Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Climate Goals & Targets

Environmental Challenges

• Limited data availability on material sustainability factors from companies.
• Subjective nature of non-financial criteria leading to a wide variety of possible outcomes.

Mitigation Strategies

• Use of a variety of data sources and in-house research to gather data on responsible company management and behavior.
• Integration of ESG factors into the investment decision-making process to assess and weigh up governance and sustainability matters.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SFDR (EU Sustainable Finance Disclosures Regulation)

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• The invasion of Ukraine in late February increased volatility and led to further spikes in inflation, most prominently in commodities.
• The expected discontinuation of LIBOR may significantly impact financial markets; specifically, discontinuation may impact financial contracts to which the Company is a party.

Mitigation Strategies

• The Investment Manager manages the Company’s interest rate risk on a daily basis in accordance with policies and procedures in place.
• The Investment Manager seeks to mitigate the Company’s liquidity risk by diversifying the underwriters/market-makers through which it effectuates transactions and limiting the amount of any one issue purchased.
• Effective 1 July 2021, the Investment Manager incorporated a screening process in its review of existing and potential investments to identify and exclude from the Sub-Funds any companies which it has determined to have controversial weapons exposure or to be non-compliant with UN Global Compact principles.

Supply Chain Management

Climate-Related Risks & Opportunities

Transition Risks

• The expected discontinuation of LIBOR may significantly impact financial markets

Reporting Standards

Frameworks Used: IFRS as adopted by the European Union

Third-party Assurance: Grant Thornton Chartered Accountants

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance
• Diversity, Equity, and Inclusion (DEI)

Environmental Achievements

• A building-related materials company's products displace 5% of U.S. cement production, keeping 6 million tons of Carbon Dioxide equivalents out of the environment.

Social Achievements

• Expanded recruiting efforts resulting in 50% of new hires being non-white/Caucasian in 2023 (vs 21% in 2020) and increased female representation from 30% in 2020 to 33% in 2023.
• Formation of Shenkman Women’s Network (SWN) with various events throughout the year.
• Increased team member contributions and participation in the Donation Matching Program.

Governance Achievements

• Updated ESG Policy reflecting enhancements to ESG processes and including references to CDP and TCFD.
• Added two new members to the Board of Directors, increasing board diversity.

Climate Goals & Targets

Environmental Challenges

• Challenges accessing data for companies in the high yield space, particularly as many are privately held.
• Inconsistent ESG practices and regulations across different geographies.
• Subjectivity and potential for greenwashing in ESG ratings.
• Complexity of ESG issues, as illustrated by Lego's experience with recycled plastics.

Mitigation Strategies

• Utilizing data from CDP to the extent available.
• Adopting a flexible approach to ESG integration tailored to client needs.
• Focusing on robust internal resources to handle varied approaches to ESG.
• Reviewing outside vendors for data while acknowledging limitations of imprecise estimates.
• Encouraging further disclosure and consistency in reporting.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: CDP, TCFD

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Moved NYC offices to a LEED Gold certified building in 2022

Social Achievements

• Created a Diversity, Equity, and Inclusion Committee
• Launched a Shenkman Women’s Network Employee Resource Group
• Established a Corporate Philanthropy matching program

Governance Achievements

• Established an ESG Committee, a subcommittee of the Risk Committee

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Water scarcity

Transition Risks

• Higher future regulatory costs

Reporting Standards

Frameworks Used: UN Global Compact, PRI (Principles for Responsible Investment)