BELIEFS

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

PRI SIGNATORY

Vaughan Nelson has been a PRI signatory since 2020. The PRI provides a globally accepted framework for incorporating ESG factors into investment and ownership decisions. Our philosophy of utilizing responsible investment practices to generate well-rounded investment perspectives aligns with the principles for responsible investment. 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. The inclusion of ESG information may provide a more complete picture of investment holdings, contributing 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 incorporated into the overall investment thesis and inform our understanding of an investment’s attractiveness. Our evaluation of ESG considerations will vary for each investment. Because ESG is 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. Put another way, there is no guarantee that ESG criteria will influence all of Vaughan Nelson’s investment decisions.

INVESTMENT EXCLUSIONS

Vaughan Nelson does not apply firm-level exclusionary screens or reflect social or moral values in investment decisions. 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.

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 allow us to constructively influence an issuer’s ESG-related business activities.