SUSTAINABLE INVESTMENT INDEX SOLUTIONS

Selecting the right index
for your sustainable
investment objectives
The future of investment
is sustainable investment

Sustainable investment is key to the successful transition to a world that issustainable, but achieving this critical shift across financial markets requires
committed momentum and conviction. As a global index provider, FTSE Russell,an LSEG business, is a key enabler of this massive, ongoing capital shift.
Based on research that shows a strong correlation between sustainability/ESG consideration and performance – a shift
from previous investor sentiment — today’s institutional investors consider sustainability issues when making major
portfolio allocations. According to our annual Sustainable Investment survey that takes the pulse of global asset owner
thinking, 80% of respondents were implementing or evaluating sustainable investment in 2023.1
For over 20 years, our deep relationships throughout the investment value chain have enabled us to facilitate collaborative
action between issuers, investors and policymakers. Our broad range of indices, data, and analytics cover thousands ofcorporates and the main sovereign issuers globally – a world of investment influence and choice.
We understand that benchmarks and indices need to be designed to meet investors’ diverse sustainability objectives so
our clients can choose anything from a simple ready-made to a sophisticated custom-made index solution.
Sustainable investment considerations are firmly embedded in the investment decision-making process. As a result,asset owners and managers have been moving to integrate sustainability into index designs for new mandates on corepassive portfolios.

“I want to integrate my sustainability
objectives into a simple index design thataligns with my passive investment objectives.”

1. FTSE Russell Sustainable Investment: 2023 global survey findings from asset owners
Selecting the right index for your sustainable investment objectives

2

There is no single
approach to sustainability

Global, multi-asset
capabilities

Whatever your sustainability objectives, FTSE Russell offers a comprehensive range of environmental, socialand governance (ESG) and climate indices. We provide investors with a broad set of tools to measure andanalyse global markets across asset classes, styles or strategies and designed to help investors integrate theirsustainability view into their investment strategies.
These indices, covering thousands of companies and the main sovereign issuers globally, are designed to meet
diverse investor objectives and themes — e.g, climate, ESG, and sustainable factor overlays.
FTSE Russell provides both next-generation and long-serving sustainable investment indices, based on widely
tracked FTSE Russell benchmarks to help clients stay one step ahead.

Proprietary sustainable
investment researchand data models

A strategic partnerwith a comprehensive
and robust sustainable
investment toolkit

Our key sustainable investment principles
Quantitative

Material

Consistent

Trusted indices built with credible
ESG and climate data, quantitative
methodologies, tested frameworks,
and next-generation forward-looking
metrics

Measure and quantify themateriality of ESG and climate
issues based on deep knowledgeof the sustainability challenges

Rules-based methodology allows
for replicable index approaches,building selective portfolios andadherence to market regulationor policy guidance

Selecting the right index for your sustainable investment objectives

Collaborative approach
to index designand construction

Designing andbuilding sustainable
investment indicessince 2001

Independent
sustainable investment
advisory committees3Solutions and expertisefor a changing world
Well-known index families
The FTSE Global Equity Index Series, FTSE UK Index Series, Russell US Indexes, FTSE Fixed Income indices, and FTSE Canada Universe Bond
Index Series reflect how investors see the world as well as their objectives and investment criteria. By defining markets and securities on the basisof quantifiable, measurable attributes, we deliver an unbiased representation of capital markets and a reliable way for investors to gain targeted
exposure to market opportunities.

Rules-based methodology
Our sustainable investment indices are constructed through a transparent, rules-based methodology that includes the versatility required to meet
diverse investor needs.

Open architecture
To fully reflect specific investment strategies, we rely on an open architecture that mobilises the best and most-adapted sustainability data, index
methodologies, and design approach, using our proprietary or third-party data. Data and disclosure are key to any index methodology.

Innovation to capture market developments
Sustainable investment is a fast-evolving space with a widening spectrum of topics to be addressed. Through our team of sustainable investment
experts and our unique index construction capabilities, we innovate continuously to develop index solutions that reflect this evolution. Our presence
in local markets presents opportunities to work directly with investors and apply this collective perspective to index innovation.

Selecting the right index for your sustainable investment objectives

4Index partnerships and client collaboration
We have a culture of working closely with clients, in particular with asset owners, to develop precisely the tools they need, such as indices alignedwith specific climate targets. This collaborative way of working also extends to our index partners who have the industry intellectual property or data
inputs that together build the right indices behind the funds, e.g., the Transition Pathway Initiative (TPI) partnership.

