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ResponsibleinvestingABCsof responsibleinvesting

G-NUK outlet shopping center soaks up the sunwhile pursuing stable income streamAbigail DeanHead of global sustainability, real estateNuveen.com/realestateO-RThe Nuveen Real Estate business recently installedsolar panels on Dalton Park, an outlet shoppingand leisure center in the northeast UK. Helping tofuture-proof the center against energy price risesand supply shortages, the property will generate over200,000 kWh of electricity each year, saving 70 tonsof CO2 annually1, reducing energy service costs, andpursuing a stable income stream for investors.E-FCarbon footprint/'kär-bən 'fu̇t-print/ nounA-DA-D“Responsible property investmentis about more than just reducingthe carbon footprint. It’s aboutunderstanding and managingexternal risks that may jeopardizeour investments. And it’s aboutidentifying opportunities that willprotect and enhance value in theface of changing environments.”One hundred percent of the renewable energygenerated is used on site. It boosts investmentreturns because the cost savings on reduced consumption of national-grid electricity is greater thanrevenue generated by exporting the same amount ofelectricity to the grid.S-Z

Favoring companies with the best ESG performance,e.g., within a particular sector or industry group. Seeresponsible investing – other RI approaches.Climate changeBoard qualityA change in global or regional climate patterns, inparticular a change apparent from the mid- tolate-20th century onward – especially warming –attributed largely to the increased levels ofatmospheric carbon dioxide produced by the use offossil fuels.The sale or disposition of securities or other assetsbased on corporate behavior that is not aligned withspecific environmental, social and governanceobjectives, values or convictions. See responsibleinvesting – other RI approaches.Carbon footprintRefers to a security issuer’s activity in an industrythat can cause significant social harm like tobacco,alcohol and firearms.Corporate social responsibility (CSR)A company’s efforts to evaluate the effect of itsoperations, processes and philanthropy on thebroader community and to set policies and practicesthat maximize the positive impact of its activities onthe company’s key stakeholders.O-RThe sum of greenhouse gas (GHG) emissions –primarily carbon dioxide and other GHGs – for agiven company or group of companies comprising aportfolio. For a public equities portfolio, theseemissions then are typically pro-rated in proportionto the number of shares held by each company.Controversial businessinvolvementG-NBoards play a critical role in crisis management,oversight, and risk management – setting the tone atthe top before incidents occur. From an investmentstandpoint, issues such as director independence,board composition, experience, perspectives and tenure are important because they protect shareholdervalue. Board composition, executive compensation,business ethics and accounting practices all reflect aboard’s judgment and priorities.E-FDivestmentA-DBest in classS-Z2

G-NIrrigating Napa vineyards with recycledwastewater conserves a community’s mostprecious commoditywww.nuveen.com/napa-vineyardsS-ZNuveen invested 2M in capital and propertyeasements to develop a two-foot wide pipelineirrigating our properties and those of 30 to 40 otherlandowners in Los Carneros Water District. Reusingwastewater cut irrigation costs by up to 65 percent,2improving the bottom line for local farmers, and isexpected to reduce surface and groundwaterconsumption in the area by 75 percent.Martin DaviesCEO, Westchester Group InvestmentManagementO-REngaging with our farm operators, Nuveen strivesfor optimal water efficiency using a range ofinnovations, technologies and cooperative efforts.In 2014, the vineyard management team for affiliateWestchester Group Investment Management workedwith the Napa Sanitation District to recycle treatedwastewater for irrigation.E-FEngagement/in-'gāj-mənt/ nounA-DE-F“Water is essential for all cropgrowth. On the land we managein our diversified croppingportfolio, for certain crops wegrow, we require irrigation tosupplement rainfall. Conservingwater through innovationbenefits our tenants, cropmanagers, the environmentand investors.”

A-DExample: Waste managementInnovative packaging can reduce waste whilealso driving down material and transport costs.EnvironmentalEngagementA range of activities performed to exert influenceon companies, issuers and other investees to helpthem innovate and operate more efficiently, i.e.,proxy voting, company dialogue, targeted initiatives,market initiatives and policy influence. Seeresponsible investing.Environmental: A responsible investingfactor dealing with climate impact, energyconsumption, biodiversity, waste managementand natural resource use.Example: Board diversityA wide range of competencies, knowledge, andperspectives can lead to better decision-makingand more effective corporate governance.ESG investingExamining a company’s exposure to ESG-relatedrisks and opportunities, focusing on the ones mostlikely to have a material impact on investmentperformance.Exclusionary screeningAvoiding companies involved in controversialbusinesses such as fossil fuels, oil, and tobacco,or other ESG-related criteria. See responsibleinvesting – other RI approaches.ESG-focused fundsOriginally known as socially responsible investing(SRI) funds, portfolios that explicitly applyenvironmental, social and governance criteria intheir investment decision-making process, often inthe development of an investable universe.O-RTypically refers to the factors and issues investorsconsider regarding a firm’s sustainable businesspractices.Governance: A responsible investing factordealing with management structure, boardaccountability and independence, executivecompensation, audits and internal controls andshareholder rights.Including ESG factors within the investmentprocesses to enhance long-term performance andmanage risks for clients. See responsible investing.G-NEnvironmental, socialand governance (ESG)Example: Health and safetyEffective health and safety programs canmitigate unexpected costs caused by workplaceinjuries, e.g., medical expenses, workplacedisruption, productivity loss.ESG integrationE-FA responsible investing factor dealing with climateimpact, energy consumption, biodiversity, wastemanagement and natural resource use. Seeenvironmental, social and governance (ESG).Social: A responsible investing factor dealingwith employee engagement and development,labor relations, human rights practice, productsafety and consumer protection.S-Z4

