The Fund seeks to build aportfolio of high-quality global companies that we assess as having a netpositive alignment with the United Nations Sustainable Development Goals (SDGs)and do not generate revenues from activities we consider incompatible with theobjectives of the Fund, as they may be harmful to society and/or inconsistentwith the achievement of the SDGs. Companies in the fund must be approved by theSustainable Compliance Committee and exceed Alphinity’s minimum ESG criteria.

Society faces significant challenges to achievesustainable development: climate change;socioeconomic issues such as growing disparities inincome, wellbeing and living standards; ageingpopulations, gender inequalities, unemployment; globalhealth threats; natural resource depletion; environmentdegradation and so on. These challenges also bringsome opportunities. We are committed to supportingthose companies which our research shows are doinggood and avoiding those we believe are not.

We seek to invest in global listed companies which have a netpositive alignment with one or more of the 17 UnitedNations Sustainable Development Goals (SDGs), exceedAlphinity’s minimum ESG criteria, and which are alsoidentified as undervalued and within an earnings upgradecycle. This might include activities such as:

• Combating poverty through enhancing food security,improved nutrition and sustainable agriculture (SDG 1No Poverty and SDG 2 Zero Hunger)
• Promoting healthier lives and well-being for all peopleof all ages (SDG 3 Good Health and Wellbeing)
• Providing quality education which is inclusive andequitable (SDG 4 Quality Education)
• Promoting gender equality and diversity (SDG 5Gender Equality)
• Promoting sustainable cities and the development ofsustainable human settlements (SDG 11 SustainableCities and Communities
• Promoting inclusive, and sustainable economic growth,as well as full and decent employment (SDG 8 DecentWork and Economic Growth and SDG 10 ReducedInequalities)
• Building resilient infrastructure, promoting inclusiveand sustainable industrialisation (SDG 9 Industry,Innovation and Infrastructure)
• Promoting sustainable consumption and productionpatterns (SDG 12 Responsible Consumption andProduction)
• Combatting climate change and its impacts (SDG 13Climate Action)
• Promoting affordable, reliable, and sustainable energyproduction (SDG 7 Affordable and Clean Energy)
• Conserving biodiversity, forests, rivers, and the oceansin a sustainable manner (SDG 14 Life under water andSDG 15 Life on land)
• Providing sustainable management of water andsanitation (SDG 6 Clean water and Sanitation)

A company’s alignment with the SDGs is assessed usingan in-house assessment methodology. This methodologyquantitatively aligns the positive and negativecontributions that the company’s products and servicesmakes towards the SDGs to arrive at a net score.

We seek to avoid investing in companies that are involved inactivities we consider incompatible with the objectivesof the fund, as they may be harmful to society and/or inconsistent with the achievement of the UN SocialDevelopment Goals. We therefore have a zero revenuetolerance for producers of tobacco and controversialweapons. We also don’t support companies whichgenerate more than 5% of their revenues (cumulative)from producing or operating in the following areas:

• Fossil fuels (including extraction, production andelectricity production from energy coming from fossilfuels), such as Thermal Coal, Natural Gas and Oil,unless the company has a clear and crediblecommitment to divest from the use of fossil fuelswithin a reasonable timeframe. This divestmentcommitment should also be supported by clearemissions reduction targets and commitments whichare compatible with the Paris Agreement (i.e. net zeroby 2050);
• High-impact fossil fuels such as Coal Seam Gas,Oil Sands and those drilling in Arctic regions, regardlessof any emissions commitments they might make;
• Production of controversial fuels such as Uranium;
• Gold mining, where Gold is the primary purposeof the mine;
• Factory farming, animals in entertainment, live exportsand animal testing for cosmetic products, as well asother activities which are associated with animalwelfare concerns. For healthcare, we tolerate testingonly where necessary, that is where the benefits tohumans are significant and procedures meetinternationally recognised standards. We also requirepolicies related to animal testing are in place;
• Predatory lending and hostile debt collection³;
• Addictions such as Alcohol and Gambling;
• Old growth forest logging and non-RSPO palm oil; and
• Pornography

Companies must be approved by the Global SustainableCompliance Committee to be included in the Fund.The role of the committee is to provide ovesight andgovernance of the investable universe for the Fund andto help ensure compliance with this Charter.  When faced with a ‘grey’ area, the Global SustainableCompliance Committee will assess the matter onits merits and determine whether we can support thecompany’s activities. Companies which meet our stringent conditions are thenassessed against Alphinity’s investment philosophy &process to ensure they are quality, undervalued companiesin or entering an earnings upgrade cycle, and thereforecandidates for our portfolio.

The result is a balanced portfolio of 25-40 companies with attractive investment fundamentals and prospects. Alphinity does not identify with any particular investment style as our approach has proven successful through a number of different market cycles, although the Alphinity process may have a slight bias towards growth.