Process

What We Do

Approach to Sustainable Investing

Our investment process is designed to generate positive environmental and social impacts without compromising financial returns. It involves three stages:

Verification

Positive identification

Rigorous evaluation
including credit

SPECTRUM Bond®
universe

Portfolio
Management

Market analysis

Risk assessment

Client objectives and risk tolerance

Portfolio construction

Impact
Reporting

Ongoing monitoring
and data review

Alignment to UN SDGs

Annual Impact Report

Engagement with issuers, market participants and investors

During the Verification phase, our team of experts apply our proprietary SPECTRUM Bond® criteria to identify our impact investment universe. Our rigorous sustainability and credit process fully integrates environmental, social and governance (ESG) assessment.

Our Verification analysis includes a robust and disciplined approach to ESG principles. ESG issues are our starting point as we seek to identify eligible investments that encompass impact and deliver mainstream investment returns. The team uses our proprietary SPECTRUM Bond® criteria to conduct this analysis.

Sustainability

Aligned with our purpose to support the UN SDGs and Paris Agreement on climate change.

Positive externalities

Positive environmental and/or social externalities associated with the issuance.

Ethics & issuer conduct

Issuers must have appropriate governance, policies and operational conduct.

Credit

Issuers must have a strong financial structure.

Transparent

Issuers with clear and transparent reporting and disclosure.

Responsible issuer

Issuers with strong integrity and environmental and social standards, as well as a clear commitment to a sustainable model.

Use of proceeds

Ability to determine use of proceeds to assure funded activities meet our criteria.

Material & measurable

Issuers with reporting on material and measurable environmental and social impact.

As the table below shows, our SPECTRUM Bond® criteria go further than industry standards of green bond identification and certification. This gives us a comprehensive overview of the market.

Characteristics of different green bond identification and certification schemes
Tool	Table 1*					Table 2
	CBI Climate Bonds Certification	Green Bond Indices¹	CICERO Second Opinions	Moody’s Green Bond Assessments	Standard & Poor’s Green Evaluations	Affirmative Investment Management
Use of funds must be tied to green investment
Eligibility criteria differ by sector
Ex-post monitoring/ assessment
Granular assessments of greenness
Quantitative weights for specific factors

* (Bank for International Settlements, September 2017)
¹ Bank of America Merrill Lynch, Barclays MSCI, Standard & Poor’s, and Solactive.

Having completed the Verification process, our investment team then constructs and maintains a diverse range of portfolios from this list of eligible securities purely for risk-adjusted return.

We actively engage with our holdings and are committed to measurable and material impact reporting for our clients. Engagement with issuers is core to our process throughout every stage of analysis. We work with key stakeholders to support asset class growth and to ensure quality impact measurements. We actively engage with the market to promote the development and maintenance of standards that will ensure a high level of transparency and a clear ongoing commitment.

Annual Impact Report

We provide a comprehensive Annual Impact Report for each portfolio to provide evidence of the positive environmental and social impacts of our investments, which includes portfolio alignment with the UN SDGs and an assessment of portfolio greenhouse gas emissions avoided.

To read the LO Funds – Global Climate Bond 2022 Impact Report please click here .

sHaving completed the Verification process, our investment team then constructs and maintains a diverse range of portfolios from this list of eligible securities purely for risk-adjusted return.