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SDG1 Analytics for Investor PortfoliosAligning Investments with Sustainability GoalsIn 2015, the United Nations developed a blueprint for achieving peace and prosperity for people and the planet by 2030 in the form of 17 global goals and 169 targets for sustainable development. Bridging the estimated $2-3 trillion SDG-financing gap requires private sector assistance.2 Trucost’s SDG Analytics quantitatively measure the SDG alignment of a company’s products and services, allows investors to benchmark companies against each other in terms of their SDG performance, and offers portfolio-level metrics to measure risk exposure and SDG-alignment.

SDG alignment where it matters mostWhen comparing the top SDGs reported from companies, Trucost found that corporate reporting is often misaligned with SDG risk exposure.3 Analyzing the SDG exposure of the S&P 500®, Trucost found the most reported SDGs to be Good Health and Well-Being (SDG 3), Decent Work and Economic Growth (SDG 8), and Responsible Consumption and Production (SDG 12), while the highest risk exposure related to financial secrecy (SDG 17: Partnership for the Goals), land pollution and deforestation (SDG 15: Life on Land), and water overconsumption and pollution (SDG 6: Clean Water and Sanitation). Data analysis is an essential component for understanding SDG risk and positive impact across a company’s operations and supply chains.

3,500 companies covered, covering the total S&P LargeMid Cap Universe and representing

83% global market cap*

464 product and service types across over

164+ positive impact categories (aligned with the SDG Taxonomy)

189 countries covered across

45 SDG risk exposure metrics

1 Sustainable Development Goal2 “Report: Better Business, Better World.” Better Business, Better World, Business & Sustainable Development Commission (BSDC), Jan. 2017, report.businesscommission.org/report.3 “Sustainable Development Goals (SDGs): A Misunderstood Market Opportunity.” Trucost, part of S&P Global, Dec. 2019. * Coverage as of December 2019

Most reported

Most SDG exposure

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SDG Positive Impact

• SDG-aligned revenue ($)

• Positive Impact Intensity Contribution (%)

• SDG Additionality Contribution (%)

SDG Additionality

Additionality “boost” based on country of sales

SDG Investor HeatmapThe SDG Investor Heatmap indicates the percentage of overlap between a portfolio’s current coverage and where SDG investment is needed most. SDG need is determined by the SDG Index developed by the Sustainable Development Solutions Network. Trucost analyzes a portfolio’s geographic reach and investment volume, and provides the overlap between current investment and SDG need.

No

Revenue portion is not SDG-aligned

Positive ImpactTrucost evaluates the positive impact on the SDGs related to revenue based on a two-step process:

1. SDG-Aligned Revenue: Evaluating the share of revenue derived from products, services, and technologies that contribute to SDGs. SDG-aligned revenue is determined according to the Trucost SDG Positive Impact Taxonomy, which is a database of products and services that align with specific SDG targets.

2. SDG Additionality: Weighting SDG-aligned revenue based on the level of need4 for solutions to the SDGs in the company’s key markets. Trucost applies an SDG Impact weighting to reflect the additional benefit, or SDG Additionality, associated with delivering products and services in those geographies where they are most needed.

Understanding Trucost’s Analysis for SDG Integration

Company in Portfolio SDG Positive Impact Taxonomy

Yes

• Revenue by type

• Revenue by Geography

Is product or service in the SDG Positive Impact Taxonomy?

