Considerazioni sui rischi

Sintesi

Nessun obiettivo di investimento sostenibile

Questo Fondo promuove caratteristiche ambientali o sociali, ma non ha come obiettivo l’investimento sostenibile. 

Caratteristiche ambientali o sociali dei prodotti finanziari

Il Fondo punta ad avere un’impronta di carbonio (intensità media ponderata, “WACI”) dei suoi investimenti in emittenti societari generalmente inferiore del 30% a quella dell’indice MSCI ACWI. Pur essendo gestito attivamente e senza alcun riferimento o vincolo a un indice di riferimento, il Fondo utilizza questo indice per monitorare le emissioni di carbonio degli investimenti. Per effettuare il monitoraggio continuativo del WACI a livello del Fondo, il Consulente per gli investimenti si basa sui dati relativi all’impronta di carbonio forniti da un fornitore terzo e, se necessario, può ridurre o eliminare le esposizioni a determinate società.

Strategia di investimento

CRMC (il “ Consulente per gli Investimenti”) valuta e applica uno screening ESG e basato su norme per implementare esclusioni su emittenti societari in relazione a settori specifici, tra cui i carburanti fossili e le armi (i “Criteri di vaglio negativo”).

Il Fondo promuove, tra le altre caratteristiche, caratteristiche ambientali e sociali, a condizione che le imprese beneficiarie degli investimenti rispettino prassi di buona governance. Le prassi di buona governance sono valutate nell’ambito del processo di integrazione ESG del Consulente per gli investimenti. Nel valutare le prassi di buona governance, il Consulente per gli investimenti terrà almeno conto degli aspetti che ritiene pertinenti ai quattro pilastri prescritti di buona governance (ovvero strutture di gestione solide, relazioni con il personale, remunerazione del personale e rispetto degli obblighi fiscali). Tali prassi sono valutate attraverso un processo di monitoraggio. Ove pertinente, viene condotta anche un’analisi fondamentale di una serie di parametri di governance che coprono aree quali, a titolo esemplificativo e non esaustivo, le prassi di revisione contabile, la composizione del consiglio di amministrazione e le retribuzioni dei dirigenti.

Il vincolo di carbonio del Fondo non si applica all’intero portafoglio ma solo agli emittenti societari per i quali sono disponibili dati sulle emissioni di carbonio (comunicati o stimati). I Criteri di vaglio negativo di Capital Group si applicano all’intero portafoglio, ad eccezione della liquidità.

Quota degli investimenti

L’asset allocation pianificata viene monitorata costantemente e valutata con cadenza annuale. Almeno il 90% degli investimenti del Fondo è allineato alle caratteristiche A/S. Non oltre il 10% degli investimenti del Fondo, compresi quelli non allineati alle caratteristiche A/S promosse e/o i derivati, rientrerà nella categoria “#2 Altri”. Nell’ambito della quota del 90%, il Fondo deterrà una percentuale minima del 10% del portafoglio in investimenti sostenibili con un obiettivo ambientale o sociale in attività economiche che non si qualificano come ecosostenibili ai sensi della Tassonomia UE.

Monitoraggio delle caratteristiche ambientali o sociali

Seguono gli indicatori di sostenibilità impiegati dal Fondo per misurare il raggiungimento di ciascuna delle caratteristiche ambientali o sociali che promuove:

Il WACI è l’indicatore utilizzato per dichiarare le emissioni di carbonio del Fondo. Questo indicatore serve a mostrare l’impronta di carbonio del portafoglio rispetto all’indice, e si basa sulle emissioni di Ambito 1 e 2:

• Ambito 1: emissioni dirette provenienti dagli impianti della società beneficiaria degli investimenti;
• Ambito 2: emissioni indirette legate al consumo di energia della società beneficiaria degli investimenti.

Il Consulente per gli investimenti applica esclusioni ESG e basate su norme per applicare i Criteri di vaglio negativo agli investimenti del Fondo. Il Fondo monitorerà la conformità degli emittenti societari ai Criteri di vaglio negativo.

Metodologie

Il Fondo attua due criteri vincolanti in materia di ESG: filtri settoriali e basati su norme costituiti da esclusioni e un obiettivo in termini di impronta di carbonio.

Fonti e trattamento dei dati

Le esclusioni sono identificate principalmente attraverso un fornitore terzo, MSCI ESG Business Involvement Screening Research (“MSCI ESG”). Altre fonti di dati sono l’MSCI United Nations Global Compact e gli MSCI Carbon Footprint Metrics.

