Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Social Achievements

• Furthering efforts through intentional processes and initiatives, such as enhancing firm-wide employee engagement and building on our recruiting pipeline.

Governance Achievements

• Strong corporate governance, client-aligned values, and commitment to give back to our community.

Climate Goals & Targets

Environmental Challenges

• Climate change
• Cyber security

Mitigation Strategies

• Companies need strong corporate governance to achieve these goals.
• Continue evolving our organization and investment capabilities

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Wildfires
• Hurricanes
• Sea level rise

Transition Risks

• Imposed regulatory limits on carbon emissions
• Changes to carbon pricing

Environmental Metrics

ESG Focus Areas

• Financially material ESG factors
• Governance
• Climate change and the energy transition
• Human capital

Environmental Achievements

• Vogtle Unit 3 (nuclear power unit) went into commercial operation, supporting Southern Company's net-zero goal.
• Continued research on climate-related topics, including the energy transition, assessing company carbon risk, climate litigation, and building an internal database to track decarbonization targets.

Social Achievements

• Expanded analysts’ access to companies’ human capital data through Revelio Labs.
• Engaged with Cognizant on employee attrition, resulting in improved retention strategies.

Governance Achievements

• Reviewed and approved changes to our ESG Policy Statement.
• Updated our Proxy Voting Policy.
• Updated our ESG client materials and reporting, including producing our first Stewardship and ESG Integration Report.

Climate Goals & Targets

Environmental Challenges

• High inflation, fears of a potential global recession, geopolitical turmoil, turbulence in the Financials sector, and the lingering economic effects of COVID.
• Elevated employee attrition at Cognizant.
• Cost and potential overruns of Vogtle Units 3 and 4 (nuclear power units).
• Climate litigation risk.

Mitigation Strategies

• Continued to refine the way we communicate our approach to stewardship and ESG integration.
• Cognizant implemented various actions to address retention challenges, including increased investments in people, salary increases, and expanded hiring.
• Southern Company's large scale, diversification, and commitment to a strong balance sheet provide downside protection to bondholders.
• Thorough review on climate litigation risk and sharing findings with analysts.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Physical climate change or other environmental impacts (e.g., destruction from wildfires, hurricanes, or other natural disasters, productivity loss from extreme heat, long-term effects of sea level rise)

Transition Risks

• Material risks from the energy transition (e.g., carbon emissions and decarbonization strategy, policy/regulatory changes, shifts in consumer behavior and market sentiment, technology disruption)

Opportunities

• Investing in clean technology

Reporting Standards

Frameworks Used: Principles for Responsible Investment (PRI)

Environmental Metrics

ESG Focus Areas

• Financial Materiality of ESG factors

Governance Achievements

• Became a signatory to the Principles for Responsible Investment (PRI) in 2012

Climate Goals & Targets

Environmental Challenges

• Varying financial materiality of environmental and social factors by company, industry, and region
• Nuances and limitations in ESG integration for sovereign bonds, municipal bonds, and securitized products

Mitigation Strategies

• Intensive bottom-up research, strict price discipline, and team decision making to evaluate financially material ESG factors
• Ongoing monitoring of investments and adjustments based on material changes to investment thesis
• Collaboration with global industry analysts to evaluate ESG factors for fixed income investments

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: PRI