4 Sustainable Development Report 2019: Transformations to Achieve the Sustainable Development Goals. Sustainable Development Solutions Network (SDSN). June 28, 2019. https://www.sdgindex.org/

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SDG Exposure Metrics

SDG Risk Exposure

* indicates metrics that apply to multiple SDGs ^ indicates metrics applicable to selected sectors4 Sustainable Development Report 2019: Transformations to Achieve the Sustainable Development Goals. Sustainable Development Solutions Network (SDSN). June 28, 2019. https://www.sdgindex.org/

A company’s SDG performance is specific to industry and the geographic distribution of its value chain — where it sources its materials and sells its products. Trucost’s SDG-Extended Multiregional Input-Output Model (SDGI-O) analyzes the economic flows and associated baseline exposure to SDG-related risks across countries and sectors globally. Trucost assesses a company’s risk exposure from direct and indirect risks on the SDGs (such as greenhouse gas emissions in the supply chain) or the risk that a company may be dependent on practices and activities that conflict with the SDGs (such as child labor or underpayment of wages). Trucost has identified 45 unique metrics linked to the 17 SDGs that aim to represent corporate exposure to each SDG.

SDG 1: No Poverty • Poverty• Fair Wage

• Indigenous Rights*

SDG 2: Zero Hunger • Undernutrition • Agriculture Practices^

SDG 3: Good Health and Well-Being • Communicable Disease• Non-Communicable Disease• Healthcare Access

• Air Pollution*• Land and Water Pollution*

SDG 4: Quality Education • Education Access

SDG 5: Gender Equality • Gender Equity*

SDG 6: Clean Water and Sanitation • Water Consumption• Water Pollution

SDG 7: Affordable and Clean Energy • Energy Access^• Renewable Energy Access

• Energy Consumption*

SDG 8: Decent Work and Economic Growth

• Forced Labor and Modern Slavery• Labor Rights• Occupational Health and Safety• Freedom Association• Financial Services Access^

• Economic Development in Least Developed Countries

• Waste• Sustainable Tourism^

SDG 9: Industry, Innovation and Infrastructure

• Research and Development Investment

• Energy Consumption*• Material Footprint*

SDG 10: Reduced Inequalities • Indigenous Rights*• Gender Equality*

• Migrant Worker Rights

SDG 11: Sustainable Cities and Communities

• Housing Access• Disaster Risk

• Air Pollution Impact

SDG 12: Responsible Consumption and Production

• Material Footprint*• Air Pollution*• Land and Water Pollution*

• Sustainability Reporting• Sustainability Awareness

SDG 13: Climate Action • Climate Change Vulnerability and Adaptation Readiness

• Greenhouse Gas Intensity*

SDG 14: Life Below Water • Marine Pollution • Overfishing^

SDG 15: Life On Land • Land Pollution • Deforestation

SDG 16: Peace, Justice and Strong Institutions

• Corruption and Bribery• Child Labor

• Rule of Law• Governance and Transparency

SDG 17: Partnerships for the Goals • Fair Share Taxation • Partnerships for the Goals

4

SD

G 1

4S

DG

5S

DG

15

SD

G 1

6S

DG

2S

DG

6S

DG

3S

DG

10

SD

G 4

SD

G 1

7S

DG

12

SD

G 1

SD

G 9

SD

G 1

1S

DG

13

SD

G 8

SD

G 7

SD

G-A

ligne

d R

even

ue ($

m)

Portfolio Benchmark

SDG 14 SDG 5

SDG 15

SDG 16

SDG 2

SDG 6

SDG 3

SDG 10

SDG 4

SDG 17

SDG 12

SDG 1

50

60

40

30

20

10

0

SDG 9

SDG 11

SDG 13

SDG 8

SDG 7

Integrate SDG Metrics into Portfolio AnalysisPositive ImpactIdentify SDG alignment within a portfolio as a percentage and total amount of SDG-aligned revenue for SDG positive impact.

Portfolio-level Metrics• % of revenue alignment with the SDGs

(revenue or market cap-weighted)

• % of revenue alignment with the SDGs (revenue or market cap-weighted) adjusted for country level “need”

• % of “additionality” provided by portfolio towards achieving the SDGs

• Positive impact intensity contribution across portfolio

SDG Risk ExposureQuantify SDG-related impacts in a standardized and scalable way with risk exposure scores from 0-100 (100 having the highest risk exposure to SDG-related risks).

