Emerging Market

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Accepting the Challenge

Transforming society demands committed collaboration among diverse stakeholder groups. The U.N. estimates that we must invest a staggering $5 trillion to $7 trillion annually to attain the 17 SDGs set forth in its Agenda for Sustainable Development by 2030. Achieving these global goals requires the human, technical and financial resources of governments at all levels and those of public and private businesses.

Emerging markets (EM) have more need for investments in infrastructure, technological innovation and educational improvements than developed markets. Accompanied by profound socioeconomic, gender and income inequalities, living standards in some EM nations are among the lowest in the world. EM countries are also more vulnerable to environmental andhealth-related issues, including access to clean water and rare diseases.These conditions make investing in emerging markets with an SDG focus especially significant.

We believe EM companies could benefit from the growth generated by the positive impact the SDGs intend to achieve. Attaining the SDGs could serve as a fundamental driver of growth in corporate revenues and earnings. In turn, these could drive returns from equities and other assets.

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Total Portfolio Impact

By investing with the intention of helping advance the SDGs, our investors have played a critical role in creating a more inclusive society in emerging markets. Many of the portfolio holdings impact more than one SDG, so numbers will add up to more than 100%.



How the Portfolio Impacts Each Theme

Based on portfolio allocation to each company and its primary impact theme

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We Believe Change Is Possible

The UN. SDGs are broad goals that affect businesses, investors, govemments, nonprofits and policy makers. I's our view that investors make the best contribution to these goals by focusing on areas where their investment dollars can add meaningful value. Each security is mapped to one or more SDGs so investors can see how individual securities are linked to the global effort for a sustainable future. Using the Sustainable Development Investments taxonomy developed by Dutch pension investors PGGM and APG, we group the SDGs into five specific invest ment themes that provide pathways to achieving impact. To link our five impact themes to the SDGs, we use the Sustainable Develop- ment Investments (SDI) Taxonomy and Guidance as a foundation.


1

HEALTH CARE

Provide access to affordable health care, medical innovation, and more productive and efficient equipment, services and software

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2

SUSTAINABLE LIVING

Achieve harmony with ecosystems, accelerating circular economy transition and providing access to a better quality of life, food secu- rity, efficient energy and transportation options, and basic services

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3

TECHNOLOGICAL PROGRESS

Develop paradigm-breaking technological innovation that could transform the global economy and improve society

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4

EDUCATION

Provide access to the affordable transfer of knowledge, which could help lift people out of poverty and strengthen economic conditions and gender quality

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5

ENVIROMENTAL PROTECTION

Drive positive environmental impact from biodiversity loss preven- tion to climate change mitigation to the transition toward a lower- carbon energy system

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SUSTAINABLE LIVING

THESIS

We believe the key to sustainable living is attaining growth and development while improving quality of life in a responsible way. This theme seeks to address the future of urban living through financial services and smart cities connected by technology in harmony with the ecosystem.

  • Electric vehicles, power storing infrastructure and pooling services
  • Efficiency in industrial processes, wood-based construction materials and fiber-based composites, and smart grids
  • Local food supply chain management, clean agritech and organic or alternative food production to expand sustainable access to nutritious food
  • Microfinance focused on expanding access to services and basic needs, including sanitation and affordable housing to previously under- served or remote populations

CRITICAL CHALLENGES

  • Nearly 50% of the world’s population lives on less than $5.50 per day.
  • Anestimated 815 million people globally suffer from chronic undernourishment®
  • Only 35% of small-scale industries have access to credit in developing countries.®




EDUCATION

THESIS

Access to education is crucial to improving quality of life through reducing inequality and increasing the possibility of better paying employment. We see three vital outcomes resulting from access to an affordable transfer of knowledge.

  • Helping end poverty through better employment
  • Strengthen economic conditions by providing entrance to the knowledge-based economy
  • Achieve gender equality by helping women and girls achieve fuller integration into society

CRITICAL CHALLENGES

  • Incomplete education or poor health leads to a 50% decline in productivity in 56% of the world’s children."°
  • Approximately 617 million children and adoles- cents globally are unable to reach minimum proficiency levels in reading and mathematics."
  • Sixty-nine million new teachers are needed to achieve global universal primary and secondary education.’
  • Girls living in areas of conflict are 90% more likely not to attend secondary school.'*
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TECHNOLOGICAL PROGRESS

THESIS

We believe technological innovation is the backbone of economic growth and a critical element for achiev- ing many of the U.N. Sustainable Development Goals. While the Technological Progress theme interrelates with other portfolio themes, it focuses on compa- nies involved in impact-driven technology solutions. The ability to commercialize these solutions has the potential to impact society in a meaningful way.


CRITICAL CHALLENGES

  • More than 40% of the world’s population lacks regular access to the internet.’
  • Approximately 80% of all public energy R&D spending is now directed to low-carbon tech- nologies, but the COVID-19 pandemic has delayed or disrupted scheduled projects.®
  • Renewable resources generate only 23% of electricity worldwide.®



ENVIRONMENTAL PROTECTION

THESIS

Climate change and renewable energy sources dominate the topic of environmental protection. While we acknowledge the importance of these two pillars of pro-environmental investing, this theme looks beyond anti-fossil fuel and clean energy solutions.

  • Addressing biodiversity protection
  • Reducing environment footprints
  • Working toward achieving the circular management of resources
  • Addressing opportunities in environmental control and negative-emissions technology, renewable energy, and bio-based plastics and materials

CRITICAL CHALLENGES

  • Some 29% of the world population lacks access to safe drinking water.'*
  • While energy companies produce more than 70% of global greenhouse gas (GHG) emissions annually, often overlooked is the significant portion other sectors generate, including agriculture, waste and industrial processes.'®
  • Rising sea levels threaten to displace 350 million people globally by 2050."®
  • In the U.S. alone, extreme weather events causing losses above $1 billion have increased more than 400% since the 1980s.'”
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