Limitazioni delle metodologie e dei dati

La metodologia e le fonti relative alle esclusioni e all’approccio di integrazione ESG nel suo complesso presentano alcuni limiti. La valutazione delle caratteristiche ESG dei titoli e la selezione di tali titoli possono comportare un elemento di giudizio soggettivo nell’ambito del processo di investimento. L’impronta di carbonio è misurata dal WACI rispetto all’indice designato  Nel caso in cui non siano disponibili dati sulle emissioni di carbonio per un determinato emittente, il fornitore terzo può fornire stime utilizzando le proprie metodologie. Gli emittenti che non dispongono di dati sulle emissioni di carbonio (comunicati o stimati) sono esclusi dal calcolo del WACI. Sono esclusi dal calcolo del WACI le disponibilità liquide, i derivati, i titoli sovrani e i prodotti cartolarizzati.

Dovuta diligenza

Il personale di Capital Group incaricato della compliance, della gestione del rischio e dell’audit interno conduce valutazioni periodiche sulla struttura e sull’efficacia operativa delle attività ESG e dei controlli chiave dell’impresa.

Politiche di impegno

Instaurare un dialogo con le imprese è parte integrante del servizio di gestione degli investimenti offerto ai clienti dal Consulente per gli investimenti. In questo modo Capital Group può impegnarsi in un dialogo aperto riguardante tutte le questioni che potrebbero influire sulle prospettive aziendali a lungo termine, compresa le esposizioni a problemi inerenti alla sostenibilità.

Indice di riferimento designato

Il Fondo non ha designato alcun indice di riferimento finalizzato a soddisfare le caratteristiche ambientali e/o sociali che promuove.

The sustainability-related disclosures are meant to be revised as necessary from time to time to capture any changes or reviews. The capitalized terms are used in accordance with the definitions and references outlined in Prospectus.

Capital Group New Economy Fund (LUX) (the “Fund”)

LEI: 5493005TAI2AYOJ2IZ71

The below section “Summary” was prepared in English and is being translated to other official languages of the European Economic Area. In case of any inconsistency(ies) or conflict(s) between the different versions of this section “Summary”, the English language version shall prevail.

Summary

No sustainable investment objective

This Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial products

The Fund aims to manage a carbon footprint (weighted average intensity (“WACI”)) for its investments in corporate issuers that is generally at least 30% lower than MSCI ACWI index. While this Fund is actively managed and without any reference or constraints to a reference index, the Fund is using this index to monitor the investment’s carbon emissions. The Investment Adviser relies on carbon footprint data from a third-party provider to carry out ongoing monitoring of WACI at the Fund level, and may reduce or eliminate exposures to certain companies as necessary.

Investment strategy

CRMC (the “Investment Adviser”) evaluates and applies ESG and norms-based screening to implement exclusions on corporate issuers, with respect to certain sectors such as fossil fuel and weapons (the “Negative Screening Policy”).

The Fund promotes, among other characteristics, environmental and social characteristics, provided that the companies in which investments are made follow good governance practices. Good governance practices are evaluated as part of the Investment Adviser’s ESG integration process. When assessing good governance practices, the Investment Adviser will, as a minimum, have regard to matters it sees relevant to the four prescribed pillars of good governance (i.e., sound management structures, employee relations, remuneration of staff and tax compliance). Such practices are assessed through a monitoring process. Where relevant, fundamental analysis of a range of governance metrics that cover areas such as auditing practices, board composition and executive compensation, among others, is also conducted.

The Fund’s carbon constraint does not apply to the entire portfolio, and will apply only to corporate issuers that have carbon emissions data available (reported or estimated). The Capital Group’s Negative Screening Policy will apply to the entire portfolio, with the exception of cash holdings.

Proportion of investments

The planned asset allocation is monitored continuously and evaluated on a yearly basis. At least 90% of the Fund's investments are aligned with E/S characteristics. A maximum of 10% of the Fund’s investments including investments non-aligned with the E/S characteristics promoted and/or derivatives are in category “#2 Other”. Within the 90%, the Fund will have a minimum proportion of 10% of the portfolio in sustainable investments with an environmental or social objective in economic activities that do not qualify as environmentally sustainable under the EU Taxonomy.

