Climate Change Data

Environmental Metrics

ESG Focus Areas

• climate
• equality
• governance

Environmental Achievements

• Weighted average carbon intensity of investment strategies significantly lower than benchmarks (e.g., -37% to -78% lower depending on the cap size of the strategy).
• Offsets carbon emissions from business travel.
• Purchases certified renewable energy certificates for all energy use.

Social Achievements

• 76 companies demonstrated improvement in ESG performance (43% impact rate).
• Highest impact rate by topic was Equal Employment Opportunity (EEO) disclosure at 38%.
• Increased diversity of staff; 16 out of 21 new hires added racial and/or gender diversity.

Governance Achievements

• Top scores in PRI’s assessment report, including A+ for Strategy & Governance and Listed Equity Incorporation.
• Withdrew 53% of shareholder resolutions after reaching agreements with companies.
• Voted against at least one management recommendation 60% of the time.

Climate Goals & Targets

Environmental Challenges

• Product safety litigation at Johnson & Johnson.
• Misalignment between some companies' lobbying efforts and their stated climate commitments.
• Need to improve representation of people of color among staff.

Mitigation Strategies

• Reduced position weight of Johnson & Johnson to mitigate risk.
• Engaged companies to align climate lobbying with Paris Agreement goals.
• Initiatives to identify a diverse pool of candidates for all open positions.

Supply Chain Management

Responsible Procurement

• Sourcing gifts from a vendor that focuses on sustainable products

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: PRI, SASB, TCFD

Environmental Metrics

ESG Focus Areas

• Climate Risk
• Equality
• Governance

Environmental Achievements

• Reduced weighted average carbon intensity significantly lower than benchmarks across investment strategies (see table on page 12).

Social Achievements

• Encouraged 100 companies to disclose workforce demographics.
• 36 companies added 46 diverse directors, almost half of whom are people of color.
• Approximately ten more companies committed to include people of color and women in board candidate pools.
• Improved workforce composition disclosure is in process at approximately one dozen companies.

Governance Achievements

• 96 companies demonstrated improvement in ESG performance (44% impact rate).
• 50% of shareholder resolutions were successfully negotiated and withdrawn.
• Average shareholder support for resolutions that went to a vote was 27%.

Climate Goals & Targets

Environmental Challenges

• Uncertainty caused by the global pandemic impacting stock performance.
• Lack of widely available data on racial or ethnic composition of boards of directors.
• SEC and DOL rule changes diminishing shareholder rights and challenging ESG incorporation in investment processes.

Mitigation Strategies

• Continued long-term focus on business sustainability across market cycles.
• Participation in the Russell 3000 Board Diversity Disclosure Initiative.
• Public comments to SEC and DOL, participation in investor coalitions to advocate against anti-ESG bias in rule changes.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: PRI, SASB, TCFD

UN Sustainable Development Goals

• SDG 5
• SDG 10
• SDG 12
• SDG 13
• SDG 16

Active ownership initiatives touched 10 of the 17 SDGs.

Environmental Metrics

ESG Focus Areas

• Climate Risk
• Equality
• Governance

Environmental Achievements

• Operations have been carbon neutral for more than 15 years; offset carbon emissions from business travel and purchase certified renewable energy certificates for office energy use; office building is platinum LEED-EB certified; recycle IT hardware and equipment; print on 100% post-consumer recycled paper with soy-based ink; partner with a sustainability-focused vendor for corporate gifts.

Social Achievements

• Engaged companies to increase gender, racial, and ethnic diversity on boards of directors; encouraged companies to disclose workforce composition statistics; encouraged companies to adopt and make public inclusive EEO policies and practices that explicitly protect LGBTQ+ employees from discrimination; supported an investor sign-on letter calling on the US Congress to pass a comprehensive and permanent federal paid family leave program; supported a letter supporting the passage of the John Lewis Voting Rights Advancement Act; supported a statement calling on world leaders to finance the ACT-Accelerator and ensure fair and equitable access to COVID-19 vaccines, medicine, and diagnostics globally.

Governance Achievements

• Encouraged companies to disclose comprehensive and decision-useful sustainability data, including actionable ESG metrics and goals; encouraged companies to enhance transparency regarding lobbying policies, oversight, and expenditures, and congruence with corporate positions on ESG risks and opportunities; engaged with F5 Networks to encourage sustainability reporting aligned with the SASB Standards; engaged with Comcast to expand lobbying disclosures; engaged with Vanguard to strengthen proxy voting practices.

Climate Goals & Targets

Environmental Challenges

• The persistence of the global pandemic exposing entrenched economic and social inequalities, coupled with the impacts of extreme climate events worldwide.
• Varying quality and comparability of ESG disclosures among companies, especially smaller ones.
• Misalignment between a company’s sustainability objectives and its lobbying activities.
• Limited progress made on the pathway to reduce global emissions 45% by 2030.

