Responsible Investment Variations by Asset Class & Strategy

Responsible Investment Variations by Asset Class & Strategy

Contents... 1 Responsible Investment at Sparinvest: An Overview... 3 A note on Norms-Based Screening... 3 Actively Managed Equities... 4 Ethical Actively-Managed Equities... 5 Quantitatively-Managed Equities... 6 Passively-Managed Equities... 7 Ethical Passively-Managed Equities... 8 Quantitatively-Managed Convertible Bonds... 8 Actively-Managed Corporate Bonds... 9 Ethical Actively-Managed Corporate Bonds... 10 Actively-Managed Sovereign Bonds... 11 Passively-Managed Securitized Bonds... 12 Asset Allocation (Blend Funds)... 13

Responsible Investment at Sparinvest: An Overview Sparinvest invests its entire fund range responsibly according to accepted industry definitions of responsible investment. Of course, the potential for ESG integration and stewardship varies by and by strategy. The pages that follow aim to give a brief overview of how Sparinvest applies the principle tenets of responsible investment across its entire directly managed AUM. For a more detailed picture of Responsible Investment at Sparinvest, particularly with regards to our actively managed strategies, please refer to the dedicated Responsible Investment area of our website. A note on Norms-Based Screening Throughout this document, norms based screening refers to the process of identifying breaches of internationally agreed initiatives and guidelines such as: The UN Global Compact Principles, The UN Guiding Principles on Business and Human Rights International Labour Organisation Conventions, United Nations Convention Against Corruption, OECD Guidelines for Multinational Enterprises and the Paris Climate Agreement.

Actively Managed Equities Danish Fund Range Cumulus Value KL Value Aktier KL Value Aktier (Ex Finans) Value Emerging Markets KL Value Europa KL Value USA KL Sparinvest SICAV Sparinvest - European Value EUR Sparinvest - Global Value EUR Exclusions Voting The fund excludes illegal weapons and securities subject to EU sanction In our active fundamental equity funds, our aim is to understand the long-term intrinsic value of the companies we invest in, and risks to that value. We aim to assess the downside risk before the upside potential. Consequently, issues which may impact a company in the short or long-term are considered relevant to our analysis, and this includes many environmental, social and governance issues. As such, we integrate ESG considerations into our security analysis, alongside other fundamental factors. We also engage with companies as deemed appropriate (see separate section on engagement) and aim to vote all shares. Sparinvest subscribes to an external service which continuously monitors companies for breaches of international norms. Portfolios and their benchmarks are fully screened every six months, with ad-hoc alert information received as new breaches occur. This information is converted into pre-trade compliance alerts, and daily screenings by Middle Office, resulting in portfolio norms breach watch lists. Information about any new norms breach classification will result in an investment case reappraisal by the portfolio management teams at their weekly meetings. Where the incident is deemed to be destructive of value to the point where the investment case is materially diminished, divestment may occur. Otherwise, the team will consider whether direct engagement is an appropriate course of action. We believe that encouraging holdings towards higher standards on ESG issues can benefit investment performance in the long term. We therefore use a combination of direct engagement; collaborative engagement and service provider engagement to address issues that we feel have most impact on corporate value and sustainability. With regard to companies in confirmed or alleged breach of international norms, we will engage via a combination of service provider and direct engagement. Our engagement policy describes the steps we will take to escalate matters should a company prove unresponsive 4. At the PM s discretion, we may consider divesting the company, depending on the gravity of the violation and our assessment of the case. We aim to vote all of our shares. We subscribe to a proxy voting service but voting decisions are by our Portfolio Managers based on our voting policy and company knowledge. We report on our responsible investment activities (including voting and engagements) each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. Our PRI Transparency Report is available to view on our website. Mandates will follow the same policy as the funds on which they are based unless the client specifies otherwise.