Strong governance
Robust governance, transparency, and integrity have always been at the foundation of our business. To ensure that FTSE Russell indices areconstructed, maintained, and operated to the highest standards, FTSE Russell employs a robust governance framework to approve new indicesand changes to the methodologies of existing indices with specialist decision-making bodies. The framework is supported by independent external
advisory committees formed of market practitioners with specialist expertise on benchmark methodologies, input data, and the underlying market.
This includes the FTSE Russell Sustainable Investment Technical Advisory Committee and the FTSE Russell Sustainable Investment Strategic
Advisory Committee.

Proprietary Target Exposure methodology
Some of our sustainable investment indices are tilted using the innovative Target Exposure methodology to address concerns about liquidity,
capacity, diversification, and turnover. This next-generation factor methodology removes the noise, targets certain exposure or sets objective
outcomes. This may include, for example, a carbon emissions decrease year-on-year such as the FTSE ESG Low Carbon Target Exposure
Indices or FTSE EU Climate Benchmarks Index Series.

Selecting the right index for your sustainable investment objectives

5What else can you expectfrom your sustainable
investment indices?
Looking ahead to meet regulatory requirements

Shaping future decisions on climate investing

We work closely with regulators, policymakers, industry
associations, and other key players within the sector to help
shape the market and support our clients. As a committed
financial services firm, we have contributed considerably
to shaping the sustainable investing environment via our
expertise and connections with the investment community.
As sustainable investment is a fast-evolving environment,
we are constantly innovating to offer new data, analytics
solutions, and indices that will contribute to complying
with upcoming regulations and address emerging trends
in the industry.

Investors are increasingly recognising the impact of climatechange as one of the greatest investment risks — and thetransition to a low-carbon economy as one of the greatest
opportunities — of our times.

We take into account major regulatory developments suchas the EU’s Sustainable Finance Disclosure Regulation (SFDR),EU Climate Benchmark regulation, EU Green Taxonomy, the
FSB Task Force on Climate-Related Financial Disclosures(TCFD), UN Sustainable Development Goals (SDGs), andnational green bond guidelines in Asia.

Selecting the right index for your sustainable investment objectives

As the climate has shifted swiftly to the front and centreof public dialogue, we work closely with the investmentcommunity to provide climate-informed indices.
Our forward-looking data models, index partnerships, andwork with asset owners have led to next-generation indicesin the equity and fixed income asset classes, most notably the
FTSE TPI Climate Transition Index Series, FTSE EU Climate
Benchmarks Index Series, and FTSE Climate Risk-Adjusted
Government Bond Index Series.

6Smart sustainability: overlay of alternative-weighted
methodology
Smart beta strategies offer investors a low-cost meansof taking a view on factors they believe will generateoutperformance over time. By using a series of predetermined
rules, an index can be tilted based on particular factors suchas value, quality, volatility, momentum or yield.
More recently, the smart beta and sustainability trends havecome together. Over the last couple of years we’ve foundthat a growing number of institutional investors are taking theopportunity to integrate certain sustainability parameters –usually climate-related, but sometimes covering other ESG
measures, too – when they award new smart beta mandates.

Selecting the right index for your sustainable investment objectives

Passive doesn’t have to be inactive

Custom index solutions

In terms of investor engagement, sustainable investment
indices are powerful tools for engaging with constituents,
especially in equity portfolios, on their journey towards
sustainability. FTSE Russell plays an important role inproviding visibility on what is expected from these issuers
from a sustainability perspective.

Sustainable investing itself is very diverse and there aredifferent ways of implementing these strategies dependingon the client’s profile and need. Therefore, our index solutions
can be customised to meet a wide variety of clients’ needs,
including buy-side, sell-side, custodians, asset owners,
exchanges, investment consultants, and ETF providers.

Research experts
With around 35 sustainable investment research professionals
making up six sub-teams with sustainability, investing,and data science experience, our multi-disciplinary, crossasset class team publish regular applied finance research,
test and prototype new and next-generation evolving data
and modelling.

