Environmental, Social and Governance Criteria: Summary Highlights

RESPONSIBLE investing is widely understood as the integration of environmental, social and governance (ESG) factors into investment processes and decision-making.

factors cover a wide spectrum of issues ESG that traditionally are not part of financial analysis yet may have financial relevance.

This might include how good corporates are with water management, how effective their health and safety policies are in the protection against accidents, how they treat their workers and whether they have a corporate culture that builds trust and fosters innovation.

There are several different categories of sustainable investing. They include impact investing, socially responsible investing (SRI),

and value-based investing. ESG Another school of thought puts under ESG the umbrella term of SRI. Under are ethical SRI investing, investing and impact investing. ESG This is an umbrella term for investments that seek positive returns and long-term impact on society, the environment and the performance of the business. issues are often ESG interlinked and it can be challenging to classify an issue as only an environmental, social, ESG or governance issue.

The growing trend of seeking out both financial and social returns is being driven in part by Millennials who want to align their investments with their personal values. The most commonly used methods for bringing considerations ESG into investors’ decision-making process are:

Exclusionary screening / negative screening Best-in-class selection Thematic investing Active ownership Impact investing As a regulator, we encourage all companies to take positive and effective environmental, social and governance actions that are consistent with shareholder interests. Companies that incorporate factors into their long-term ESG strategic planning and communicate that fact to investors, provide a complete picture of their prospective value.