# Responsible Investment Policy: [Firm or fund name]

> The firm-wide policy for how an asset manager or asset owner takes environmental,
> social and governance (ESG) factors into account: investment beliefs, governance, the
> approaches used (integration, exclusions, stewardship, sustainable and impact
> strategies), sustainability risk assessment, principal adverse impacts, product
> classification and naming, climate commitments, engagement and voting, data and
> anti-greenwashing controls, client sustainability preferences, remuneration,
> monitoring and review. Based on Regulation (EU) 2019/2088 (SFDR) Articles 3 to 9 and
> Commission Delegated Regulation (EU) 2022/1288, Regulation (EU) 2020/852 (Taxonomy),
> Directive (EU) 2017/828 (SRD II) Article 3g, the ESMA guidelines on funds' names using
> ESG or sustainability-related terms, US SEC Rule 206(4)-6 and 29 CFR 2550.404a-1, with
> the UK Stewardship Code 2026 and the Principles for Responsible Investment cited by
> name, as in force in October 2026. Replace every `[bracketed]` value and every row
> marked *Example*. This is a document format, not financial, investment, tax, legal or
> accounting advice. Obtain the standard or law for the normative text.

<!--
Guidance: How to use this template
- Publish a version of this policy on your website if you are an EU
  financial market participant: SFDR Article 3 requires a public policy
  on integrating sustainability risks. Keep internal procedures (data
  vendors, thresholds, desk notes) in an appendix or a separate manual.
- Write the beliefs (section 3) and the approaches table (section 5)
  first; every later section should implement them. A policy that
  promises more than the investment process does is the most common
  source of greenwashing findings.
- Link, do not repeat: Proxy Voting Policy (`compliance/proxy-voting-policy`),
  Stewardship Report (`finance/stewardship-report`), SFDR Principal
  Adverse Impacts Statement (`compliance/sfdr-pai-statement`),
  Marketing Review Checklist (`compliance/marketing-review-checklist`),
  ISSB Sustainability Disclosure (`finance/issb-sustainability-disclosure`)
  for the firm's own corporate reporting.
- Asset owners use this template too: the policy then sits under the
  Investment Policy Statement (Institutional)
  (`finance/investment-policy-statement-institutional`) section 10.
- The worked example is fictional: Kestrel Bay Capital, an SEC-registered
  investment adviser, and its EU affiliate Kestrel Bay Capital Europe, a
  MiFID investment firm. The EU funds named in the example are managed by
  the affiliated management company Kestrel Bay Fund Management
  (fictional, authorised as a UCITS management company and AIFM), with
  Kestrel Bay Capital Europe as delegated investment manager. Holdings such as
  Halvard Tools are fictional. Nothing here is a view on any real security.
- Common pitfall: using one policy for every jurisdiction without noting
  that US plan clients may limit ESG use to risk and return factors while
  EU rules require disclosure of how sustainability risks are integrated.
-->

## Document control

<!-- Guidance: List every legal entity and product range the policy covers, because disclosures are made per entity and per product. -->

| Field | Value |
|---|---|
| Document ID | [RIP-001] |
| Entities covered | [Kestrel Bay Capital (US RIA); Kestrel Bay Capital Europe (EU MiFID investment firm); Kestrel Bay Fund Management (EU UCITS management company and AIFM)] |
| Products covered | [All discretionary mandates and funds; advisory services where stated] |
| Asset classes | [Listed equity, fixed income, private equity, real assets, multi-asset] |
| Version | [1.0] |
| Status | [Draft / Approved / Superseded] |
| Owner | [@head-of-responsible-investment] |
| Approvers/reviewers | [@chief-investment-officer], [@chief-compliance-officer], [@legal-counsel], [@board-or-management-committee] |
| Approved by | [Board or committee] on YYYY-MM-DD |
| Public version published at | [URL] |
| Last updated | YYYY-MM-DD |
| Next review | YYYY-MM-DD (at least annual) |
| Classification | [Public / Internal] |

### Approvals

| Role | Name | Decision | Date |
|---|---|---|---|
| Board or management committee | [Name] | [Approved] | YYYY-MM-DD |
| Chief investment officer | [Name] | [Reviewed] | YYYY-MM-DD |
| Chief compliance officer | [Name] | [Reviewed] | YYYY-MM-DD |
| Responsible investment committee chair | [Name] | [Recommended] | YYYY-MM-DD |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@author] | First draft |
| 1.0 | YYYY-MM-DD | [@author] | Approved; public summary published |

