**In this section:** Message of commitment *>* 2021 impact highlights *>* Alignment with UN Sustainable Development Goals *>*
Campe Goodman, Liliana Castillo Dearth and Tara Stilwell (L to R)
We continue to evolve our impact investing approach in response to major trends, including the ongoing COVID-19 pandemic, the intensifying impact of climate change, and the accelerating shift to digital ways of working and living.
In our digital divide theme, we anticipate significant long-term demand for technologies addressing widening digital inequality across developed and emerging markets. In our health theme, we are finding more companies and issuers looking to solve health-care-related challenges such as access to affordable care, inefficiencies in service delivery, and chronic underinvestment in health care infrastructure. As we write this year’s report, a humanitarian crisis is unfolding in Europe following Russia’s invasion of Ukraine. This tragedy is an urgent reminder for countries the world over to reduce their dependency on fossil fuels and increase their focus on energy security. We expect impact companies in the alternative energy and resource efficiency spaces to see accelerated demand as governments redouble their efforts to diversify energy systems.
The challenges associated with climate change remain a primary focus. Our ongoing research with our climate-science partners at Woodwell Climate Research Center (Woodwell) shows the widespread need to boost climate resilience. Solutions to protect life and property from the effects of climate events cross several impact themes in our Life essentials, Human empowerment, and, of course, Environment categories. Wellington has expanded its focus on climate transition risks through a partnership with the Massachusetts Institute of Technology Joint Program on the Science and Policy of Global Change. We also continue our leadership in the Net Zero Asset Managers initiative.
Across our impact strategies, we are committed to setting a high bar for materiality, additionality, and measurability.
Across our impact strategies, we are committed to setting a high bar for materiality, additionality, and measurability. Through engagement, we encourage companies to establish key performance indicators (KPIs) demonstrating positive social and environmental impact. In our fixed income strategy, we can invest in issues that incentivize issuers to improve their sustainability profiles and set targets with associated metrics. As communities increasingly see the value of solutions that benefit people and the planet, companies and issuers are incentivized to innovate. The result is an expanding impact opportunity set.
We believe our approach of investing across 11 impact themes puts us in a strong position to capture promising new developments across developed and emerging markets.
We are honored to play a role in growing the impact ecosystem with your support. Thank you for your faith in our team and in Wellington. We look forward to generating positive impact and competitive investment returns for our clients in 2022.
Tara Stilwell, CFA Portfolio Manager, Global Impact
Campe Goodman, CFA Portfolio Manager, Global Impact Bond
Liliana Castillo Dearth Portfolio Manager, Emerging Markets Impact
All investing involves risk. Investors should consider the risk that may impact their capital, before investing. The value of your investment may become worth more or less than at the time of original investment. Please refer to the Risks section for more information.
Investments in our equity and fixed income impact portfolios:
Supplied or financed more than 14 million units of affordable housing
Protected over 86 million businesses or individuals with cybersecurity tools and technologies
Enabled digital access for over 1.6 billion people in developing countries
Provided education, training, and career support to more than 55.5 million people
Avoided 414 million tonnes** of greenhouse gas (GHG) emissions through improved resource efficiency
Supplied health care products and services to over 141 million patients
Generated 298 terawatt hours (TWh) of renewable energy, enough to eliminate more than 129 million tonnes of GHG emissions and power 16 million homes*
Provided or treated more than 147 billion cubic meters (m3) of water
14 million Financed more than 14 million units of affordable housing
141 million Supplied health care products and services to over 141 million patients
147 billion Provided or treated more than 147 billion cubic meters (m3) of water
86 million Protected over 86 million businesses or individuals with cybersecurity tools and technologies
1.6 billion Enabled digital access for over 1.6 billion people in developing countries
5.5 million Provided education, training, and career support to more than 5.5 million people
414 million Avoided 414 million tonnes** of greenhouse gas (GHG) emissions through improved resource efficiency
16 million Generated 298 terawatt-hour (TWh) of renewable energy, enough to eliminate more than 129 million tonnes of GHG emissions and power 16 million homes
* Authors' note: Our 2020 report stated that the portfolios generated over 5,389 TWh of renewable energy for the year. Due to a calculation error, this figure was overstated. The actual amount generated was 1,006 TWh.
