BELIEFS

Vaughan Nelson believes that environmental, social, and governance (ESG) risks and opportunities can affect portfolio performance. We seek to develop informed investment views by integrating material ESG insights alongside traditional financial research.

PRI SIGNATORY

Vaughan Nelson has been a signatory to the UN Principles for Responsible Investment (PRI) since 2020. The PRI is a global proponent of responsible investment and outlines six principles with the objective of encouraging investors to adopt responsible investment practices. The principles are voluntary and aspirational, offering a menu of possible actions for incorporating ESG issues into investment practices. Our investment and ownership philosophy are directionally aligned with the PRI’s mission. Consistent with our fiduciary responsibilities, we seek to implement the PRI’s principles with the goal of meeting our client’s investment objectives. Because the PRI’s principles represent only general goals, they may not be fully implemented, or may be implemented differently, for each strategy.

ESG INTEGRATION

Vaughan Nelson recognizes that ESG factors can influence intrinsic value and can be important contributors of investment returns. ESG information may provide a more complete picture of investment holdings and contribute to more informed investment decisions. Our approach is centered around materiality, with the objective of identifying and evaluating factors that impact long-term financial value. The materiality of ESG issues varies based on company-specific characteristics, such as industry, region, and time horizon; therefore, ESG factors are evaluated case-by-case based on factors deemed material to the company’s business model and value drivers. Relevant insights are integrated into the overall investment thesis and help to inform our understanding of an investment’s attractiveness. Our evaluation of ESG considerations will vary for each investment. Unless the pursuit of ESG-related goals is expressly stated as the investment objective of a client, ESG is generally treated as only one of many considerations that we take into account when making investment decisions. Other considerations may outweigh ESG considerations with respect to any investment, and Vaughan Nelson may make investments in cases where it has limited or no ability to evaluate or manage ESG considerations.

INVESTMENT EXCLUSIONS

Vaughan Nelson does not apply firmwide exclusionary ESG screens. Instead, we view our ESG approach as an opportunity to mitigate risks by analyzing and monitoring relevant issues and circumstances as they are presented. However, we are positioned to accommodate client-specific values, beliefs, and socially responsible investing (“SRI”) preferences through the application of client-directed SRI screens. We may also manage client accounts pursuant to client-imposed ESG guidelines, restrictions, targets, or parameters.

STEWARDSHIP

Stewardship is an important element of our commitment to delivering attractive investment returns for clients. As an active manager, we are positioned with ownership responsibilities. Our obligation is to preserve and enhance the long-term value of assets for clients and beneficiaries, and stewardship practices can help us to constructively influence an issuer’s ESG-related business activities.