7

Meeting your sustainable
investment index needs
What are our clients trying to solve for?
Like us, our clients are trying to scale up their climate and ESG activities

Internal
commitments

External
commitments

Sustainable
investment
regulation

MarketdemandFirstly, looking at an investor’s objectives towards incorporating the risks andopportunities of climate change, we align our indices with three clear climate
investment strategies:
1 Accelerating the green economy
2 Transitioning to a low-carbon economy

Sustainability policies &investment strategies

Net Zerocommitments

EU SFDR, TCFD
reporting

Sustainable investment
product offerings

We define sustainable investment as investment approaches that take into account ESG and/or climate
considerations – forming an umbrella term for topics that can be the source of both investment risks
and opportunities. We simplify our sustainable investment index approach into two core frameworks tomirror our clients’ objectives and convictions.

3 Aligning with external commitments brought on by climate regulations and policies that are
constantly shaping standards

Secondly, again with the investor’s broader view of environmental, social andgovernance issues in mind, we align our indices with three clear ESG investment
strategies:
1 Selective investments including positive and negative screening
2 Integrating ESG into investment strategy with the aim of maintaining financial performance3 Aligning with regulatory objectives with broader ESG considerations, such as the EU’s SFDR andthe UN’s SDGs

Selecting the right index for your sustainable investment objectives

8

FTSE Russell sustainable investment
index framework explained: throughthe lens of the investor objective
FTSE Russell Climate Indices

FTSE Russell ESG Indices

ACCELERATE

TRANSITIONALIGN

SELECTINTEGRATEALIGN

Build investment strategies with
exposure to the green opportunities
generated by climate challenges

Seek exposure in your investment
strategy to securities that might prevail
in a low carbon economy, based on pastand forward looking trends

Align your investment strategy withclimate regulation, reporting, and policy
developments

Build investment strategies based onyour specific exclusions/inclusions needs

Include ESG criteria in yourinvestment strategy

Align your investment strategy withregulations and policies that have ESG/
sustainable objectives

FTSE Global Choice

EquityRussell US ESG

EquityFTSE4Good

EquityFTSE UK ESG Risk-Adjusted

EquityFTSE Blossom Japan

EquityFTSE ESG

EquityFTSE Ping An China
ESG Index Series

EquityFTSE ESG Low Carbon
SelectEquityFTSE Impact Bond

Fixed
IncomeFTSE Women on Boards
Leadership

EquityFTSE Fixed Income
Global Choice

Fixed
IncomeFTSE ESG Gov’t Bond

Fixed
Incometo a green economy

to a low carbon economy

FTSE Environmental Markets

EquityFTSE ex Fossil Fuels

EquityRussell Green America

EquityFTSE EPRA Nareit Green

EquityFTSE Green Impact Bond

Fixed
IncomeFTSE Global Climate

EquityFTSE Smart Sustainability

EquityFTSE TPI Climate Transition

EquityFTSE Climate Risk Adjusted
Gov’t Bond

Fixed
IncomeFTSE Fixed Income ex Fossil
Fuels Enhanced

Fixed
IncomeSelecting the right index for your sustainable investment objectives

investmentswith regulatory objectives

FTSE EU Climate
Benchmarks including
PAB & CTB

EquityFTSE Fixed Income
EU Climate Benchmarks
Index Series

Fixed
IncomeFTSE JPX Net Zero Japan

EquityESG in investment strategy

with regulatory objectives

FTSE Euro Credit SDGAligned Bond (custom)

Fixed
Income9Breaking it down – what’s in an index?
Climate IndicesStandard frameworks

FTSE Environmental Markets

Equity●Russell Green America

Equity●FTSE Green Impact Bond

Fixed Income●

FTSE ex Fossil Fuels

Equity●FTSE EPRA Nareit Green

Equity●FTSE Global Climate

Equity●FTSE Smart Sustainability

EquityFTSE TPI Climate Transition

EquityFTSE Climate Risk Adjusted
Gov’t Bond

Fixed income

FTSE Fixed Income ex Fossil
Fuels Enhanced

Fixed income

FTSE EU Climate Benchmarks

Equity●●FTSE Fixed Income EU Climate
Benchmarks

Fixed income

●

●

●

FTSE JPX Net Zero Japan

Equity●●●Align withregulatory
objectives

Selecting the right index for your sustainable investment objectives

Labelled Bond
Alignment

Transition
Alignment

Fossil Fuel
Reserves

Carbon Emissions

Green Revenues

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Green
Certification

Product
Involvement

Sustainability data inputs
Controversies

Factor Weighted

Accelerate
to a green
economyTransition toa low carbon
economyImplementation
approach
Target Exposure