## Contents

- [1. Purpose and scope](#1-purpose-and-scope)
- [2. Regulatory and framework basis](#2-regulatory-and-framework-basis)
- [3. Investment beliefs](#3-investment-beliefs)
- [4. Governance and responsibilities](#4-governance-and-responsibilities)
- [5. Responsible investment approaches by product](#5-responsible-investment-approaches-by-product)
- [6. ESG integration process](#6-esg-integration-process)
- [7. Exclusions and restrictions](#7-exclusions-and-restrictions)
- [8. Sustainability risk assessment](#8-sustainability-risk-assessment)
- [9. Principal adverse impacts](#9-principal-adverse-impacts)
- [10. Product classification and naming](#10-product-classification-and-naming)
- [11. Climate commitments and metrics](#11-climate-commitments-and-metrics)
- [12. Stewardship: engagement, escalation and voting](#12-stewardship-engagement-escalation-and-voting)
- [13. Data, ratings and anti-greenwashing controls](#13-data-ratings-and-anti-greenwashing-controls)
- [14. Client sustainability preferences](#14-client-sustainability-preferences)
- [15. Remuneration](#15-remuneration)
- [16. Monitoring, reporting and review](#16-monitoring-reporting-and-review)
- [17. Glossary and references](#17-glossary-and-references)
- [Standard and licence note](#standard-and-licence-note)

## 1. Purpose and scope

<!-- Guidance: Say why the firm has this policy (fiduciary duty, client demand, regulation) and where it applies. Note any products excluded and why. Pitfall: an "all assets" policy that is not applied to private markets or external sub-advisers. -->

This policy describes how [Firm name] (the "Firm") identifies, assesses and acts on
environmental, social and governance factors in its investment decisions, stewardship
and client reporting. It aims to:

1. Improve risk-adjusted returns for clients by treating financially
   material sustainability factors as part of investment analysis.
2. Meet the sustainability objectives or characteristics that specific
   products promise, and only those.
3. Satisfy the disclosure and conduct rules that apply to each entity.
4. Give clients, regulators and staff a clear and testable description
   of what the Firm does and does not do.

| Scope element | Applies? | Notes *(Example)* |
|---|---|---|
| Discretionary separate accounts | Yes | Client guidelines prevail where stricter or where the client restricts ESG use |
| Pooled funds managed by the Firm | Yes | Product-level commitments in each fund's prospectus or pre-contractual annex |
| Advisory (non-discretionary) services | Partly | Section 14 for preferences; no exclusions applied unless agreed |
| External sub-advisers | Yes | Assessed at selection and annually (section 13) |
| Firm's own balance sheet | [No] | Covered by treasury policy |

**Client instructions.** Where a client's mandate sets different rules, the mandate
governs for that account. For US retirement plans subject to ERISA, the Firm considers
ESG factors only where they are relevant to a risk and return analysis, consistent with
29 CFR 2550.404a-1 and any replacement rule (section 2).

## 2. Regulatory and framework basis

<!-- Guidance: Keep only rows that apply to your entities and products. Cite numbers and dates; do not copy text. Label proposals as proposals. Pitfall: citing withdrawn or vacated proposals as if they were rules. -->

Status as of 2026-10. Check local law and the consolidated texts.

