ESG & Impact Investing In partnership with our investors, we are committed to leaving a legacy of impact investing, which assists in the process of lifting nations out of poverty Impact Investing through sovereign debt Global Evolution, in partnership with our investors, is committed to leaving a legacy of impact investing, which assists in the process of lifting nations out of poverty. Financing the debt that provides macroeconomic sustainability and goes into promoting productivity, and raising infrastructure, such as electricity production, health, water, security, transport, and school systems, has a significant impact on reducing poverty levels. At Global Evolution, we have conducted extensive research into the relationship between sovereign debt investing and Environmental, Social, and Governance (ESG) indicators. There is a clear correlation between the sovereign funding costs and ESG dynamics, with governance, unsurprisingly, the most prevalent. By not integrating ESG dynamics into investment decisions, investors sacrifice essential information. Furthermore, through country visits, we conduct, among other things, extensive on-the-ground dialogue with policy makers discussing strategies to optimize their funding strategies to promote swift and sustainable economic development. REACH OUT The importance of ESG considerations At Global Evolution we recognize the importance of Environmental, Social and Governance (ESG) considerations for investors and advisors globally and continue to help our investors achieve their individual ESG goals. A strong, integrated, and active ESG approach has become a prerequisite for investment managers to operate in today’s market, but certainly also an important selection criteria for many institutional investors. Through our significant quantitative research effort, we have found that there is a strong business case for considering ESG dynamics as part of the investment process. ESG dynamics are statistically correlated with returns – consequently bridging ESG with returns! Global Evolution is an active signatory of UN Principles for Responsible Investment, the UN Global Compact and the Task Force for Climate-related Change. We frequently publishes research on the relevant subjects of ESG dynamics, investment process integration and reports on our progress annually: – 2021 Commuication on Progress UN Global Compact – 2021 TCFD Report Global Evolution achieved the top A+ -rating, scoring 30 out of 30 points, in the UN PRI annual assessment for 2020. REACH OUT Global Evolution's ESG Integration Explained in 3 min. ESG Integration Global Evolution has a strategic commitment to impact investment and ESG sustainability as an integrated part of our approach to investment. In terms of our ESG integration approach, we have incorporated ESG dynamics across our investment process through various proprietary quantitative econometric models. For the full universe of emerging and frontier market countries, we construct proprietary ESG ratings, ESG-adjusted credit ratings, as well as statistical valuation signals for sovereign credit spreads and currencies based on ESG dynamics. We believe we are at the forefront of ESG sovereign research and ESG sovereign investment integration. We continue to play an active role in the public domain through our ESG research agenda and our collaboration with the World Bank, the UN, and other relevant stakeholders. REACH OUT ESG Ratings Global Evolution maintains proprietary ESG ratings for all emerging and frontier market countries across a set of more than 100 E, S and G indicators. Our ESG ratings are calculated in our ESG-simulator which is integrated into our proprietary IT systems and contributes valuable information to the investment process. The ESG Ratings are optimized through simulations of the several variables and weightings and only includes indicators with substantial influence on the sustainable economic and socio-economic development of countries. In that context, the ESG dynamics are linked to long-term sovereign investments through sustainable development. The ESG Ratings serve to inform our investment process and as ongoing input to our quantitative valuation and rating models. REACH OUT Negative Screening Model As part of the sovereign monitoring we operate with a negative screening model that provides a negative watch list for countries due to reasons pertaining to unsustainable levels of governance developments. Key indicators are used as benchmarks, such as: political rights, civil liberties, democracy, corruption, failed state indicators, and whether the international financial institutions are willing to engage with a government. Deteriorations in such indicators may lead to exclusion from the investable universe of countries. We prefer to use the carrot rather than the stick approach to encourage a government to act in a manner which we believe will be beneficial for the majority of its population. However, in the most extreme circumstances of government malfunction, we would not favor a strategy of positive engagement. REACH OUT Valuation and Rating Model Valuation Model: By integrating fundamental macroeconomic, financial and ESG factors into our valuation models, Global Evolution estimates signals for valuations of sovereign credit spreads and currencies. The models are based on panel regression econometrics across the relevant emerging and frontier markets universe and then compares the fundamental fair value of the sovereign credit spreads and currencies with actual market levels. The models simulates over/under/fair valuation signals as well as their statistical significance to inform the investment process as leading indicators for credit spread and currency change. Rating Model: The Rating Model estimates high-frequency credit ratings, and takes advantage of the dynamics of the fundamentals estimated in the Valuation Model, including macroeconomic, financial and ESG factors. Such high-frequency dynamics in fundamentals are applied to adjust the official and low-frequency credit ratings provided by e.g. S&P and Moody’s, and estimate ratings for non-rated countries. Such a proprietary methodology provides a monthly leading indicator for fundamentally deserved credit rating upgrades/downgrades that are not captured in the official credit ratings, and consequently provides the investment process with timely information on sovereign debt valuations. Global Evolution ESG Mega Trends UN PRI annual assessment Principles for Responsible Investment (“PRI”) is a group of signatories who have agreed to adopt and adhere to specific principles for responsible investment. PRI assesses signatories adherence in order to rate them. To be included in the Assessment Report, signatories report on their responsible investment activities by responding to asset-specific modules in the Reporting Framework. Each module houses a variety of indicators that address specific topics of responsible investment. Signatories’ answers are then assessed and results are compiled into an Assessment Report. Additional information regarding the assessment can be found here: www.unpri.org/signatories/about-pri-assessment Global Evolution · E-Mail: em@globalevolution.com · Contact Privacy Policy Order Execution Policy Legal Disclaimer Conflict of Interest Cookie Policy Complaint Policy Whistleblower Policy Statement from the Danish FSA Copyright © 2021 Global Evolution - All rights reserved