Ethical Actively-Managed Equities Sparinvest SICAV Sparinvest - Ethical Emerging Markets Value EUR (Sold in DK) Sparinvest - Ethical Global Value EUR (Sold in DK) Overarching Exclusions Ethical Exclusions (Norms Based) Ethical Exclusions (Sector Based) Voting The fund excludes illegal weapons and securities subject to EU sanction. The fund excludes/divests companies in confirmed and unaddressed breach of international norms relating to human rights, environmental law, labour rights and anti-corruption 1. In addition to this, we can also divest companies assessed as having alleged or confirmed but addressed violations, depending on the nature of the situation. The decision to do so would be on the basis of a qualitative investigation by portfolio managers into the nature of the alleged breach, or risk of breach and the company s speed of reaction to it, as well as the remedial actions that it has taken/has announced. The fund excludes companies on the basis of revenue derived from activities in certain sectors. We apply zero tolerance for production and max 5% tolerance for distribution of: tobacco, alcohol, gambling, pornography, military arms/weapons 1, thermal coal and oil sands. 2 In our active fundamental equity funds, our aim is to understand the long-term intrinsic value of the companies we invest in, and risks to that value. We aim to assess the downside risk before the upside potential. Consequently, issues which may impact a company in the short or long-term are considered relevant to our analysis, and this includes many environmental, social and governance issues. As such, we integrate ESG considerations into our security analysis, alongside other fundamental factors. We also engage with companies as deemed appropriate (see section on engagement) and aim to vote all shares. Sparinvest subscribes to an external service which continuously monitors companies for breaches of international norms. Portfolios and their benchmarks are fully screened every six months, with ad-hoc alert information received as new breaches occur. Exclusion Lists for our ethical funds are maintained on the basis of the semi-annual screenings, ad hoc alerts and decisions of the Responsible Investment Committee. These exclusion lists are used for pre-trade compliance checks, and daily screenings by Middle Office of the portfolios for any breaches. Any breaches (for example, where an existing holding becomes reclassified for exclusion) will result in the security being divested as soon as reasonably practicable for the ethical funds. We believe that encouraging holdings towards higher standards on ESG issues can benefit investment performance in the long term. We therefore use a combination of direct engagement, collaborative engagement and service provider engagement to address issues that we feel have most impact on corporate value and sustainability. Our engagement policy describes the steps we will take to escalate matters should a company prove unresponsive. At the PM s discretion, we may consider divesting the company, depending on the gravity of the violation and our assessment of the case. We aim to vote all of our shares. We subscribe to a proxy voting service but voting decisions are by our Portfolio Managers based on our voting policy and company knowledge. We report on our responsible investment activities (including voting and engagements) each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. In addition, we have signed the Montreal Carbon Pledge in respect of our ethical equity funds which means that we produce an annual carbon footprint report which is available on our website, as is our PRI Transparency Report. Ethical sector-based exclusion tolerance levels: 1 Zero tolerance for revenue derived from combat equipment. Max 5% tolerance for revenue derived from other military equipment and associated services. 2 Max 5% tolerance for thermal coal production. (Metallurgical coal, which is essential to steel production/manufacturing, is permitted.)

Quantitatively-Managed Equities Danish Fund Range Sparinvest SICAV Sparinvest SICAV SIF Danske Aktier KL Momentum Aktier KL Momentum Aktier Akk. KL A Sparinvest - Equitas EUR Sparinvest - Equitas Emerging Mkts EUR A Exclusions Voting The fund excludes illegal weapons and securities subject to EU sanction. When investing using quantitative strategies, the emphasis is on overall portfolio characteristics rather than on the individual holdings. Accordingly, consideration of ESG-factors is integrated in the investment process at the total portfolio level, using a numeric score based on MSCI ESG ratings, (where available) with the aim of improving the portfolio s ESG score over time. Portfolios are screened for norms on a 6-monthly basis. is preferred to exclusion for quantitatively-managed strategies. for quant funds is conducted at a Group level via our service provider. Voting is on individual holdings exceeding a value of EUR 1 million. We report on our responsible investment activities (including voting and engagements) each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. Our PRI Transparency Report is available to view on our website.

