Tax-Exempt Sustainable Fixed Income Strategy: Reporting on the impact of our investment decisions 2023

A Letter of Introduction From The Portfolio Managers

A lot has happened since we launched our Tax-Exempt Sustainable strategy a decade ago. We have seen the sustainable investing landscape mature, evolve, and be met with immense polarization and scrutiny. We experienced a global pandemic, mounting geopolitical tensions, extreme and historic weather events, and humanitarian crises. There has been an evolving focus on transition finance and a growing sophistication toward several sustainability-oriented investment topics. Evolving regulatory frameworks have emerged that seek to enhance transparency and comparability on material issues.

2023 was marked by unparalleled events: persistent inflation, rising interest rates, mounting tension and polarization on sustainability issues within the US, and continued pressure on municipal issuers to build and support infrastructure and provide services that enable a more inclusive economy. All of these events have investment implications, and as stewards of capital on behalf of our clients, it is imperative for us to continuously calibrate the materiality of evolving factors that affect risks and opportunities within our investment decisions.

Despite the rapid changes occurring within this space, we have not altered our investment process. We firmly believe that there does not have to be a trade-off between strong performance and investments that help address global sustainability challenges. Without both in combination, it will be difficult to amass the necessary capital required to address the many large-scale systemic challenges the US economy faces today. The roughly $4 trillion US municipal bond market provides ample investment opportunities to align ourselves with issuers addressing these issues.

In the 10 years we have been managing this strategy, it has been incredibly rewarding to see the evolution in sustainable fixed income. The breadth and depth of fixed income markets present opportunities across our many different asset classes, sectors, and structures. The rapidly growing labeled bond market continues to evolve and provides more targeted investment opportunities for investors, as well as dedicated financing for issuers looking to address a multitude of sustainability-oriented projects or challenges.

In 2023, we also added additional sector expertise to our research teams, to support our growing sustainable fixed income platform. As always, we thank our teammates, who work tirelessly to ensure that our investment decisions are informed by trustworthy data, and clear viewpoints about what we can infer from that data.

This report includes a review of the sustainability outcomes of our strategy and how the depth of our research translates into a robust investment process. We hope you find this report informative, and we welcome a conversation with you about the work we are doing.

Sincerely,