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5 Key ESG Trends in 2021 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only

Overview The interest and adoption of ESG and impactinvesting continues to accelerate into themainstream. This presentation is intended to provide you with aframework to:- Enhance your understanding of the currentdevelopments in the ESG and impact investing space- Equip you with talking points about timelysustainability topics in investing that may resonatewith your clients Why now?- An opportunity to connect more deeply with yourclients and your clients’ children- An opportunity to differentiate your practice andengage with a broader potential client base 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only2

12ESG Gets MoreSophisticatedThe Rise of theHyper-PersonalizedPortfolio345Consensus isBuilding TowardsCommon StandardsThe Era of StakeholderCapitalismMaking Progress onthe Path to Net Zero5 key ESGthemes towatch in 2021 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only3

ESG Gets MoreSophisticated 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only

Overview A greater depth and breadth of ESGand impact data is powering research,analytics, and reporting across thefinancial services ecosystem. This ecosystem is growing rapidly.Asset managers, investmentconsultants, wire houses, platform andresearch firms are now joined by newstartups and are partnering andconsolidating to offer unique tools tobuild and report on ESG portfolios. Investment managers are movingbeyond negative screening or ESG as a“check the box” exercise and are nowpursuing the integration of material ESGrisks into multiple stages of theinvestment process. With record ESG product launches overthe last 5 years, the market now hasaccess to more options across assetclasses, with longer track records. 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only5

Traditional platforms now offer high-quality ESGdata and analytics tools 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only6

Consolidation of ESG data providers enrichesdata qualityESG Data & Services: A 2.2B total available market, with blue sky upside of 5.1B by 2025 - UBS20152016201720182019 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only202020217

Asset managers see the value in ESG informationIn the next edition of the CFA curriculum, ESG content willincrease by 130%, with 23 readings in 7 topic areas. 2021 Envestnet, Inc. All rights reserved. For home office and advisor use onlySource: CFA Institute 8

Now there’s enough ESG product to builddiversified portfoliosNUMBER OF ESG & IMPACT STRATEGIES ON THE ENVESTNET PLATFORMAll CapLarge-CapMid-CapSmall-CapForeign Large CapForeign Small Mid CapGlobal EquityInt'l Developed MktsInt'l Emerging MktsREITsCommodityIntermediate BondInternational BondLong BondShort BondHigh YieldEmerging Markets BondAlternative Fixed IncomeMF0204060 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only80100SMA1209

The Rise of theHyper-PersonalizedPortfolio 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only

Overview Investors of all ages, especially younger generations,are driving the demand for hyper-personalization andcustomization of portfolios that reflect their worldviews. Consumer trends, including buying local or organicfoods, shopping at socially conscious brands, alongwith social movements, such as climate strikes,#metoo, and racial justice, are now translating to adesire to invest with these same social objectives. Technology is serving as a catalyst by:– Facilitating the real-time spread of informationthrough social media– Enabling access for investors through wealth/retailplatforms and direct indexing 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only11

Personal choices are now translating toinvestment preferencesConsumer trends like “buying local,” purchasing organic foods, andwearing socially conscious brandsThe #MeToo movement, national women’smarches, Lean In, the gender pay gapClimate strikes, Greta Thunberg, campaign against plasticsBLM, ongoingprotestsadvocating forracial justice 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only12

And technology is making hyper-personalizationpossible for retail investors 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only13

Consensus is BuildingTowards CommonStandards 2020 Envestnet, Inc. All rights reserved. For home office and advisor use only

Overview The industry is working together to adoptcommon ESG definitions and standards:– The Sustainability Accounting Standards Board(SASB) will emerge as the leading global ESGdiscloser framework for companies.– SASB’s ongoing collaboration with the Task Forcefor Climate Related Financial Disclosures (TCFD)will support further alignment.– The CFA Institute is developing ESG disclosureguidance for investment strategies which willbecome the industry standard for asset managers. 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only15

Coming soon: ESG disclosure standards for companiesIn September 2020, CDP, CDSB, GRI, IIRC,and SASB announced a shared vision for acomprehensive corporate reportingsystem and a commitment to collaborateto achieve it:Statement of Intent to Work TogetherTowards Comprehensive CorporateReporting 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only16

Coming soon: ESG disclosure standards forinvestment productsCFAI is working on a voluntary global disclosurestandard for investment strategies, planning torelease an initial version in May 2021.Published a consultation paper with input from aworking group of 15 international volunteers withexpertise in ESG, asset owners, money managers,consultants, and service providers.78%of practitionersurvey participantssupport suchstandardsThe paper proposes definitions of six ESG-relatedfeatures of investment strategies. 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only17