Rekha UnnithanImpact investing portfolio manager, NuveenS-ZThe Nuveen Private Markets impact investingteam saw an opportunity to support an underservedpart of the Indian economy – medium-sizedenterprises, whose access to venture capital ismost constrained – while pursuing an attractive,stable return to institutional clients. The opportunitywas through a private equity investment in anon-banking lender offering fast and flexibleworking-capital loans to Indian entrepreneurs.O-RWith its rapidly expanding middle class, Indiais on track to become the third largest consumermarket in the world. Despite this it can bechallenging for entrepreneurs to get a businessloan from an Indian bank.G-NAn investment in fast and flexible loansimproves opportunities for IndianentrepreneursE-FImpact/'im-pakt / nounA-DG-N“In India, small businessesand the unorganized informalsector account for a largepart of the population. Theyemploy more people, drivemore innovation, and fostergreater competition. Youjust can’t deliver these kindsof double bottom-lineresponsible outcomes from8,000 miles away.”

Human capitalmanagementA comprehensive set of practices for recruiting,managing, developing and optimizing anorganization’s human resources.Human rightsGovernanceGreenGreen bondA fixed income security developed to fund aproject that has positive environmental and/orclimate outcomes.Net-zero carbonImpactIntentionally seeking positive environmental andsocial outcomes alongside financial returns throughinvesting practices across asset classes. Seeresponsible investing.Low carbonSeeking to lower a portfolio’s overall carbon footprintby favoring companies with lower current carbonemissions, no fossil-fuel reserves, or other green investments. Low-carbon strategies may satisfy clientsseeking “fossil-fuel-free” and “green” investments.See responsible investing – other RI approaches.Achieved by balancing a measured amount of carbonreleased with an equivalent amount sequestered oroffset. Typically the term is used in relation tobuildings. A net-zero carbon building is highly energyefficient and fully powered from on-site and/oroff-site renewable energy sources. The WorldGreen Building Council states that all buildingswill need to be net zero carbon by 20503 to meetthe Paris Agreement.S-Z6Information that is of the greatest significance inthe investment decision-making process.Increasingly, ESG issues are being viewed througha materiality lens.O-RGenerally refers to the consideration of climatechange and environmental impacts in portfolioconstruction, i.e., investments in clean tech, renewable energy and energy efficiency. See responsibleinvesting – other RI approaches.MaterialityG-NA responsible investing factor dealing with management structure, board accountability and independence, executive compensation, audits and internalcontrols and shareholder rights. See environmental,social and governance (ESG).Moral principles or norms that describe standardsof human behavior and are protected as natural andlegal rights in municipal and international law.An economy based on low-carbon power sourcesthat has a minimal output of greenhouse gas (GHG)emissions into the biosphere, but refers specifically tothe greenhouse gas carbon dioxide. The ParisAgreement commits to the transition to a globallow-carbon economy over the next 30 years, whichmany believe will bring substantial benefits bothfor developed and developing countries and avoidcatastrophic climate change.E-FAn investor-driven organization that assesses thesustainability performance of real-asset-sectorportfolios and assets in public, private and directsectors worldwide. The index offers environmental,social and governance data, scorecards, benchmarkreports and portfolio analysis tools.Low-carbon economyA-DGlobal Real EstateSustainability Initiative(GRESI) and Benchmark(GRESB)

Amy O’BrienHead of responsible investing, NuveenO-ROur company has been a leader in responsible investing for half acentury. We have differentiated our business, driven long-terminvestment returns and made a positive impact on the world byengaging with portfolio companies directly on environmental,social and governance practices, launched innovative products, andspearheaded efforts to expand ESG and sustainability across publicand private markets, as well as real estate and real assets. Ourapproach to RI is driven through three key principles:G-NPutting RI principles into practice provides enduringbenefitsE-FResponsible investing/ri-'spän(t)-sə-bəl in-'vest-ing/ nounA-DO-R“We believe that responsibleinvesting principles canhelp provide enduringbenefits for our clients andour communities.”ESG integration – we aim to incorporate material ESG factors intoour investment process systematically, across funds and asset classes.Engagement – we connect using our influence with companies andissuers to help them innovate and operate more effectively, andpartner with stakeholders to drive and advance ESG best practices.S-ZImpact – through our investing practices, we seek to drive positiveenvironmental and social outcomes.