Engagement in action

Martin Jarzebowski: How do you think about engagement and in particular, how do you think about this as being able to potentially overcome some of the limitations from third party data providers?

Joanne Beatty: As a world leading stewardship provider, EOS Federated Hermes engages with companies on strategic sustainability concerns with the aim of promoting our clients long-term performance and fiduciary interests. And this is very much, I think, aligned with our own goals to help individuals invest and retire better, and also to help our clients create better risk-adjusted returns and where possible contribute to positive outcomes in the wider world. An engagement can provide that information that reaches beyond those offered by the many ESG rating providers, data aggregators, and offers a robust overview of the risk and opportunities of potential investments. And I do agree with you, Martin, it does give us a seat at the table to advocate for change. If we divest because of a particular issue, we lose that seat at the table. The problem doesn't necessarily go away and our ability to affect change and create positive outcome reduces substantially. So, absolutely agree with you there. Engagement also enables long term institutional investors to be more active owners of their assets through dialogue on ESG issues. And I guess then, at the highest level, engagement can help decipher for risks that even high quality liquidity and shorter duration instruments might have.

Disclosures: Views are as of Nov. 5, 2021 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. Duration is a measure of a securitys price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations. ESG investments may be viewed as sustainable, responsible or socially conscious, among other names. ESG factors may be utilized and evaluated differently by different investment managers and may mean different things to different people. Investing based in part on ESG factors carries the risk that, under certain market conditions, the investment strategy may underperform strategies that do not utilize such factors. The application of responsible investment criteria may affect exposure to certain sectors or types of investments and may impact relative investment performance depending on whether such sectors or investments are in or out of favor in the market. An investments ESG performance or an investment managers assessment of such performance may change over time. The successful application of ESG factors is dependent on an investment managers skill in properly identifying and analyzing material ESG issues, and the suitability of ESG investments may change over time. Federated Advisory Services Company 21-40550 (11/21)