| ID | Jurisdiction | Source | Relevance |
|---|---|---|---|
| REG-001 | EU | Regulation (EU) 2019/2088 (SFDR) Article 3 | Publish policy on integrating sustainability risks in investment decisions (or advice) |
| REG-002 | EU | SFDR Article 4 and Delegated Regulation (EU) 2022/1288 Annex I | Entity statement on principal adverse impacts (PAI) or reasons for not considering them; mandatory for firms or groups above an average of 500 employees; reference period calendar year, published by 30 June |
| REG-003 | EU | SFDR Article 5 | Remuneration policy consistent with integration of sustainability risks |
| REG-004 | EU | SFDR Articles 6, 8 and 9 and Delegated Regulation (EU) 2022/1288 Annexes II to V | Product pre-contractual and periodic disclosures by product type |
| REG-005 | EU | Regulation (EU) 2020/852 (Taxonomy) | Taxonomy alignment disclosure for products with environmental characteristics or objectives |
| REG-006 | EU | ESMA Guidelines on funds' names using ESG or sustainability-related terms (ESMA34-1592494965-657) | 80% threshold of investments meeting the characteristics or objectives, plus exclusions based on the EU climate benchmark rules depending on the term used; existing funds had to comply by 2025-05-21. ESMA does not endorse this template |
| REG-007 | EU | Directive (EU) 2017/828 (SRD II) Article 3g, as transposed | Engagement policy and annual disclosure of its implementation, voting behaviour and significant votes (comply or explain) |
| REG-008 | EU | MiFID II sustainability preferences (Delegated Regulation (EU) 2017/565 as amended by (EU) 2021/1253) and ESMA35-43-3172 | Collect and respect client sustainability preferences in suitability (section 14) |
| REG-009 | EU (proposal) | Commission proposal to revise SFDR ("SFDR 2.0"), COM(2025) 841, November 2025 | Would replace Article 8 and 9 labels with product categories. It is a proposal and not law as of 2026-10: the European Parliament and the Council have adopted their negotiating positions and trilogue negotiations are under way; check the current status |
| REG-010 | US | Investment Advisers Act Rule 206(4)-6 (17 CFR 275.206(4)-6) | Written proxy voting policies, disclosure and records for advisers with voting authority |
| REG-011 | US | 29 CFR 2550.404a-1 (ERISA investment duties) | Risk and return focus for plan assets; proxy voting duties; replacement rulemaking announced 2025 and pending: check current text |
| REG-012 | US | Investment Company Act Rule 35d-1 (Names Rule) as amended in 2023 | 80% investment policy for registered funds whose names suggest a focus, including ESG terms; check compliance dates on sec.gov |
| REG-013 | US | SEC proposals on ESG disclosure for advisers and funds | Withdrawn by the SEC on 2025-06-12; no current obligation from them |
| REG-014 | UK | UK Stewardship Code 2026 (Financial Reporting Council), effective 2026-01-01 | Voluntary signatory regime with annual reporting; FCA rules require asset managers to disclose their commitment to the Code or explain. Cited by name only |
| REG-015 | UK | FCA Sustainability Disclosure Requirements and investment labels regime, including the anti-greenwashing rule | Applies to UK-authorised firms; cited by name only, check the FCA Handbook |
| REG-016 | Voluntary | Principles for Responsible Investment (PRI), six Principles and annual reporting | Signatory commitments; cited by name only |
| REG-017 | [Jurisdiction] | [National rule] | [Relevance] |

## 3. Investment beliefs

<!-- Guidance: State a small number of beliefs the investment teams actually hold and that explain the approaches in section 5. Each belief should be testable. Pitfall: generic statements that any firm could sign. -->

| ID | Belief | How it shows in the process |
|---|---|---|
| BEL-001 *(Example)* | Well-governed companies allocate capital better over a full cycle | Governance score is a required input in every equity and credit model |
| BEL-002 *(Example)* | Climate transition and physical risks are mispriced in some sectors | Sector-specific transition analysis and scenario tests (section 8, 11) |
| BEL-003 *(Example)* | Engagement by long-term owners can improve outcomes more than divestment | Engagement before exclusion except for legal or norm-based bans (section 12) |
| BEL-004 *(Example)* | Clients have different sustainability preferences that must be met precisely | Product range by approach (section 5) and suitability process (section 14) |

## 4. Governance and responsibilities

<!-- Guidance: Name the bodies and roles, their authority and how often they meet. Show where final investment decisions remain. Pitfall: an RI team that owns the policy but has no authority over portfolio managers. -->

```mermaid
flowchart TD
  BOARD["Board or management committee"] --> RIC["Responsible investment committee"]
  RIC --> PM["Portfolio managers and analysts"]
  RIC --> RIT["Responsible investment team"]
  RIT --> PM
  COMP["Compliance"] --> RIC
  RISK["Risk management"] --> RIC
  PM --> CLIENT["Client reporting"]
  RIT --> CLIENT
```

| Task | Board | RI committee | RI team | Portfolio managers | Compliance | Risk |
|---|---|---|---|---|---|---|
| Approve this policy | A | R | C | C | C | C |
| Set exclusion list | I | A | R | C | C | I |
| Integrate ESG in investment decisions | I | I | C | A, R | I | C |
| Engagement and escalation | I | A | R | R | I | I |
| Voting decisions | I | A (policy) | R | C | C | I |
| Product classification and naming | I | A | C | C | R | I |
| Pre-trade and post-trade exclusion checks | I | I | C | I | A, R | C |
| Sustainability risk monitoring | I | I | C | C | I | A, R |
| Marketing and disclosure review | I | I | C | C | A, R | I |

The RI committee meets [quarterly], is chaired by [the CIO], and includes [the head of
RI, two portfolio managers, the CCO and the chief risk officer]. Portfolio managers keep
final decision authority over individual positions within this policy and product rules.