Passively-Managed Equities Danish Fund Range INDEX Emerging Mkts KL INDEX Europa Growth KL INDEX Europa Small Cap KL INDEX Europa Value KL INDEX Globale Aktier KL INDEX Globale Aktier Min. Risiko Akk. INDEX Globale Aktier Min. Risiko KL INDEX Japan Growth KL INDEX Japan Small Cap KL INDEX Japan Value KL INDEX Japan OMX C25 KL INDEX USA Growth KL INDEX USA Small Cap Growth KL INDEX USA Value KL Exclusions Voting The fund excludes illegal weapons and securities subject to EU sanction. The raison d être for passive strategies is to track according to tracking error constraints a specified benchmark at the lowest cost possible. The requirement to mimic a given index means that - unless the index itself is built upon environmental, social and governance (ESG) factors these cannot be artificially introduced into portfolio construction procedures. Doing so could potentially change the fund s investment characteristics away from those promoted to, and understood by, investors and result in a failure of fiduciary duty. Passive portfolios are screened for norms on a 6-monthly basis. Any degree of exclusion is considered to be undesirable for the successful operation of passive strategies and therefore engagement with companies in breach of Norms is preferred. for passive funds is conducted at a Group level via our service provider. Voting is on individual holdings exceeding a value of EUR 1 million. The number and progress of service provider engagements is reported on annually in Sparinvest s Responsible Investment Review and PRI reporting.

Ethical Passively-Managed Equities Danish Fund Range INDEX DJSI World KL Overarching Exclusions Ethical Exclusions Voting The fund excludes illegal weapons and securities subject to EU sanction. This fund follows the the Dow Jones Sustainability World ex. Alcohol, Gambling, Tobacco, Armaments, Firearms and Adult Entertainment Index The fund tracks a benchmark which has a best in class approach to sustainability in addition to the abovementioned ethical exclusions. Passive portfolios are screened for norms on a 6-monthly basis. Any degree of exclusion is considered to be undesirable for the successful operation of passive strategies and therefore engagement with companies in breach of Norms is preferred. In the unlikely event that Norms Based screening identifies a confirmed breach for this fund, our engagement will consist of trying to clarify this with our index provider/screening service provider Voting is on individual holdings exceeding a value of EUR 1 million. The number and progress of service provider engagements is reported on annually in Sparinvest s Responsible Investment Review and PRI reporting. Quantitatively-Managed Convertible Bonds Sparinvest SICAV Sparinvest Global Convertible Bonds EUR R Exclusions The fund excludes illegal weapons, securities subject to EU sanction and shares in companies owned by states excluded by our country screening. When investing using quantitative strategies, the emphasis is on overall portfolio characteristics rather than on the individual holdings. Accordingly, consideration of ESG-factors is integrated in the investment process at the total portfolio level, using a numeric score based on MSCI ESG ratings, (where available) with the aim of improving the portfolio s ESG score over time. Portfolios are screened for norms on a 6-monthly basis. is preferred to exclusion for quantitatively-managed strategies for quant funds is conducted at a Group level via our service provider. We report on our Group level responsible investment activities each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. Our PRI Transparency Report is available to view on our website

