Sustainable Small-Cap Core Strategy: Reporting on the impact of our investment decisions 2022

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A Letter of Introduction From The Portfolio Managers

Brown Advisory has made a deep commitment to sustainable investing across a wide range of its equity and fixed income strategies. We firmly believe that there does not have to be a trade-off between strong performance and investments that seek to address society’s environmental and social challenges.

This report for our Sustainable Small-Cap Core Strategy includes a review of our sustainable investment research and integration approach and examines how we use this to identify compelling long-term investments. We also discuss the positive environmental and social outcomes being created by our portfolio companies, and report on our engagement and proxy voting activity during the year.

We are pleased to report continued progress and advancement of our sustainable investment initiatives at the firm, particularly our work to develop new investment strategies for our clients. Most recently, we have brought together Brown Advisory’s expertise in large-cap, value and sustainable investing to launch the Brown Advisory Large-Cap Sustainable Value strategy.

Further, we have continued to build our team and expertise internally, further integrating fundamental and sustainable investment analysis by adding several new research analysts across our equity and fixed income research teams that act as industry-sector specialists.

We thank our research team for its contribution to this report and our work in general. The team works tirelessly to ensure that our investment decisions are informed by solid data and clear insights about how that data may affect a company’s prospects. We also thank our fundamental equity research colleagues and all of our colleagues across the firm for embracing sustainable investing principles so enthusiastically. Most importantly, we are deeply grateful to our clients, who trust us as stewards of their capital and serve as our partners as we learn, innovate and improve over time.

The year in review was filled with both sustainability hurdles and progress forward. Natural disasters that occurred in 2022 were among the costliest on record. Global conflict has impacted energy and commodity access and affordability. Mixed progress was made at COP27. Despite these events, we are encouraged by the passage of the historic Inflation Reduction Act, which we believe could provide opportunities for many companies of interest to the Sustainable Small-Cap Core Strategy.

We hope you find this report informative, and we welcome an ongoing conversation with you about our work and continuing evolution as investors.

Sincerely,

^{*Brown Advisory entities included are: Brown Advisory LLC, Brown Investment Advisory & Trust Company, Brown Advisory Ltd., and Brown Advisory Trust Company of Delaware, LLC.}