## 5. Responsible investment approaches by product

<!-- Guidance: Use a consistent vocabulary and say exactly which approaches each product range uses. This table drives disclosures and marketing. Pitfall: describing a product as "sustainable" when it uses integration only. -->

| Approach | Definition used by the Firm | Products *(Example)* |
|---|---|---|
| ESG integration | Financially material ESG factors are analysed alongside other factors in valuation and risk; no binding portfolio constraint | All active strategies |
| Firm-wide exclusions | Issuers excluded for legal or norm-based reasons across all products | All products (section 7) |
| Product exclusions | Additional binding exclusions stated in product documents | Kestrel Bay Global Sustainable Equity Fund *(Example)* |
| Binding ESG characteristics | Commitments such as minimum ESG score, carbon intensity below benchmark | Kestrel Bay Euro Credit ESG Fund *(Example)* |
| Sustainable investment objective | Each investment must meet the Firm's sustainable investment test (contribution, no significant harm, good governance) | Kestrel Bay Climate Solutions Fund *(Example)* |
| Impact | Intentional, measurable positive outcomes alongside financial return, with an impact measurement framework | [Private markets impact fund] |
| Stewardship | Engagement and voting to improve long-term value | All products with voting rights or creditor access |

**Sustainable investment test.** For products that commit to a share of sustainable
investments under SFDR Article 2(17), the Firm documents: (a) the contribution
indicators used; (b) how it checks that the investment does no significant harm, using
the PAI indicators in section 9; and (c) the good-governance test for investee
companies. The methodology is in [Appendix or manual reference] and is approved by the
RI committee.

## 6. ESG integration process

<!-- Guidance: Describe the steps per asset class: what data, which analysis, where it enters the decision, and what evidence is kept. Pitfall: an ESG score that is computed but never used in a buy or sell decision. -->

```mermaid
flowchart LR
  U["Investment universe"] --> X["Exclusion screen"]
  X --> M["Materiality map by sector"]
  M --> A["Analyst ESG assessment"]
  A --> V["Valuation and credit view"]
  V --> D["Portfolio decision"]
  D --> E["Engagement plan"]
  E --> MON["Monitoring and controversy alerts"]
  MON --> A
```

| Asset class | Main inputs | Where it enters the decision | Evidence kept |
|---|---|---|---|
| Listed equity | Sector materiality map, company disclosures, third-party data, controversy alerts | Cost of capital or terminal value adjustment; position sizing | Research note section "ESG view" |
| Corporate credit | Governance, transition exposure, controversies | Internal credit rating notch adjustment; spread view | Credit memo field |
| Sovereign debt | Institutional strength, climate vulnerability, social indicators | Country risk score | Country note |
| Private equity | Pre-investment ESG due diligence, value creation plan | Investment committee memo; 100-day plan | Due diligence report, annual portfolio survey |
| Real assets | Physical climate risk, energy efficiency, local community | Capex budget, valuation | Technical due diligence |

**Example** *(Example)*: an analyst covering Halvard Tools, a fictional listed
toolmaker, identifies product safety and supply-chain labour standards as material. The
research note raises the cost of equity by 0.25 percentage points until an audit
programme for tier-1 suppliers is in place, and an engagement objective ENG-014 is
opened (section 12).

## 7. Exclusions and restrictions

<!-- Guidance: For each exclusion give the rationale (legal, norm-based, financial or client-driven), the measure, the threshold, the data source and the scope. Pitfall: thresholds without a defined revenue or activity measure, which make compliance untestable. -->

| ID | Exclusion | Rationale | Measure and threshold *(Example values)* | Scope | Data source |
|---|---|---|---|---|---|
| EXC-001 | Controversial weapons (anti-personnel mines, cluster munitions, chemical and biological weapons) | Legal in several jurisdictions; norm-based | Any involvement | All products | [Vendor] |
| EXC-002 | Companies in severe breach of international norms (UN Global Compact, OECD Guidelines for Multinational Enterprises) without credible remediation | Norm-based; financial risk | Vendor flag "fail" confirmed by RI team review | All products | [Vendor] plus internal review |
| EXC-003 | Thermal coal mining | Transition risk | Revenue share above 10% | Article 8 and 9 products | [Vendor] |
| EXC-004 | Tobacco production | Product policy | Revenue share above 5% | Article 8 and 9 products | [Vendor] |
| EXC-005 | Exclusions linked to EU Paris-aligned benchmark rules (Delegated Regulation (EU) 2020/1818 Article 12(1)(a) to (g)) | Required under the ESMA guidelines for fund names using environmental, impact or sustainability-related terms; ESMA treats "ESG" as including an environmental term | As set in the regulation | Funds using those terms | [Vendor] |
| EXC-005b | Exclusions linked to EU Climate Transition Benchmark rules (Delegated Regulation (EU) 2020/1818 Article 12(1)(a) to (c)) | Required under the ESMA guidelines for fund names using transition, social or governance terms (where no environmental, impact or sustainability term is also used) | As set in the regulation | Funds using those terms | [Vendor] |
| EXC-006 | Sanctioned issuers | Legal | Listed on applicable sanctions lists | All products | Compliance |
| EXC-007 | [Client-specific exclusion] | Client instruction | [Measure] | [Account] | [Source] |

**Implementation.** Exclusion lists are refreshed [quarterly] and coded as hard
pre-trade blocks in [order management system]. A holding that becomes excluded is sold
within [90] days unless the RI committee approves an extension for liquidity reasons,
recorded in the exceptions log.

