Top-Down Quality Screens
FINANCIAL SCREENING
SUSTAINABILITY SCREENING
BOTTOM-UP ASSESSMENT
PORTFOLIO CONSTRUCTION
STEP
Include companies with: • a durable competitive position • persistent asset growth • sufficient market liquidity
Exclude companies which: • are involved in harmful activities • display very poor behavior
Detailed company analysis: • value chain position • sustainability drivers • areas for engagement • valuation and upside potential
Risk-controlled portfolio: • tracking error range of 2 – 6% • high-conviction ideas • macro stress tests
Global Universe > 12,500 stocks
~1,300 stocks
~350 stocks
40 – 60 stocks
The team seeks to identify “Transition Winners” in what it considers to be the major “Value Chains” in the modern economy, whose durable competitive advantages are to some extent due to their positive impact on the environment and society through their operations and practices or their products and services—defined and benchmarked by the UN Sustainable Development Goals (SDGs). The team believes that proprietary research is necessary to locate truly sustainable companies with potential for additional alpha. In having a strong integrated sustainability engagement model, the team also engages with companies—not only to look at current sustainability issues, but also to help companies with their transition to more resilient
and more responsible business models, with a focus on innovation and continuous improvement. This strategy is also managed in line with our firmwide commitment to the Net Zero Asset Managers Initiative. The team seeks to have at least 90% of the portfolio’s assets under management (AUM) invested in companies with science-based (“SBTi”) validated targets (or equivalent as assessed by Neuberger Berman’s net-zero sector alignment methodology) by 2030, and aims to reach 100% of the portfolio’s AUM by 2050. Additionally, the team plans to reduce its portfolio’s carbon footprint across scope 1, 2 and material scope 3 GHG emissions by a minimum of 30% by 2030 relative to a 2019 baseline, with a subsequent decline to net zero by 2050.
20 2021 ESG ANNUAL REPORT
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