Mitigation Strategies

• Multi-faceted, collaborative approach to address complex issues; increased attention to investor collaboration and public policy advocacy; direct company engagement, multi-stakeholder initiatives, public policy advocacy, and thought leadership; collaborative initiatives with other investors to drive enhanced environmental disclosure and science-based targets; public policy advocacy at regional, national, and international levels; engagement with US regulators to restore recognition of ESG considerations as material to investment decision-making.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Partnering with a sustainability-focused vendor for corporate gifts.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (heat, wildfires, flooding)

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Growth opportunities associated with the shift to electric vehicles (EVs)

Reporting Standards

Frameworks Used: TCFD, SASB

Certifications: LEED-EB Platinum

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• SDG 5 (Gender Equality)
• SDG 10 (Reduced Inequalities)
• SDG 12 (Responsible Production and Consumption)
• SDG 13 (Climate Action)
• SDG 16 (Peace, Justice, and Strong Institutions)

Active ownership initiatives touched 11 of the 17 SDGs, with strong results across those most aligned with focus areas of climate risk, equality, and governance.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Corporate Governance
• Sustainable Business Practices

Environmental Achievements

• Not disclosed

Social Achievements

• Lent public support to Nasdaq’s Board Diversity Rule and jointly filed an Amicus Brief in support of the SEC’s decision to approve the rule.
• Spearheaded a letter to SEC Chair Gensler calling for the SEC to mandate disclosure of EEO-1 data.

Governance Achievements

• Submitted public comment letters supporting proposed SEC rule requiring climate risk disclosures and supporting proposed amendments to rule 14a-8 to strengthen shareholder rights.

Climate Goals & Targets

Environmental Challenges

• Lack of consistent, comparable, and decision-useful information on climate risk disclosure.
• Lack of consistent disclosure of workforce composition and human capital management practices.
• Lack of transparency from many asset managers regarding their ESG investing approach.

Mitigation Strategies

• Active engagement with regulators and standard setters to improve corporate disclosure of material ESG information.
• Issuing public comment letters supporting increased corporate accountability on workforce demographics and improved climate risk disclosure.
• Communicating to the SEC the need for increased scrutiny of how investment companies and advisers utilize ESG analysis and active ownership.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: SASB, TCFD

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Board Diversity
• Climate Risk Management
• ESG Counterproposals
• Artificial Intelligence Governance
• Lobbying Transparency

Environmental Achievements

• Three shareholder resolutions withdrawn after companies committed to GHG emission reduction goals and publishing transition plans (Valmont Industries, Chemed Corporation, Comfort Systems).

Social Achievements

• Shareholder resolution withdrawn at Valmont Industries after agreement to annually disclose workforce demographic data.
• Shareholder resolution withdrawn at Chemed Corporation after commitment to publish an inaugural sustainability report aligned with SASB Standards.

Governance Achievements

• 53% of 62 boards opposed in 2022 now meet board diversity guidelines.
• Supported nearly 58% of 148 shareholder proposals observed at portfolio companies.

Climate Goals & Targets

Environmental Challenges

• Decline in support for environmental and social shareholder proposals (from 31% in 2021 to 16% in 2024).
• Increase in ESG counterproposals (80 in 2024 vs 33 in 2022).
• Increased SEC omissions of shareholder proposals (55% increase from prior year).
• Politicization of company action to address material ESG risks.
• Challenges in negotiating with companies to withdraw proposals.

Mitigation Strategies

• Active engagement with companies, regulators, and policymakers to advance diversity and address ESG concerns.
• Multiyear time horizon for active ownership and multifaceted approach to engagement.
• Use of shareholder resolutions when dialogue is unproductive.
• Careful consideration of individual proposals and evaluation of their merit.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SASB Standards

Environmental Metrics

ESG Focus Areas

• Climate Change
• Governance
• Social

Climate Goals & Targets

Environmental Challenges

• Significant GHG emissions from energy-intensive production of industrial gases, exposing the company to climate risks (legislative, regulatory, and societal responses to global climate change).

Mitigation Strategies

• Setting a goal to reduce emissions intensity by one-third by 2030.
• Investing in no- and low-carbon projects to improve emissions intensity.
• Investing in green hydrogen gasification projects resulting in no CO2 emissions.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• Future taxation of carbon emissions
• Changes to government incentives
• Interest rate environment
• Profitability of new projects

Opportunities

• Growth opportunities presented by the energy transition
• Development of green and blue hydrogen gasification projects

Reporting Standards

Frameworks Used: SASB

Sustainable Products & Innovation

• Green and blue hydrogen gasification projects