## 8. Sustainability risk assessment

<!-- Guidance: Explain how sustainability risks (events that could cause a material negative effect on value, as defined in SFDR Article 2(22)) are identified and measured at issuer and portfolio level, and how the result is disclosed in product documents under SFDR Article 6. Pitfall: listing risks without measuring their likely effect on returns. -->

| Step | Method | Output |
|---|---|---|
| Identify | Sector materiality map; controversy alerts; physical hazard maps for real assets | Issuer risk flags |
| Measure | Scores and indicators; climate scenario analysis with transition and physical pathways | Portfolio risk metrics |
| Assess effect on return | Qualitative rating of likely impact on product returns (low, medium, high) with reasons | Pre-contractual statement under Article 6 |
| Manage | Position limits, engagement, hedging where possible | Actions log |
| Monitor | Quarterly risk report to RI committee | Trend and limit breaches |

| Product | Main sustainability risks *(Example)* | Likely impact on returns *(Example)* |
|---|---|---|
| Global equity | Transition risk in energy and materials holdings; governance failures | Medium |
| Euro credit | Transition risk for high emitters with refinancing needs | Medium |
| Infrastructure | Physical risk (flood, heat) to assets | Medium to high |
| Government bonds | Climate vulnerability of issuers | Low |

**Climate scenarios.** The Firm runs [an orderly transition, a disorderly transition and
a hot-house world] scenario for each product at least [annually] using [named scenario
set and version], and reports the estimated value change.

## 9. Principal adverse impacts

<!-- Guidance: State whether the entity considers PAI under SFDR Article 4 and, if so, which indicators it prioritises and what actions follow. Detailed figures go in the PAI statement. Pitfall: claiming to consider PAI without any action linked to the indicators. -->

**Entity position.** [Kestrel Bay Capital Europe considers principal adverse impacts of
its investment decisions on sustainability factors and publishes its statement by 30
June each year for the previous calendar year.] The statement follows the SFDR Principal
Adverse Impacts Statement template (`compliance/sfdr-pai-statement`).

**Indicators.** The Delegated Regulation sets 18 mandatory indicators (14 for investee
companies, 2 for sovereigns and supranationals, 2 for real estate) plus at least one
additional environmental and one additional social indicator chosen by the firm.

| Priority | Indicator group *(Example)* | Action linked |
|---|---|---|
| 1 | Greenhouse gas emissions and intensity | Climate targets (section 11); engagement with top emitters |
| 2 | Violations of international norms | EXC-002 exclusion and engagement |
| 3 | Board gender diversity | Voting policy on board composition |
| 4 | Exposure to controversial weapons | EXC-001 exclusion |
| 5 | [Additional social indicator chosen] | [Action] |

## 10. Product classification and naming

<!-- Guidance: Describe how a product is classified, who approves the classification and the naming rules. Keep the decision record. Pitfall: changing a product's classification in marketing before the legal documents change. -->

```mermaid
flowchart TD
  S["New or changed product"] --> Q1{"Sustainable investment objective?"}
  Q1 -- "Yes" --> A9["Article 9 disclosures"]
  Q1 -- "No" --> Q2{"Promotes environmental or social characteristics with binding elements?"}
  Q2 -- "Yes" --> A8["Article 8 disclosures"]
  Q2 -- "No" --> A6["Article 6 disclosures only"]
  A9 --> N{"Name uses ESG or sustainability terms?"}
  A8 --> N
  N -- "Yes" --> T["Apply ESMA names test and exclusions"]
  N -- "No" --> R["Compliance approval"]
  T --> R
```

| Product | SFDR classification *(Example)* | Binding elements *(Example)* | Name test *(Example)* | Approved |
|---|---|---|---|---|
| Kestrel Bay Global Sustainable Equity Fund | Article 8, minimum 50% sustainable investments | EXC-001 to EXC-005; WACI at least 20% below benchmark | At least 80% meets characteristics; sustainable term used, so a meaningful share of sustainable investments is expected (ESMA Q&A: below 50% is unlikely to be meaningful) and Paris-aligned benchmark exclusions apply | YYYY-MM-DD |
| Kestrel Bay Euro Credit ESG Fund | Article 8 | EXC-001 to EXC-005; minimum average ESG score | At least 80% meets characteristics; "ESG" is treated as an environmental term, so Paris-aligned benchmark exclusions apply | YYYY-MM-DD |
| Kestrel Bay Climate Solutions Fund | Article 9 | 100% sustainable investments except cash and hedging | Environmental term: EU Paris-aligned benchmark exclusions apply | YYYY-MM-DD |
| Kestrel Bay Global Equity Fund | Article 6 | Firm-wide exclusions only | No ESG term in name | YYYY-MM-DD |