Monitoring of environmental or social characteristics

The sustainability indicators used by this Fund to measure the attainment of each of the environmental or social characteristics it promotes are the following:

The WACI is the metric used to report the Fund’s carbon emissions. It helps show the carbon footprint of the portfolio compared to the index, and is based on Scope 1 and 2 emissions:

•             Scope 1: direct emissions from the investee company’s facilities;

•             Scope 2: indirect emissions linked to the investee company’s energy consumption.

The Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments. The Fund will monitor the adherence of corporate issuers to the criteria set forth in the Negative Screening Policy.

Methodologies

The Fund implements two binding ESG-related criteria: sector- and norms-based screens in the form of exclusions and a carbon footprint target.

Data sources and processing

Exclusions are primarily identified through a third-party provider, MSCI ESG Business Involvement Screening Research (“MSCI ESG”). Other data points include the MSCI United Nations Global Compact and MSCI Carbon Footprint Metrics.

Limitations to methodologies and data

The methodology and sources relating to the exclusions and the ESG integration approach as a whole have certain limitations. When assessing the ESG characteristics of securities and the selection of such securities, subjective judgement within the investment process might be involved. The carbon footprint is measured by the WACI relative to the relevant index. In the event that reported carbon emissions data is not available for a particular issuer, the third-party provider may provide estimates using their own methodologies. Issuers that do not have any carbon emissions data available (reported or estimated) are excluded from the WACI calculation. Excluded from the WACI determination are cash holdings, derivatives, sovereigns, and securitised products.

Due diligence

Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s ESG activities and key controls.

Engagement policies

Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. This enables Capital Group to engage and generate dialogue on any issues that could affect the investee company’s long-term prospects, including exposures to sustainability issues.

Designated reference benchmark

The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.

No sustainable investment objective

This Fund promotes environmental or social characteristics but does not have as its objective sustainable investment. The Investment Adviser commits to maintain at least 10% of the Fund’s investments in companies that, in the Investment Adviser’s opinion, are addressing social and/or environmental challenges through their current or future products and/or services. This 10% minimum qualifies as “sustainable investments” under Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector.

Such companies have products and services that are majority-aligned, or transitioning towards higher positive alignment, with any single or combination of sustainable investment themes focused on global social and environmental challenges as identified by the Investment Adviser. These themes map to the United Nations Sustainable Development Goals (“SDGs”). Therefore, investments could be made in companies addressing needs such as but not limited to: (i) energy transition, (ii) health & well-being, (iii) sustainable cities & communities, (iv) responsible consumption, (v) clean water & sanitation, (vi) education & information access, and (vii) financial inclusion.

The sustainable investments that the Fund intends to make are subject to the Investment Adviser’s eligibility process for sustainable investments. Sustainable investments are those whose business activities are majority-aligned or transitioning towards higher positive alignment with any one or a combination of these sustainable investment themes, and that (i) do not significant harm any environmental or social objective(ii) follow good governance practices and (iii) satisfy the Negative Screening Policy.

The sustainable investments that the Fund partially intends to make shall not cause any significant harm to any environmental or social sustainable investment objectives. As such the Investment Adviser considers the mandatory Principle Adverse Impacts (PAIs) as set out in Table 1 of Annex I of Commission Delegated Regulation (EU) 2022/1288 for corporate investments, as well as other ESG risks and controversies that the Investment Adviser considers potentially material, such as data privacy or censorship issues Companies deemed by the Investment Adviser to be causing significant harm, based on the PAIs, are not considered sustainable investments.

How have the indicators for adverse impacts on sustainability factors been taken into account?

As mentioned above, the Investment Adviser considers all mandatory PAIs.

The Investment Adviser considers several PAIs within its Negative Screening Policy. In particular, the Negative Screening Policy addresses the Principal Adverse Impact 4 on exposure to companies active in the fossil fuel sector, Principal Adverse Impact 10 on United Nations Global Compact violators and Principal Adverse Impact 14 on controversial weapons.

Beyond the screening process, with respect to the remaining mandatory PAIs:

1.    where the Investment Adviser considers sufficient and reliable quantitative data is available across the investment universe, the Investment Adviser uses third-party data and prescribed thresholds to determine whether the adverse impact associated with the company’s activities is potentially significant based on the company’s relative ranking (on the specific adverse impact) to the overall investment universe and/or peer group; or

2.    where data availability or quality is not sufficient across the investment universe to enable a quantitative analysis, the Investment Adviser assess significant harm on a qualitative basis, for example using proxies. 

The Investment Adviser’s assessment will also include an overall qualitative assessment of how ESG risks are being managed.

