ESG fuelled by the power of 3

ESG resources

*IMPORTANT INFORMATION

For corporate holdings, we use two data providers (MSCI and Institutional Shareholder Services Inc. (ISS)) and five different indicators to monitor and flag holdings. These indicators capture materially lower ESG performance relative to peers and potential violations of international norms via the UN Global Compact (UNGC) and Organisation for Economic Co-operation and Development (OECD) Guidelines. For sovereign holdings, our proprietary ESG score for an issuer is a weighted average of its raw scores from three data sources: Notre Dame Global Adaptation Initiative Climate Vulnerability Index, United Nations Human Development Index, World Bank Worldwide Governance Indicators. Historically, our methodology for sovereign holdings has most heavily weighted governance metrics. Governance indicators can provide important signals about a country’s ability to meet its financial obligations. Our monitoring process for municipal bonds focuses on physical climate risks and applies to obligors in certain sectors (excluding Tobacco, Corporates, Gas, as well as escrowed bonds) that exceed 0.25% of the assets of certain U.S.-based mutual funds in the Capital Group complex. We use third-party climate risk scores from Intercontinental Exchange (ICE) to monitor and flag certain large municipal holdings for potential financial risk arising from physical climate hazards. Obligors with physical climate risk scores above our thresholds are escalated for additional analyst review.

Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.