**Applying the names test.** Classify every term in the fund name before launch and at
each name change: environmental, impact and sustainability-related terms (and "ESG",
which contains an environmental term) take the Paris-aligned benchmark exclusions in
EXC-005; transition, social and governance terms take the Climate Transition Benchmark
exclusions in EXC-005b. Test the 80% threshold on the investments used to meet the
characteristics or objectives, using the same calculation as the pre-contractual
disclosure, and record the calculation, the data date and the reviewer. A temporary fall below the
threshold that is not caused by a deliberate choice of the portfolio manager is treated
as a passive breach and corrected in the best interests of investors; a deliberate
breach is escalated to the RI committee and compliance at once. Keep the ESMA
supervisory Q&A on the guidelines under review, because supervisors have used it to
narrow how terms are classified.

**US funds.** For registered funds whose names include ESG terms, the Firm adopts the
80% investment policy required by Rule 35d-1 and defines the term in the prospectus.

**SFDR 2.0.** If the proposal is adopted, the Firm will map each product to the new
categories and update this section. Until then, the current Article 6, 8 and 9
disclosures apply.

## 11. Climate commitments and metrics

<!-- Guidance: Give targets with a base year, scope, metric and interim milestones, and say how they are reached (portfolio construction, engagement) and what happens if they are missed. Pitfall: a long-term net zero promise with no interim target or method. -->

The weighted average carbon intensity (WACI) of a portfolio is:

$$
\text{WACI} = \sum_{i=1}^{n} w_i \times \frac{E_i}{\text{Rev}_i}
$$

where $w_i$ is the weight of issuer $i$ in the portfolio (or sleeve), $E_i$ its scope 1
and 2 emissions in tonnes CO2e and $\text{Rev}_i$ its revenue in EUR million.

| Holding *(Example)* | Weight | Emissions (tCO2e) | Revenue (EUR m) | Intensity (t/EUR m) | Contribution |
|---|---|---|---|---|---|
| Halvard Tools (fictional) | 40% | 450,000 | 3,000 | 150 | 60.0 |
| [Issuer B] | 35% | 30,000 | 1,500 | 20 | 7.0 |
| [Issuer C] | 25% | 500,000 | 1,000 | 500 | 125.0 |
| **Portfolio** | **100%** | | | | **192.0** |

With a benchmark WACI of 210 t/EUR m, the example sleeve is 8.6% below the benchmark
((210 minus 192) / 210).

| ID | Commitment *(Example)* | Base year | Interim target | Method |
|---|---|---|---|---|
| CLM-001 | Reduce WACI of in-scope listed equity and credit | YYYY | 50% lower by 2030 | Portfolio construction and engagement |
| CLM-002 | Share of financed emissions from issuers with science-based or credible transition plans | YYYY | 70% by 2030 | Engagement (section 12) |
| CLM-003 | Increase investment in climate solutions | YYYY | EUR [x]m by 2030 | Product range |
| CLM-004 | Report scope 3 emissions where data quality allows | YYYY | Disclose with data quality score | Reporting |

Report progress annually with data coverage and quality notes. Where an interim target
is missed, the RI committee records the reasons and the corrective plan.

## 12. Stewardship: engagement, escalation and voting

<!-- Guidance: Set objectives per engagement, timelines and an escalation ladder. Make voting consistent with engagement. Pitfall: counting meetings instead of outcomes. -->

**Engagement.** The Firm selects engagement targets by [size of holding, severity of
issue, likelihood of success] and sets a specific objective, milestones and a deadline
for each.

| ID | Issuer | Topic | Objective | Start | Milestone | Status |
|---|---|---|---|---|---|---|
| ENG-014 *(Example)* | Halvard Tools (fictional) | Supply-chain labour standards | Independent audits of all tier-1 suppliers published | YYYY-MM-DD | Policy adopted by YYYY-MM-DD | In progress |
| ENG-021 *(Example)* | [Issuer C] | Transition plan | Publish interim emissions targets and capex plan | YYYY-MM-DD | Targets published | Achieved |

**Escalation ladder.**

1. Private meeting with management and investor relations.
2. Letter to the chair or lead independent director.
3. Collaborative engagement with other investors, subject to competition
   and acting-in-concert rules.
4. Vote against relevant directors or items at the general meeting.
5. Public statement or filing of a shareholder resolution.
6. Reduce or sell the position, or add to the exclusion list, by RI
   committee decision.