The Era of StakeholderCapitalism 2020 Envestnet, Inc. All rights reserved. For home office and advisor use only

Overview Companies are more aware of and responsive tothe interests of stakeholders beyond just theirshareholders; their customers, suppliers,employees and communities.– The pandemic has catalyzed this focus. Shareholders are increasingly voting their proxiesin support of ESG resolutions.– Asset managers are putting pressure oncompanies to better manage and disclose onmaterial ESG risks such as climate change,diversity, and governance issues. 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only19

COVID-19 pushes managers to focus onESG issuesSocial & Human Capital Employee Health & Safety Labor Practices Customer Support Community SupportInnovation Supply Chain Management Product Design Business Model Resiliency Data SecurityLeadership & GovernanceEnvironmental Climate Change & GHGEmissions Disaster Planning and BusinessContinuity Air QualitySource: Cerulli 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only20

Managers increasingly support ESG votesAcross all fund families evaluated, average supportfor ESG shareholder resolutions was at 46% in2019, up from 27% in 2015 but the largest managers stilllag behind on proxy supportSource: Jackie Cook, Morningstar 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only21

Workforce issues takecenter stage in 2020proxy seasonHarvard Law School Forum on CorporateGovernance1.Workforce issues take center stage3.Board diversity and related disclosures advance2.4.Companies enhance environmentalgovernance and disclosuresVirtual annual meetings surge20 E&S-related shareholder proposals at U.S.companies received majority support, up from 12 in2019 and 10 in 2018. – Institutional ShareholderServices 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only22

Making Progress on thePath to Net Zero 2020 Envestnet, Inc. All rights reserved. For home office and advisor use only

Overview Climate change is an investmentconsideration impossible to ignore, withheightened frequency and severity ofnatural disasters, growing economiclosses, and regulators increasinglyrecognizing it as a systemic financial risk. The pandemic highlighted howbiodiversity loss as a result of climatechange has increased the probability ofpandemics. It also has highlighted theneed for a low-carbon-focused economicrecovery. Countries, companies, credit ratingagencies, and asset managers are allturning their focus to climate issues. Climate change is a major focus areafor investors, which has put pressure oncompanies to disclose climate riskexposures and management of carbonemissions. 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only24

Key players committed to combattingclimate changeKey Commitments in 2020 –CountriesKey Commitments in 2020 –CompaniesKey Commitments in 2020 –Asset Managers Biden administration -- pledges carbonfree electricity production carbon-free by2035; and, for the U.S. to have net zerocarbon emissions by 2050. EU -- now looking at 55% carbonreductions by 2030 (versus 40%previously). China -- establishes a new goal to achievenet-zero carbon emissions by 2060. New Zealand and the U.K. -- became thefirst countries to say they’ll requirecompanies to disclose their climate risk. Japan -- pledges to become carbonneutral by 2050. Bloomberg reports that about 1,500companies have announced net-zeroemissions goals. Walmart Inc. -- working toward zeroemissions from its global operations by2040; plans to power its facilities with100% green energy by 2035. Amazon -- on track to run on 100%renewable energy by 2025, five yearsahead of schedule. Microsoft -- expects to be carbonnegative and beginning to remove thecarbon it has emitted since its founding, by2030. The Net Zero Asset Managers Initiativeincludes a group of 30 asset managersoverseeing a combined 9 trillion. The Initiative supports efforts to limitglobal warming by requiring carbonneutral investment portfolios by 2050at the latest. 7 trillion asset manager BlackRock makesclimate change central to its investmentstrategy for 2021. 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only25

Companies, fund managers actively consideringclimate risksMentions of Climate Change in Public Companies’ Filings 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only26

Investors develop frameworks for climate riskand opportunities“If you aren’t considering climate risk in your investments, you’re betting against the laws ofthermodynamics.” - Jeremy Grantham 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only27

Conclusion Now that investors know that they can reflect their values in their portfolio,there’s no turning back. ESG investing is here to stay. The ecosystem continues to expand, and technology, data, and accessare driving that. Your current and future client base will expect you to be knowledgeable.Envestnet is here to provide you with the best-in-class tools and analyticsto help your clients make progress towards both their financial and ESGgoals.For additional resources, visit investpmc.com/impact 2021 Envestnet, Inc. All rights reserved. For home office and advisor use only28