESG research and engagement reports, so these are all available on the platform. 

ESGCentral

While ESGintel is primarily used as a research tool at the issuer level, ESGCentral is a platform that includes ESG portfolio analytics and ESG screening.

ESGCentral brings in 40+ ESG data sources—together covering more than 52,000 companies and ESG data metrics—and integrates them with Invesco’s ESG portfolios and benchmarks to provide a holistic portfolio-level ESG analytics capability. The platform’s data fueled ESG insights highlight ESG opportunities and risks within the portfolios. The tool enables users to screen the portfolios for positive and negative ESG screens, net zero, Article 8, sustainable/responsible investing and other ESG frameworks. Through these capabilities, the platform supports ESG compliance, risk management, ESG reporting, and regulatory initiatives such as SFDR and TCFD. As a result, ESGCentral provides clear differentiation to Invesco’s ESG approach.

FocusIntel

FocusIntel is a list of the highest ESG risk issuers across all of Invesco’s aggregated holdings that identifies top-priority issuers for engagements using ESGintel’s research and data points. The Global ESG Research team maintains this list, which categorizes issuers into High/Medium/Low ESG risk buckets and compliance status (when assessing specific ESG funds and strategies). 

Our proprietary tools have built-in feedback processes to encourage continuous improvement, gathering users’ feedback regarding issues, observations and requests on sources, data and methodology.

ESGintel’s research and datapoints to helps to identify the highest ESG risk issuers at an aggregate level for Invesco (all the holdings of an issuer are aggregated across the portfolios in Invesco). Ownership and ESG risk materiality criteria are applied on the aggregated holdings and the issuers are segregated into high/medium/low buckets, signifying the ESG risk of the issuers. The Global ESG Research team collaborates with investment teams to engage with highest risk issuers and understand the path issuers are taking to mitigate the ESG risk and influence the issuers to bring a positive change towards ESG issues.

PROXYintel

Invesco’s proprietary proxy voting platform, PROXYintel, is a global knowledge-share platform that tracks proxy votes and rationales across Invesco with respect to individual companies and proxy issues. PROXYintel facilitates the implementation of voting decisions and rationales across our global investment teams. Launched in 2014 and patented in the US, the platform tracks proxy votes and rationales in real time, and investment teams are able to view votes cast by other shareholders within Invesco. This tool helps to build institutional knowledge across the Invesco complex with respect to individual companies and proxy issues.

PROXYintel integrates:

• Meeting information and proxy ballots
• Vote execution and vote rationales
• Invesco global proxy voting guidelines
• Client-customised voting policies
• Third-party proxy research
• ESG ratings
• Conflicts of interest
• Historical proxy vote record keeping
• Client reporting
• Ballot and vote reconciliation
• Security lending
• Account/data maintenance
• Custodian/vendor management

Users directly input proxy votes with the ability to view votes cast by shareholders within Invesco. PROXYintel tracks proxy votes and rationales real time. Historical proxy voting information is stored to build institutional knowledge across the Invesco complex with respect to individual companies and proxy issues. Certain investment teams also use PROXYintel to access third-party proxy research and ESG ratings. This proprietary system facilitates internal control and oversight of the voting process.

External ESG Resources

Invesco uses external service providers to support our stewardship activities, including ESG rating providers, proxy research, business involvement screening, carbon data and more. Data from these service providers feeds into our proprietary tools and supports in-house ESG research and analysis, enabling investment teams to make informed decisions. We consider various factors in reviewing third-party data providers prior to integrating the data into our investment decision-making framework, such as whether the data provided is the most up-to-date information available.

We ensure that data providers are providing the most up-to-date information prior to being integrated into our investment decision-making framework. Through our ESG Data Governance Model, we undertake due diligence to ensure they are providing on-time deliverables such as ESG data, research and recommendations. We are constantly evaluating vendors to ensure our investment teams and clients are given the most current information.

 
Invesco's Global ESG team has access to a variety of external resources, shown below, leveraging external organisations for collaborative engagement and knowledge sharing:

• ESG Research Providers:
• Sustainalytics
• MSCI
• Bloomberg 
• Institutional Shareholder Services (ISS)
• Sell-side research
• SG analytics
• Clarity AI
• Vigeo Eiris 
• Equileap
• Just Capital
• Morningstar
• Nikko Research Center
• Farm Animal Investment Risk & Return (FAIRR)
• Net Zero Tracker
• Proxy Insight
• Carbon Disclosure Project
• Carbon Underground 200
• Transparency International
• Transition Pathway Initiative (TPI)
• Science Based Targets Initiative
• Climate Bonds Initiative
• International Energy Agency
• UN Human Development Index
• Worldwide Governance Indicators (WGI)
• Sustainable Development Goals (SDG) Index
• Environmental Performance Index
• Child Rights Benchmark

Proxy Voting Research and Vote Recommendations:

• Glass Lewis
• ISS
• Institutional Voting Information Service (IVIS) (UK Equities)

ESG Policies

Invesco is committed to adopting and implementing responsible investment principles in a manner that is consistent with its fiduciary responsibilities to clients. Our ESG website provides details of our commitment to ESG investing, and summarizes the various ways Invesco applies ESG principles as investors and how we live them as an organization. The site also provides a range of global ESG policies, statements and reports, including:

• ESG Investment Stewardship Report outlines Invesco's accomplishments, reaffirming our commitment to global stewardship and detailing how our endeavours reinforce this core mission.
• Invesco’s Policy Statement on Global Corporate Governance and Proxy Voting describes Invesco's commitment to responsible investing and proxy voting, as well as the good governance principles that inform our approach to engagement and voting at shareholder meetings. 
• Invesco's Corporate Responsibility Report outlines Invesco’s efforts to ensure the well-being of our people through a culture of inclusion and innovation. We also share details on our new hybrid work model that provides greater flexibility and work -life balance for employees while they continue to provide excellent service to our clients.
• Invesco's Task Force on Climate Related Financial Disclosures (TCFD) Report seeks to build on our past experience and provide a comparable, investor-relevant disclosure on our activities and capabilities in climate-aware investing.
• Invesco’s Approach to Sustainability Preferences outlines Invesco's work to consider principal adverse impacts in our investment decision-making processes, discusses our investor-led approach to sustainable investments, and explains what it means to invest in EU Taxonomy aligned investments.
• Invesco Group Global Remuneration Policy that complies with the SFDR requirements.

SDR Labelling:

Not eligible to use label