Where third party data or the Investment Adviser’s assessment indicates that a company is potentially doing significant harm based on a PAI threshold, the Investment Adviser will do additional due diligence to better understand and assess negative impacts indicated by third party or proprietary data. If the Investment Adviser concludes that the company is not causing significant harm based on its analysis, it may proceed with the investment and the rationale for that decision will then be documented. For example, the Investment Adviser may conclude a company is not causing significant harm if (i) the Investment Adviser has reason to believe that third-party data is inaccurate and the Investment Adviser’s own research demonstrates that the company is not causing significant harm; or (ii) the company is taking steps to mitigate or remediate that harm through the adoption of timebound targets and there are meaningful signs of improvement and positive change.

How are the sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights? Details:

The sustainable investments are aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights as follows: the Investment Adviser reviews issuers involved in significant ESG controversies, with a focus on those that may conflict with existing global standards, including guidelines from the United Nations Global Compact. In accordance with the Negative Screening Policy applied to the Fund, the Investment Adviser will exclude companies violating the UN Global Compact principles. Although other incidents will not automatically result in exclusion from the Fund, the Investment Adviser ensures that appropriate action to remediate the concerns are taken.

Environmental or social characteristics of the financial product

The Fund promotes environmental and social characteristics, provided that the companies in which investments are made follow good governance practices.

The binding environmental and/or social characteristics promoted by the Fund are the following:

Carbon constraint: The Fund aims to maintain a Weighted Average Carbon Intensity (WACI) for its investments in corporate issuers that is generally at least 30% lower than the MSCI ACWI index. The WACI is based on GHG emissions (Scope 1 and 2) divided by the revenue of the investee companies. Should the WACI of the Fund not achieve the 30% threshold, the Investment Adviser will consider what action is in the best interest of the Fund, its Shareholders and in line with the relevant Fund investment objective to bring the Fund back above the threshold in a reasonable period of time.

Negative Screening Policy: Through its Negative Screening Policy, the Investment Adviser evaluates and applies ESG and norms-based screening to implement exclusions on corporate issuers at the time of purchase, with respect to certain sectors such as fossil fuel and weapons, as well as companies violating the principles of the United Nations Global Compact (UNGC).

Investment strategy

The Investment Adviser applies the following investment strategy to attain the environmental and/or social characteristics promoted:

Carbon constraint. The Investment Adviser aims to manage a carbon footprint (WACI) lower than the Fund’s selected index level. Therefore, it will aim to manage a WACI for its investments in corporate issuers that is generally at least 30% lower than the Fund's selected index level (MSCI ACWI) Should the WACI of the Fund not achieve the 30% threshold, the Investment Adviser will consider what action is in the best interest of the Fund, its Shareholders and in line with the relevant Fund investment objective to bring the Fund back above the threshold in a reasonable period of time. The Investment Adviser carries out ongoing monitoring of WACI at the Fund level, and may reduce or eliminate exposures to certain companies as necessary.

The selected index is representative of the investment universe of the Fund. The Investment Adviser assess the portfolio WACI data on an ongoing basis to help the Fund remain within the target level. This allows the Investment Adviser to measure the carbon footprint and carbon intensity of the portfolio compared to the selected index, and to understand the attribution of the emission results. From an investment perspective, carbon footprint analysis can serve as a tool to engage with the investee company and better understand the investee company’s business. In the event that reported carbon emissions data is not available for a particular issuer, the third-party provider may provide estimates using their own methodologies Issuers that do not have any carbon emissions data available (reported or estimated) are excluded from the WACI calculation. It is not the intention of the Investment Adviser to automatically exclude higher carbon emitters on an individual basis as the carbon intensity is monitored at the total portfolio level rather than at the individual holding level.

Negative Screening Policy. The Investment Adviser also evaluates and applies ESG and norms-based screening to implement a Negative Screening Policy relating to the Fund's investments in corporate issuers at the time of purchase, with respect to certain sectors such as fossil fuel and weapons, as well as companies violating the principles of the UNGC.

To support this screening on corporate issuers, the Investment Adviser relies on third party provider(s) who identify an issuer’s participation in or the revenue which they derive from activities that are inconsistent with the ESG and norms-based screens. In this way, third party provider data is used to support the application of ESG and norms-based screening by the Investment Adviser. In the event that exclusions cannot be verified through third-party providers or if the Investment Adviser believes that data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources).

If an eligible corporate issuer held in a Fund subsequently fails a screen, the issuer will not contribute towards the environmental and/or social characteristics of the Fund and will generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund.