**Throughout this report, unless otherwise indicated, we use tonnes for metric tons. | All investing involves risk. Investors should consider the risk that may impact their capital, before investing. These impact highlights relate to our impact equity and impact bond approaches. The value of your investment may become worth more or less than at the time of original investment. Please refer to the Important disclosures at the end of this document for more information.
In 2015, we launched our first impact approach, aimed at addressing themes related to Life essentials, Human empowerment, and the Environment. The development of our themes took extensive research and consultation, as we sought to identify the key forces driving the just transition to a more socially and environmentally sustainable future. When the United Nations Sustainable Development Goals (SDGs) were adopted, we were pleased to see how closely our themes aligned.
We support the 17 SDGs and believe the financial services industry has an integral role to play in bridging the funding gap to achieve them. While we invest in companies and issuers that align directly with our proprietary impact themes, we also denote the relevant SDG and specific target to which they contribute to better contextualize their activities alongside the great work being carried out by other financial, government, and nongovernment organizations (as illustrated on the next page). Increased reporting by asset managers on alignment with the SDGs facilitates the assessment of capital allocation to fund progress toward these critical outcomes.
We support the 17 SDGs and believe the financial services industry has an integral role to play in bridging the funding gap to achieve them.
Company/Issuer overview
International provider of photovoltaic solar energy solutions
Impact theory of change
The issuer’s differentiated technology in photovoltaic solar modules diversifies the global energy mix, delivers a lower-cost alternative to utility customers, and reduces the negative environmental impact from fuel use by displacing CO2 emissions0
SDG target
7.2 – By 2030, increase substantially the share of renewable energy in the global energy mix
International provider of professional, medical, industrial, and commercial products and services spanning life sciences, diagnostics, and environmental and applied solutions
The issuer facilitates the development of innovative medical technologies that allow researchers and clinicians to create and administer lifesaving treatments, improving patient outcomes
3.B – Support the research and development of vaccines and medicines for the communicable and non-communicable diseases that primarily affect developing countries, provide access to affordable essential medicines and vaccines, and provide access to medicines for all
Wellington determines the goals and targets that, in our view, each portfolio company or issuer is aligned with. Language for the goals and targets has been abbreviated, but not otherwise altered, from UN.org. Wellington Management supports the United Nations Sustainable Development Goals. | Sources: Wellington Management, UN.org
Some of our impact themes are not directly captured by the SDGs, but, in our view, they indirectly address several goals. We believe bridging the digital divide and expanding financial inclusion, for instance, are critical pathways for reducing poverty, enhancing gender equality, and reducing inequalities (SDGs 1, 5, and 10, respectively).
An overall picture of the SDGs to which our impact equity and bond portfolios contribute is shown in the figures here.
IMPACT EQUITY REPRESENTATIVE ACCOUNT (IMPACT CATEGORIES AND THEMES – WEIGHTS, %)
IMPACT BOND REPRESENTATIVE ACCOUNT (IMPACT CATEGORIES AND THEMES – WEIGHTS, %)
The graphs show the distribution of the representative accounts for our impact equity and impact bond strategies across each primary SDG as of 31 December 2021. An asterisk (*) indicates a secondary SDG. Holdings can have more than one secondary SDG. Both our impact equity and impact bond approaches support SDG 17 at the strategy level. We do not manage the portfolios to any targeted level of alignment with regard to the UN SDGs. | The data shown relates to representative accounts, is for informational purposes only, is subject to change, and is not indicative of future portfolio characteristics or returns. | Totals may not sum due to rounding. Excludes cash, cash equivalents, interest-rate, and currency derivatives. | Sources: FactSet, Wellington Management. | Please refer to the Important disclosures page for additional information.
