Mirova Global Sustainable Equity Strategy: 2022 Impact Report

Reinforcing our convictions in light of an uncertain market environment

In 2022, we faced continued polarization of the ESG¹ landscape and headwinds coming from some market players. Investment product disclosure and other regulation aimed at bringing clarity to the space of sustainable investing and combatting greenwashing continued to be proposed or rolled out globally, with Europe at the forefront. However, we also witnessed increasing politicization of the topic of ESG, mainly in the U.S. where the "anti-woke" movement has gained momentum. At the end of the day, both movements are questioning and raising concerns about the credibility and integrity of the current ESG market. In this context, Mirova understands the necessity to advocate for an ambitious and robust definition of sustainable investing, and continues to seek positive environmental and/or social contribution from our investments alongside financial performance.

2022 proved to be a challenging year on many fronts, reinforcing the urgency to ensure financial stability of the system, to tackle climate change, and to restore social justice. Our portfolio decisions of 2022 reflected in part the challenges of the threat of recession, the continuation, albeit easing, of Covid impacts, rising inflation, the Russia/ Ukraine war and other geopolitical tensions, and global supply chain issues. However, it is becoming increasingly imperative to understand and anticipate physical climate risks, highlighted by more frequent and severe natural disasters including devastating floodings, extreme heat, droughts, and wildfires in many parts of the world. Finally, with inequalities widening, the stability of western democracies is questioned, and social progress should remain a high-priority concern.

We believe the challenging environment of 2022 should serve as a reminder of the importance of promoting a sustainable and fair economic model.

As investors committed to reconciling long-term value creation and sustainable development, these issues are fully incorporated in our analysis and decision-making process. We believe the challenging environment of 2022 should serve as a reminder of the importance of promoting a sustainable and fair economic model. Therefore, despite this - in part because of this - increasingly complicated backdrop, we have sought to enhance our sustainability methodology to aid in identifying new opportunities, and to address market drivers and mitigate risks, while generating greater impact. We also continued to work on the development of our methodology to quantify and better address the impact on biodiversity of our investments. In 2022, the topic of fair distribution of value and purchasing power has remained a priority in our discussions with companies and influencing the way we vote at Annual General Meetings. As Mirova is aware of the necessity of cooperation to build a credible ESG market, we also provided thorough feedback for some of the U.S. Securities and Exchange Commission’s (SEC) proposals seeking to structure the industry.

As investors on behalf of institutions and individuals globally, it is our duty to pause and reflect on the challenges and the opportunities of the last year, not only to evaluate our progress, but to identify potential areas of improvement. With this Impact Report for the strategy, we reinforce our approach to remain intentional and provide transparency on our ongoing efforts to achieve financial returns while contributing to sustainable development goals.