What is the policy to assess good governance practices of the investee companies?

The Investment Adviser ensures that the companies in which investments are made follow good governance practices. When assessing good governance practices, the Investment Adviser will, as a minimum, have regard to matters it sees relevant to the four prescribed pillars of good governance (i.e., sound management structures, employee relations, remuneration of staff and tax compliance). 

As described above, the Investment Adviser applies a Negative Screening Policy to the Fund. As part of this, the Investment Adviser excludes companies that, based on available third-party data, are viewed to be in violation of the principles of the UNGC, which include Principle 10 (anti-corruption) and Principle 3 (employee relations).

In addition, good governance practices are evaluated as part of the Investment Adviser’s ESG integration process. Such practices are assessed through a monitoring process based on available third-party indicators relating to corporate governance and corporate behavior. Third-party data may be inaccurate, incomplete or outdated. Where the corporate governance and corporate behavior indicators cannot be verified through the third-party provider, the Investment Adviser will aim to make such determination through its own assessment based on information that is reasonably available Where relevant, fundamental analysis of a range of governance metrics that cover areas such as auditing practices, board composition and executive compensation, among others, is also conducted. The Investment Adviser also engages in regular dialogue with companies on corporate governance issues and exercises its proxy voting rights for the entities in which the Fund invests.

If a previously eligible company held in a Fund subsequently fails the Investment Adviser’s assessment of good governance practices, the company will generally be sold within six months from the date of such determination, subject to the best interests of investors in the Fund. 

Information on Capital Group’s corporate governance principles can be also found in its Proxy Voting Procedures and Principles, available on:

https://www.capitalgroup.com/content/dam/cgc/tenants/europe/documents/responsible-investing/global_proxy_voting_guidelines(en).pdf.

The ESG Policy Statement provides additional detail on Capital Group’s views on specific ESG issues, including ethical conduct, disclosures and corporate governance, available on:

http://www.capitalgroup.com/content/dam/cgc/tenants/eacg/esg/files/esg-policy-statement(en).pdf

Proportion of investments

At least 90% of the Fund's investments are in category “#1 Aligned with E/S characteristics” and so are used to attain the environmental or social characteristics promoted by the Fund (being subject to the Investment Adviser’s binding Negative Screening Policy and carbon constraint). A maximum of 10% of the Fund’s investments including investments non-aligned with the E/S characteristics promoted and/or derivatives are in category “#2 Other”.

Within the 90%, the Fund will have a minimum proportion of 10% of the portfolio in sub-category “#1A Sustainable”, being sustainable investments with an environmental or social objective in economic activities that do not qualify as environmentally sustainable under the EU Taxonomy. These are investments that have passed through the Investment Adviser’s sustainable investment assessment. The remainder of the portfolio will be in category “#1B Other E/S characteristics”, being companies that do not pass the Investment Adviser’s assessment of sustainable investment.

Cash and/or cash equivalents are excluded from the asset allocation above. Cash and cash-equivalents may be held for liquidity purposes to support the Fund’s overall investment objective.

Monitoring of environmental or social characteristics

The sustainability indicators used by this Fund to measure the attainment of each of the environmental or social characteristics it promotes are the following:

The WACI is the metric used to report the Fund’s carbon emissions. It helps show the carbon footprint of the portfolio compared to the index, and is based on Scope 1 and 2 emissions:

• Scope 1: direct emissions from the investee company’s facilities;

• Scope 2: indirect emissions linked to the investee company’s energy consumption.

The Investment Adviser applies ESG and norms-based exclusions to implement a Negative Screening Policy to the Fund’s investments. The Fund will monitor percentage of corporate issuers failing a screen under the Negative Screening Policy.

The Fund applies investment restrictions rules on a pre-trade basis in portfolio management systems to prohibit investment in companies or issuers based on the exclusion criteria. The portfolio also undergoes regular/systematic post-trade compliance checks. The methodology applied in support of this screening is described in detail under the section “Investment Strategy” of this document.

In the event that exclusions cannot be verified through the third-party provider(s), the Investment Adviser will aim to identify business involvement activities through its own assessment.

Please refer to Fund’s Negative Screening Policy for further details, as cited under section “Data sources and processing”.