**Voting.** Voting follows the Proxy Voting Policy (`compliance/proxy-voting-policy`),
which meets Rule 206(4)-6 for the US adviser and SRD II Article 3g for the EU entity.
Votes are cast for all holdings where practicable; securities on loan are recalled for
votes the Firm considers significant. Annual results, significant votes and engagement
outcomes are published in the Stewardship Report (`finance/stewardship-report`).

**Conflicts.** Engagement and voting conflicts (for example, an issuer that is also a
client) are managed under the Firm's conflicts policy and recorded.

## 13. Data, ratings and anti-greenwashing controls

<!-- Guidance: Show that every sustainability claim can be evidenced. Treat ESG data as a model input with known gaps. Pitfall: relying on one vendor score without understanding its method or coverage. -->

| ID | Control | Owner | Frequency |
|---|---|---|---|
| CTL-001 | Due diligence on ESG data vendors: method, coverage, update frequency, conflicts | RI team | At selection and annually |
| CTL-002 | Coverage and estimation flags reported with every metric | RI team | Each report |
| CTL-003 | Pre-trade exclusion blocks; post-trade breach report | Compliance | Daily |
| CTL-004 | Review of all sustainability-related marketing and client materials against product documents | Compliance | Each item, using the Marketing Review Checklist (`compliance/marketing-review-checklist`) |
| CTL-005 | Annual test that each Article 8 and 9 product met its binding elements | Risk | Annual |
| CTL-006 | Sub-adviser RI assessment and monitoring | Investment due diligence | Selection and annual, recorded in the Manager Due Diligence Report (`finance/manager-due-diligence-report`) |
| CTL-007 | Records of ESG analysis for each investment decision | Portfolio managers | Ongoing; sampled quarterly |

**Wording rules.** Do not use "sustainable", "green", "impact", "net zero" or similar
terms for a product, strategy or holding unless the product documents contain the
binding commitments that justify the term. Statements about outcomes must be specific,
supported by data and dated.

## 14. Client sustainability preferences

<!-- Guidance: Describe how preferences are collected, matched and recorded in advice and portfolio management. Link to the suitability documents. Pitfall: asking about preferences but offering no product that matches them, without recording the client's choice to adapt. -->

For EU clients receiving investment advice or portfolio management, the Firm collects
sustainability preferences as part of the suitability assessment, after the client's
knowledge and experience, financial situation and objectives are known. Preferences are
recorded as: a minimum share of Taxonomy-aligned investments; a minimum share of
sustainable investments; and principal adverse impacts to be considered, with the
qualitative or quantitative elements the client chooses.

If no product matches the preferences, the Firm explains this to the client, and the
client may adapt the preferences; the explanation and the decision are recorded. The
process is documented in the Client Risk Profile (`finance/client-risk-profile`) and
MiFID Suitability Report (`compliance/mifid-suitability-report`). US clients may give
written restrictions or preferences in their investment guidelines.

## 15. Remuneration

<!-- Guidance: Explain how pay supports this policy without rewarding excessive sustainability risk-taking or greenwashing. SFDR Article 5 requires this information to be published. -->

The Firm's remuneration policy is consistent with the integration of sustainability
risks: [portfolio manager variable pay is assessed on multi-year risk-adjusted
performance, which includes the effect of sustainability risks; a qualitative modifier
reflects adherence to this policy and product commitments; breaches of exclusion or
product rules can reduce variable pay]. The public summary is published at [URL].

## 16. Monitoring, reporting and review

<!-- Guidance: List the KPIs the RI committee reviews and the public and client reports produced. Pitfall: a policy reviewed only when regulation changes. -->

| KPI *(Example)* | Target | Current | Source |
|---|---|---|---|
| Share of assets under management covered by ESG integration evidence | 100% of active strategies | [x]% | CTL-007 sampling |
| Exclusion breaches (active) | 0 | [x] | CTL-003 |
| Engagements with objective achieved in the year | [30]% of closed engagements | [x]% | Engagement log |
| Votes cast as a share of votable meetings | At least 98% | [x]% | Voting platform |
| WACI reduction versus base year (CLM-001) | On track for 50% by 2030 | [x]% | Section 11 |
| Data coverage for PAI indicators | At least 85% | [x]% | Vendor |

| Report | Audience | Frequency | Basis |
|---|---|---|---|
| PAI statement | Public | Annual by 30 June | SFDR Article 4 |
| Periodic product reports (Article 8 and 9 annexes) | Investors | Annual with fund report | SFDR Article 11 |
| Stewardship report | Public, clients | Annual | SRD II Article 3g; UK Stewardship Code 2026 |
| Proxy voting record | Public, clients | Annual or on request | Rule 206(4)-6; SRD II |
| RI committee report | Board | Quarterly | This policy |
| Client ESG reports | Clients | Quarterly | Mandate |

**Review.** This policy is reviewed at least annually, and when law, product range or
methodology changes materially. Each review is recorded in the revision history.