IndexfeaturesTilted

Asset
Class

Market Cap

FTSE Russell Indices

Decarbonisation
Pathways

Objective

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ESG IndicesStandard frameworks

Selectinvestments

Integrate ESG
in investment
strategy

Align withregulatory
objectives

FTSE4Good

Equity●●●FTSE Blossom Japan

EquityFTSE Ping An China ESG*

Equity●FTSE Impact Bond

Fixed Income●

FTSE Fixed Income Global Choice

Fixed Income●

Russell US ESG

EquityFTSE UK ESG Risk-Adjusted

EquityFTSE ESG

Equity●FTSE ESG Low Carbon SelectEquity●FTSE Women on Boards Leadership

Equity●●FTSE ESG World Government Bond

Fixed Income

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FTSE Euro Credit SDG-Aligned Bond (custom)

Fixed Income

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Labelled Bond
Alignment●

SDG Alignment●

CarbonEmissionsSustainability data inputs
ESG Ratings

Product
Involvement●

Factor
Weighted

EquityTargetExposure

FTSE Global Choice

TiltedAsset Class

Controversies

Implementation
approach

FTSE Russell IndicesMarketCapitalisation

Objective

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Find out more >*Ping An CN-ESG scores
Selecting the right index for your sustainable investment objectives

11Diverse approaches fordiverse needs
What constitutes a view of sustainability within an investment strategy
may vary, as the objective can be different based on investors’ desired
outcomes and convictions.
Whatever your sustainability objectives, we offer a wide range of readymade indices, as well as custom-made indices to include different
regions, countries, industries, sectors, asset classes, data inputs, factors,
sustainability tilts or targeted outcomes.

Building blocks available for index design & construction
Universes (Selection)

EquityFTSE UKFTSE All-WorldFTSE GEIS
Russell US
FTSE China A
Blossom Japan
Fixed Income
FTSE WGBIFTSE WORLDBIGFTSE EUROBIGFTSE USBIG
Thematic
EPRA NAREITFTSE4Good
Global Choice

Selecting the right index for your sustainable investment objectives

Data Inputs

Sovereign
ESG Data& Scores
EnergyUsage

SDG Data
Green
Revenues

Product
Involvement

3rd Party
ESG Data
CarbonEmissionsGreen
Certification

CarbonTrade

Sovereign
SDG
Fossil Fuel
Reserves

Controversies

ESG Data& Scores

SectorReallocation

TargetExposure
MarketCap

Tilting
Factor
Weighted

Decarbonisation
Paths

MarketSentiment

Transition
Alignment

3rd Party
Climate Data

Index Rules & Methodologies

Sovereign
Climate12

Indices can be used by market participants to benchmark the performance of active ESG
funds, as a replacement for core market capitalisation-weighted passive portfolios, and tocreate exchange traded funds (ETF), structured products, and index-based derivatives.

How to access our dataand solutions− Sustainable investment indices as the basis for ETFs and exchange traded products (ETP)Are you looking to implement a sustainable investment view in an ever-changing world?

− Sustainable investment indices as the basis for futures

Discover how to access our data and solutions.

− Sustainable investment indices as the basis for passive mandates

We are empowering clients through:Available for local and global markets− Third-party vendors such as FactSet and Rimes

There’s a sustainable investment index for that …

Our platform of sustainable investment indices cover virtually every investable region andmarket including: Global, Americas, EMEA, and APAC across multiple universes of underlying
indices, as well as multiple asset classes.

− Proprietary channels such as FTSE Russell’s Sustainable Investment Data (SID) platform or
LSEG Data & Analytics Workspace.

Sustainable investment passive assets undermanagement (AUM) are growing: morethan $281 billion in passive AUM track our3sustainable investment indices.

3.	AUM data as of December 31, 2022. These assets include separate accounts, commingled funds, retail andinstitutional mutual funds and ETFs as reported directly from index licensed passive and ETF clients and theirwebsites; third party data sources such as Morningstar and eVestment are used in cases when clients did notreport assets.

Selecting the right index for your sustainable investment objectives

13

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About FTSE Russell (LSEG)FTSE Russell is a leading global provider of index and benchmark solutions,spanning diverse asset classes and investment objectives. As a trusted
investment partner we help investors make better-informed investment decisions,manage risk, and seize opportunities.
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FR2875366/06-23