Portfolio-level Metrics• Top risk exposure SDGs

• SDG risk intensity contribution (%)

• SDG risk exposure related to operations and SDG risk exposure related to direct suppliers (Tier 1)

SDG Investor HeatmapDetermine the percentage of geographic overlap of a portfolio’s SDG-aligned investment and the geographies where SDG investment is needed the most. Darker blues indicate largest intensity of SDG needs (left chart) and largest intensity of SDG-aligned revenue generated by an example portfolio (right chart).

For Illustrative Purposes Only. Source: Trucost SDG Analytics.

For Illustrative Purposes Only. Source: Trucost SDG Analytics

For Illustrative Purposes Only. Source: Trucost SDG AnalyticFor Illustrative Purposes Only. Source: SDG Index by SDSN (2019)

15% overlap (out of a possible 100% overlap)

Areas with greatest need for SDG-related investment Areas where your portfolio is positively contributing to the SDGs

Positive Impact of Portfolio by SDG

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BEYOND THE BINARY Corporate Venturing and the Sustainable Development Goals

What the SDGs Mean to Investors Benefit from Applying Trucost’s SDG Analytics

Identify positive impacts of companies in portfolio analysis

The SDG Analytics help identify which investments are “SDG-aligned” as well as provides a quantitative indication of which geographies are most in need of this type of investment

Integrate SDG considerations in the portfolio process

By standardizing positive and negative alignment on the SDGs within a portfolio, investors have a standardized, scalable way to incorporate SDG considerations into their decision-making

Report the impact of funds in an SDG-aligned way

Successful SDG investment depends on accurate reporting where positive impacts can be quantified, tracked and assessed. To support this, the SDG Analytics enhances portfolio analytics to measure the performance of SDG data within portfolios. This provides an evidence-based approach for fund managers to report the positive impacts of their portfolios.

About TrucostTrucost is part of S&P Global. A leader in carbon and environmental data and risk analysis, Trucost assesses risks relating to climate change, natural resource constraints, and broader environmental, social, and governance factors. Companies and financial institutions use Trucost intelligence to understand their ESG exposure to these factors, inform resilience and identify transformative solutions for a more sustainable global economy. S&P Global’s commitment to environmental analysis and product innovation allows us to deliver essential ESG investment related information to the global marketplace.

For more information, visit www.trucost.com.

About S&P GlobalS&P Global (NYSE: SPGI) is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.spglobal.com.

Copyright © 2020 S&P Trucost Limited (“Trucost”), an affiliate of S&P Global Market Intelligence. All rights reserved.

This publication and related materials are not intended to provide and do not constitute financial or investment advice. The information in this publication should not be construed or relied upon in making, or refraining from making, any investment decisions with respect to a specific company or security or be used as legal advice. Trucost is not an investment advisor, and Trucost makes no representation regarding the advisability of investing in any investment fund or other investment vehicle. A decision to invest in any investment fund or other investment vehicle should not be made in reliance on any of the statements set forth in this document.

This publication and related materials (“Information”) have been prepared solely for informational purposes only based upon information generally available to the public from sources believed to be reliable. The Information may not be reproduced or disseminated in whole or in part without the prior written permission of Trucost. The information may not be used to verify or correct other data, create indexes, risk models, or analytics or in connection with issuing, offering, sponsoring, managing, marketing any securities, portfolios, financial products, or other investment vehicles.

Historical data and analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction.

Trucost, its affiliates, or its and their third-party data providers and licensors (collectively “Trucost Parties”) do not guarantee the accuracy or completeness of the Information. Trucost Parties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the Information. THE TRUCOST PARTIES MAKE NO WARRANTIES OR REPRESENTATIONS, AND, TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH TRUCOST PARTY HEREBY EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING ANY OF THE FOREGOING AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, IN NO EVENT SHALL ANY OF THE TRUCOST PARTIES HAVE ANY LIABILITY REGARDING ANY OF THE INFORMATION FOR DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL (INCLUDING LOST PROFITS) OR AN OTHER DAMAGES EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited.

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