An additional objective of the Fund is to ensure that a carbon footprint (weighted average intensity) for its investment in corporate issuers that is generally at least 30% lower than the Fund’s selected index (MSCI ACWI). The selected index is representative of the investment universe of the Fund. The Investment Adviser uses the WACI as a metric to measure the Fund’s carbon footprint. In calculating the Fund’s WACI, the Investment Adviser relies on third party data provider(s). In the event that reported carbon emissions data is not available for a particular issuer, the third-party provider may provide estimates using their own methodologies Issuers that do not have any carbon emissions data available (reported or estimated) are excluded from the WACI calculation.

If the portfolio was in danger of breaching the target, holdings would be adjusted to increase the margin between the portfolio carbon footprint and target level; exposure to selected higher emitters would be reduced with increased exposure to lower emitters, while ensuring the Fund’s investment objective is maintained. Compliance checks are in place to facilitate this and mitigate the risk of any breach, for example as the result of market movement. Carbon footprint reports use MSCI Carbon Footprint Metrics data.

Methodologies

In addition to the sustainable investment commitments described above, the Fund implements two binding ESG-related criteria: sector- and norms-based screens in the form of exclusions and a carbon footprint target, with the methodology applied to these commitments having already been presented in detail in the previous sections.

The SFDR classification is related to the European Union’s regulation and is not equivalent to approval or recognition as an ESG Fund by regulators in Asia Pacific.

The exclusionary screens are implemented pre-trade and the carbon target is managed and monitored at the aggregate portfolio level.

Data sources and processing

Data sources

The Investment Adviser uses a combination of internal research and third-party data providers to gather ESG-related data.

Third-party providers are used to calculate the carbon footprint of the Fund and for identifying corporate issuers' involvement in activities inconsistent with ESG and norms-based screens. In the event that exclusions cannot be verified through third-party data or if the Investment Adviser believes that third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser reserves the right to identify business involvement activities through its own assessment (including by using other third-party data sources).

Data quality and processing

Capital Group periodically reviews the performance quality of provider organizations and conducts ongoing monitoring and due diligence activities commensurate with the significance of the services provided.

Data are regularly updated in Capital Group’s internal platforms and made available to relevant teams. When issues are identified in third-party data, they are reported back to the provider(s). The Investment Adviser also applies systematic data quality checks to catch discrepancies and validate with the provider when issues arise.

Proportion of data that is estimated

Third-party providers may estimate data. While reported data are prioritized, Capital Group uses estimated data when reported data are unavailable. The proportion of estimated data varies depending on the data point due to inconsistencies in reporting by investee companies.

https://www.capitalgroup.com/content/dam/cgc/tenants/eacg/negative-screening-policy.pdf

Limitations to methodologies and data

The methodology and sources relating to the exclusions and the ESG integration approach as a whole have certain limitations. In order to identify all publicly traded companies globally which are involved in activities such as the production of controversial products and revenue derived from activities that are inconsistent with the ESG and norms-based screens, the Fund uses ESG criteria and exclusions that are primarily identified through third-party provider(s). In the event that exclusions cannot be verified through third-party providers, the Investment Adviser will aim to identify business involvement activities through its own assessment (including by using other third-party data sources).

When assessing the ESG characteristics of securities and the selection of such securities, subjective judgement within the investment process might be involved.

The carbon footprint is measured by the WACI score relative to the relevant index. The WACI is calculated based on securities for which data is reported or estimated. Excluded from the WACI determination are cash holdings, derivatives, sovereigns, and securitised products.

Due diligence

Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s ESG activities and key controls. This includes compliance with internal processes and procedures as well as with the regulatory landscape in the jurisdictions in which the company operates. Capital Group meets regularly with the third-party data providers to review the quality of the services provided.

Pre-trade and post-trade checks are also in place as further explained in section “Monitoring of environmental or social characteristics” above.

Engagement policies

Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. Capital Group’s investment teams meet on a regular basis with company management, including executive and non-executive directors, chairs, and finance directors. This enables the company to engage and generate dialogue on any issues that could affect the company’s long-term prospects, including exposures to sustainability issues.

Where Capital Group's investment teams identify an issue material to the long-term value of a company or they are concerned about relative ESG performance, Capital Group's investment professionals and governance teams will engage with management. The understanding of these issues, as well as management’s response and the steps they take to minimise any associated risks, forms an important part of Capital Group's assessment of management quality, which itself is a key factor in the stock selection decisions.

Designated reference benchmark

The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.

Where can more product-specific information be found?

More product-specific information can be found in the pre-contractual template:

https://docs.publifund.com/1_PROSP/LU1577354035/en_LU

More product-specific information can be found in the periodic reports:

https://docs.publifund.com/4_AR/LU1577354035/en_LU