Generation IM Global Equity Fund (sub-fund of Generation IM Fund plc)

Section

Summary

No sustainable investment objective

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

While the Fund makes no minimum % commitment to making sustainable investments as defined by SFDR, where the Fund does makes SFDR sustainable investments it will seek to ensure through pre-investment due diligence that such investments:

· do not significantly harm any of the other sustainable investment objectives set out under SFDR, including taking into account the Minimum PAI Indicators referred to in section (b) below,

· are appropriately aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, and

· where relevant (for potentially EU taxonomy-aligned investments), do not significantly harm any of the other sustainable investment objectives set out under the relevant EU Taxonomy category.

Environmental or social characteristics of the financial product

The Fund promotes the following environmental or social characteristics:

· transformational change to drive to a net-zero, prosperous, equitable, healthy and safe society.

· to invest in high‐quality, sustainable businesses run by long‐term orientated management teams.

· to apply the investment process in a manner intended to move away from particular companies where sustainability risks are considered more prevalent.

· to engage with portfolio companies to provide guidance on issues of sustainability where it has insight and expertise and to nurture ambition with the intention of protecting and enhancing the value of portfolio investments.

The definition of these characteristics is a dynamic matter, not binding and has the potential to evolve

Investment strategy

The Fund’s investment strategy integrates sustainability research within a rigorous fundamental equity analysis framework in a long-only concentrated portfolio of global equity securities. The binding elements of the investment strategy of the Fund are set out in ‘investment policy section’ of the Fund’s prospectus, which provides that every investment is assessed on detailed business quality and management quality criteria which considers, where relevant to a company, amongst other things:

· A fair deal: is the company delivering its products/services in a manner that drives long-term satisfaction of its customers without unfair methods of competition?

· Environmental impact: is the company delivering products consistent with a sustainable environment?
· People: is the company compensating its people fairly and managing risks around talent?

· Sustainable consumption: is the company offering products and services consistent with sustainable levels of consumption?

· Data risk: is the company protecting sensitive data from attackers and ensuring customers’ privacy is respected?

· Regulatory regime change: does the company face any material risks from a change to the global geo-political or regulatory environment?

· Unsustainable customers: does the company offer a material amount of products to customers which belong to an unsustainable ecosystem?

Proportion of investments

In normal market conditions the Fund expects to have a minimum of 90% of its assets invested in investments aligned with environmental and social characteristics and a maximum of 10% of its assets invested in other assets.

This is the expectation in normal market conditions, may not though apply in all circumstances, and is subject to any different limits set out in the Fund’s prospectus.

Monitoring of environmental or social characteristics

The key sustainability indicators used to measure the outcome of the actions underlying the attainment of the environmental and social characteristics of the Fund are measured at the portfolio level:

· Carbon emissions intensity

· Global Canopy Forest 500 data (or equivalent deforestation metric determined by Generation)

· Number of companies in Science Based Targets initiative

· Human capital development score (or equivalent social metric determined by Generation)

· % of female board directors

· Existence of independent compensation committee.

These indicators are reviewed by Generation, reported to clients, and, where relevant, inform engagement with companies

Methodologies for environmental or social characteristics

The social and environmental characteristics promoted by the Fund are broad, in line with Generation’s overarching mission as a firm to seek transformational change to drive to a net zero, prosperous, equitable, healthy and safe society, and its long-term investment perspective that fully integrates sustainability research within a rigorous framework of traditional financial analysis. However, the sustainability indicators used to measure the attainment of committed actions underlying the characteristics are a mixture of:

· raw data points (carbon emissions intensity, % of female board directors, existence of an independent compensation committee),

· forward-looking indicators (number of companies in the Science Based Targets initiative)

· third-party assessments of sustainability performance on discrete sustainability issues (Forest 500 score and MSCI ESG Research human capital development score, or equivalent metrics determined by Generation).

Data sources and processing

The data sources used to measure the attainment of committed actions underlying the environmental and social characteristics promoted by the Fund are currently:

· Carbon emissions intensity – the Fund obtains carbon emissions data from a number of ESG data providers and reports data from the provider that is considered to be the most accurate and complete.

· Forest 500 data is provided by Global Canopy.

· The number of companies in the Science Based Targets initiative (SBTi) is sourced from SBTi website disclosures.

· The human capital development score is provided by MSCI ESG Research.

· % of female board directors – the Fund obtains diversity data from a number of ESG data providers and reports data from the provider that is considered to be the most accurate and complete.

· The existence of independent compensation committee is sourced from MSCI ESG Research.

The Fund reserves the right to change data sources if they are considered to be at risk of being inaccurate and substitute them with revised data sources.

Limitations to methodologies and data

The breadth of Generation’s overarching mission makes it hard to quantify the outcomes of all aspects associated with the actions underlying the attainment of the environmental and social characteristics promoted by the Fund. Generation has selected indicators that focus particularly on the transition to net-zero emissions, an end to deforestation, employee development, equity, diversity and inclusion, and independent oversight and control of executive compensation.

There remain significant gaps in corporate sustainability reporting, and a lack of relevant, comparable, reliable and publicly available sustainability data on companies.

Sustainability  (including PAI indicator) data often relies on the data collection and assessment efforts of third parties and delays in accessing disclosures or inaccuracies in the data supplied will be beyond Generation’s control. Even where data is available, its impact and/or interpretation may be disputed. This is particularly the case for sustainability indicators that draw on third-party assessments.

Due diligence

Due diligence carried out on underlying assets of the Fund and the associated internal and external controls on that due diligence, is set out in Generation’s approach to Sustainability in the Investment Process.

Engagement policies

The engagement policies implemented in support of the environmental and social investment strategy, including any management procedures applicable to sustainability-related controversies in investee companies, are set out in Generation’s Stewardship and Engagement Policy.

Designated reference benchmark

While the investment performance of the Fund may be reported against an index as a reference benchmark, Generation has not designated an index as a reference benchmark for the purposes of measuring the attainment of the environmental or social characteristics promoted by the Fund.