Actively-Managed Corporate Bonds Danish Fund Range Emerging Mkts Value Virksomhedsoblig r KL HY Value Bonds Udb. KL IG Value Bds Udb. -All Countries KL Value Bds 2018 Udb. KL Value Virksomhedsobligr Global Hojrente Udb. KL Value Virksomhedsobligr - Nye Markeder Udb. KL IG Virksomhedsobligationer (ex finans) HY Virksomhedsobligationer (ex finans) Value Virksomhedsobligationer - Global Højrente Kort Løbetid Udb. KL Sparinvest SICAV Sparinvest - Emerging Mkts Corp. Value Bonds EUR Sparinvest - High Yield Value Bonds Short Dur n 2018 EUR R Sparinvest - Investment Grade Value Bonds Sparinvest - Value Bonds - Short Dated HY EUR R Sparinvest - Value Bonds 2018-50/50 EUR R Sparinvest - Value Bonds 2019-50/50 EUR R Exclusions The fund excludes illegal weapons and securities subject to EU sanction. We aim to strengthen portfolios by minimizing exposure to downside risk. Thus, consideration of ESG issues is part of our fundamental credit analysis process. Our customized 'red flags'- investment check list requires that all 3rd party ESG research information should have been analyzed prior to investment, alongside traditional financial key metrics. We prioritize governance risks for both fiduciary and practical reasons. Sparinvest believes that it is prudent to consider adequate governance as a basic prerequisite for a company to be able to focus on and improve its environmental and social credentials. Sparinvest subscribes to an external service which continuously monitors companies for breaches of international norms. Portfolios and their benchmarks are fully screened every six months, with ad-hoc alert information received as new breaches occur. This information is converted into pre-trade compliance alerts, and daily screenings by Middle Office, resulting in portfolio norms breach watch lists. Information about any new norms breach classification will result in an investment case reappraisal by the portfolio management teams. Where the incident is deemed to be destructive of value to the point where the investment case is materially diminished, divestment may occur. Otherwise, the team will consider whether direct engagement is an appropriate course of action. We believe that encouraging holdings towards higher standards on ESG issues can benefit investment performance in the long term. Our Service Provider engages on behalf of Sparinvest Group, targeting companies assessed with: Confirmed and unaddressed violations Alleged violations Confirmed but addressed violations PMs follow the progress of these dialogues closely and, where appropriate, will make efforts to help move the dialogue forwards. In addition, PMs will selectively engage directly with portfolio companies based on a) ESG risk analysis b) normative breaches where they feel they can achieve impact on remediation and mitigation of future risk We report on our responsible investment activities (including voting and engagements) each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. Our PRI Transparency Report is available to view on our website

Ethical Actively-Managed Corporate Bonds Sparinvest SICAV Sparinvest - Ethical High Yield Value Bonds Value Bonds - Global Ethical High Yield EUR R Overarching Exclusions Ethical Exclusions (Norms Based) Ethical Exclusions (Sector Based) Norms-Based Screening The fund excludes illegal weapons and securities subject to EU sanction. The fund excludes/divests companies in confirmed and unaddressed breach of international norms relating to human rights, environmental law, labour rights and anti-corruption 1. In addition to this, we can also divest companies assessed as having alleged or confirmed but addressed violations, depending on the nature of the situation. The decision to do so would be on the basis of a qualitative investigation by portfolio managers into the nature of the alleged breach, or risk of breach and the company s speed of reaction to it, as well as the remedial actions that it has taken/has announced. The fund excludes companies on the basis of revenue derived from activities in certain sectors. We apply zero tolerance for production and max 5% tolerance for distribution of: tobacco, alcohol, gambling, pornography, military arms/weapons 1, thermal coal and oil sands 2 We aim to strengthen portfolios by minimizing exposure to downside risk. Thus, consideration of ESG issues is part of our fundamental credit analysis process. Our customized 'red flags'- investment check list requires that all 3rd party ESG research information should have been analyzed prior to investment, alongside traditional financial key metrics. We prioritize governance risks for both fiduciary and practical reasons. Sparinvest believes that it is prudent to consider adequate governance as a basic prerequisite for a company to be able to focus on and improve its environmental and social credentials. Having passed our ESG analysis, bonds for our ethical portfolios must also pass our ethical screening criteria. Sparinvest subscribes to an external service which continuously monitors companies for breaches of international norms. Portfolios and their benchmarks are fully screened every six months, with ad-hoc alert information received as new breaches occur. Exclusion Lists for our ethical funds are maintained on the basis of the semi-annual screenings, ad hoc alerts and decisions of the Responsible Investment Committee. These exclusion lists are used for pre-trade compliance checks, and daily screenings by Middle Office of the portfolios for any breaches. Any breaches (for example, where an existing holding becomes reclassified for exclusion) will result in the security being divested as soon as reasonably practicable for the ethical funds. We believe that encouraging holdings towards higher standards on ESG issues can benefit investment performance in the long term. We therefore use a combination of direct engagement; collaborative engagement and service provider engagement to address issues that we feel have most impact on corporate value and sustainability. Where a norms breach forces us to sell from ethical strategies, we will inform the company of this and make remediation suggestions. For any portfolio company involved in: alleged violations or confirmed but addressed violations, we aim to engage directly as well as via our service provider. Our engagement policy describes the steps we will take to escalate matters should a company prove unresponsive. At the PM s discretion, we may consider divesting the company, depending on the gravity of the violation and our assessment of the case. We aim to report to investors on a quarterly basis regarding engagements undertaken on behalf of this fund. In addition, we produce an annual carbon footprint report for the fund. We report on our Group level responsible investment activities (including voting and engagements) each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. Our PRI Transparency Report is available to view on our website

