Appendix 2: The Investment Spectrum and Sustainable Investing

Historically, a multitude of terms have been used to describe investing that incorporates social, environmental, and ethical considerations along with pure financial considerations. Everlake incorporates the business of Ethical Financial which was established in 1997 with the objective of offering socially responsible investment solutions. We are committed to our ethical heritage. In the meantime, terminology has evolved.

We now use the term Sustainable Investing as our preferred term for investing that:

• Focuses on long-term returns through consideration of pertinent ESG risks & opportunities

• Achieves sustainability outcomes (for example investing in renewable energy)

• Reflects a particular set of values or beliefs

While there are many forms of Sustainable Investing, we think it is useful to categorise them into three general categories: Stewardship & ESG Integration, Sustainability Focus and Exclusions and Impact Investing – highlighted in the diagram below.

Stewardship & ESG Integration

“Stewardship is the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.” 7

ESG refers to the Environmental, Social and Governance characteristics of a company or business. The facets of the business contribute to the risks and opportunities it is exposed to now and in the future. ESG integration is “The systematic and explicit inclusion of material ESG factors into investment analysis and investment decisions”.8

ESG Integration does not prohibit any specific investments as long as material ESG risks are identified and taken into account as part of the investment decision.

7 According to the Financial Reporting Council in the UK Stewardship Code 2020. 8 As defined by UN PRI.

Sustainability Focus & Exclusions

“Investment approaches that select and include investments on the basis of their fulfilling certain sustainability criteria and/or delivering on specific and measurable sustainability outcomes). Investments are chosen on the basis of their economic activities (what they produce/what services they deliver) and on their business conduct (how they deliver their products and services).”9

There are different types of sustainability focused strategies. Examples include:

• “Sustainability Themed Investing” focuses on companies that provide solutions to sustainability problems (such as pollution prevention or climate change mitigation).

• “Best in Class” focuses on using some sustainability criteria (perhaps lowest carbon users and producers) to focus exposure on sector-leading companies.

• “Positive Tilt” overweights investments that fulfil certain sustainability criteria and underweights others relative to an index

Exclusions (also referred to as negative screening) is the predominant approach of many ethical funds. There are many different types of exclusion including:

• Ethical/values-based/religious (e.g., alcohol, firearms, tobacco)

• Norms-based (e.g., companies involved in human rights violations / corruption)

• Poor sustainability (e.g., oil companies)

• ESG assessment (e.g., worst rated ESG companies)

Impact Investing

Impact investing represents “Investing made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”10

Impact investments intentionally contribute to social and environmental solutions. This differentiates them from other strategies such as ESG integration, stewardship and exclusions. Often one of the positive impacts sought will be one of the UN’s Sustainable Development Goals. An important part of impact investing is promoting its use more widely amongst the general investing community. According to the Global Impact Investing Network (GIIN) the other key elements of impact investing are:

• “Intentionality”: Impact investments intentionally contribute to social and environmental solutions. This differentiates them from other strategies such as ESG integration, stewardship and exclusions.

• “Financial Returns”: Impact investments seek a financial return on capital that can range from below market rate to risk-adjusted market rate. This distinguishes them from philanthropy.

• “Range of Asset Classes”: Impact investments can be made across asset classes including bonds, private investments or listed equities.

• “Impact Measurement”: A hallmark of impact investing is the commitment of the investor to measure and report the social and environmental performance of underlying investments. Often the positive impact sought will be on one of the UN’s Sustainable Development Goals.

Philanthropy

Many people are motivated by the desire to promote the welfare of others, expressed especially by the generous donation of time and money to good causes. This can be facilitated by means of ongoing support or as part of a legacy.

9 Adapted by IA from Global Sustainable Investment Alliance (GSIA) definitions. 10 Global Impact Investing Network (GIIN)

The purpose of this guide is to provide investors approaching retirement with an understanding of their retirement options and some of the more important issues to consider.

It also sets out generic guidelines for advisers seeking to advise their clients on retirement planning matters.

Clients looking to access their retirement plans have a number of options available to them and should make some key decisions well before reaching retirement. These decisions are complicated and best served by a discussion with a qualified and experienced financial adviser.

Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. In any event that the content of this brochure may conflict with an individual’s unique personal circumstances, the client’s circumstances should be weighed more heavily.

Advisers are expected to use their Professional skill and judgement to resolve any conflicts between the content of this brochure and a particular client’s requirements.

Although this guide is intended to deal with the main questions facing those about to retire in general terms. As such, it does not attempt to cover every issue which may arise on the subject. It does not purport to be a legal interpretation of the statutory provisions and consequently, responsibility cannot be accepted for any liability incurred or loss suffered as a result of relying on any matter published in it.

The information provided in this brochure has been obtained from sources which we believe to be reliable and is based on our understanding of Irish Tax legislation at the time of writing (October 2022). We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk.

The rates and bases of taxation may change in the future. We recommend that you obtain specific tax advice for your own personal situation.

It should be noted that we are not tax consultants, but we will refer you to a suitably qualified tax consultant on request.

As with any investment strategy, there is potential for profit as well as the possibility of loss. Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors’ interests.

Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies.

We do not guarantee any minimum level of investment performance or the success of any model portfolio or investment strategy. All investments involve risk and investment recommendations will not always be profitable. Fermat Point Ltd trading as Everlake is regulated by the Central Bank of Ireland. The Central Bank of Ireland does not regulate tax advice.