**How to review this policy.** Start from evidence, not from the text. Sample investment
decisions from each strategy and check that the ESG view in the research record actually
changed a valuation, rating, position size or engagement plan; take every product with
binding elements and test the year-end portfolio against them; and compare the public
policy, the product documents, the website and recent marketing for the same claim. Ask
the RI committee to approve the findings and the changes in one paper, so that the
public version, the internal manual and the product documents move together.

**Common errors.** The errors supervisors most often find are: an exclusion threshold
stated in the policy but coded differently in the order management system; an Article 8
product whose binding elements are so loose that the benchmark already meets them; PAI
indicators "considered" with no action ever taken on them; climate targets reported
without data coverage, so a rise in coverage looks like progress; engagement counted by
meetings rather than by objectives achieved; and fund names changed in marketing before
the legal documents. Each control in section 13 exists to catch one of these, so a
failed control test should lead to a correction of the process as well as the record.

## 17. Glossary and references

<!-- Guidance: Define terms the way this policy uses them, and record the version of each source consulted. -->

### 17.1 Glossary

| Term | Meaning |
|---|---|
| ESG integration | Including financially material environmental, social and governance factors in investment analysis |
| Exclusion | A binding rule that prevents investment in certain issuers or activities |
| PAI | Principal adverse impacts: negative effects of investment decisions on sustainability factors |
| Stewardship | Responsible allocation, management and oversight of capital through engagement and voting |
| Sustainability risk | An ESG event or condition that could cause a material negative effect on the value of an investment |
| Sustainable investment | An investment that contributes to an environmental or social objective, does no significant harm and follows good governance, as defined in SFDR Article 2(17) |
| Taxonomy-aligned | Economic activity meeting the technical screening criteria of the EU Taxonomy |
| WACI | Weighted average carbon intensity: portfolio-weighted emissions per unit of revenue |

### 17.2 References

| Reference | Version or date | Use |
|---|---|---|
| Regulation (EU) 2019/2088 (SFDR) | OJ L 317, 9.12.2019, as amended | REG-001 to REG-004 |
| Commission Delegated Regulation (EU) 2022/1288 | OJ L 196, 25.7.2022, as amended | PAI indicators, product templates |
| Regulation (EU) 2020/852 (Taxonomy) | OJ L 198, 22.6.2020, as amended | REG-005 |
| Commission Delegated Regulation (EU) 2020/1818 | Article 12(1) | EXC-005 |
| ESMA Guidelines on funds' names using ESG or sustainability-related terms | ESMA34-1592494965-657 (2024) | REG-006 |
| Directive (EU) 2017/828 (SRD II) | OJ L 132, 20.5.2017 | REG-007 |
| ESMA Guidelines on certain aspects of the MiFID II suitability requirements | ESMA35-43-3172 (2023) | Section 14 |
| 17 CFR 275.206(4)-6 | Current | REG-010 |
| 29 CFR 2550.404a-1 | 87 FR 73822 (2022); replacement pending as of 2026-10 | REG-011 |
| UK Stewardship Code 2026 | Effective 2026-01-01 (name only) | REG-014 |
| Principles for Responsible Investment | Name only | REG-016 |
| Related templates | This library | `compliance/proxy-voting-policy`, `finance/stewardship-report`, `compliance/sfdr-pai-statement`, `compliance/marketing-review-checklist`, `finance/client-risk-profile`, `compliance/mifid-suitability-report` |

## Standard and licence note

Based on public law and regulatory guidance: Regulation (EU) 2019/2088, Commission
Delegated Regulations (EU) 2022/1288 and 2020/1818, Regulation (EU) 2020/852 and
Directive (EU) 2017/828 (EUR-Lex, reuse with acknowledgement); the ESMA guidelines on
fund names and on MiFID II suitability (reuse with acknowledgement; ESMA does not
endorse this template); and US federal rules 17 CFR 275.206(4)-6, 29 CFR 2550.404a-1 and
Rule 35d-1 (public domain). Article and rule numbers are cited and obligations are
summarised in original wording. The UK Stewardship Code 2026, the FCA sustainability
rules and the Principles for Responsible Investment are cited by name only, and this
template is not affiliated with or endorsed by the Financial Reporting Council, the FCA
or PRI. The structure and text are original. Check the current official versions, the
consolidated texts and the status of SFDR 2.0 and the US Department of Labor rulemaking
before use. This is a document format, not financial, investment, tax, legal or
accounting advice. Template licence: MIT.