Actively-Managed Sovereign Bonds Danish Fund Range Nye Obligations-markeder KL Indeksobligationer KL Exclusions Illegal weapons Exclusions based on Multilateral Sanctions Exclusions based on Norms based screening At an individual security level, we exclude banned weapons producers from all Sparinvest funds. This may result in the exclusion of state-owned enterprises from our funds, but not entire states. We will exclude countries prohibited for investment as a result of multilateral sanctions (UN and EU) Norms based country screening is used to inform investment decisions, meaning the sovereign bonds of certain nations may be avoided or divested. The formal consideration of governance risk factors is a vital and integral part of the process of evaluating the credit spread. From a fiduciary perspective, we believe that the G part of ESG analysis is of paramount importance when investing in Sovereigns because a well-governed country is more likely to repay its debts (as well as look after its people and protect the environment). World Governance Indicators are used as input, with adjustments on the basis of other, more forward-looking data. Norms based screening (described below) helps to identify the countries that are unable to protect basic human rights. We use the country screening service of a reputable service provider. 170- UN member states are assessed for their capacity to protect basic human rights. Screening covers: Multi-lateral sanctions (UN & EU) Social risks (UN Development Programme and others) Governance (World Bank) This rear-view data is supplemented by Sparinvest s own investigations into more up-to-date reports of country-specific social and governance factors. The difficulty of influencing behaviour in those nations that have the worst record for upholding human rights is well understood. However, we will engage at a Group level via coordinated initiatives targeting heads of state as well as through supra-company engagement with index providers and stock exchanges. With regard to sovereign funds, we will report on the total number of countries that Sparinvest considers to be uninvestable at the end of each calendar year, indicating the reasons for any change in that number since the previous year-end. We report on our responsible investment activities (including voting and engagements) each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. Our PRI Transparency Report is available to view on our website

Passively-Managed Securitized Bonds Danish Fund Range Bolig INDEX Stabile Obligationer KL Korte Obligationer KL Lange Obligationer KL Mellemlange Obligationer KL Sparinvest SICAV Sparinvest - Long Danish Bonds EUR R Exclusions Illegal weapons Exclusions - Multilateral Sanctions and Normsbased screening At an individual security level, we exclude banned weapons producers from all Sparinvest funds. This may result in the exclusion of state-owned enterprises from our funds, but not entire states. We will exclude countries prohibited for investment as a result of multilateral sanctions (UN and EU) and Norms based country screening. However, the investment universe for these funds currently consists of securitized bonds issued by Danish financial institutions. The universe for these funds consists of issuers that are able to meet strong governance and regulatory requirements. It should be borne in mind that in over 200 years of Danish Mortgage bond issuance, there has never been a single default. Nevertheless, we check for and remain alert to any such risk. We use the country screening service of a reputable service provider. Denmark regularly appears amongst the very top-rated countries in terms of governance. It is currently ranked 4/170 nations assessed. We undertake to engage with any issuer in this universe identified as being in breach of: Confirmed and unaddressed violations Alleged violations Confirmed but addressed violations via a combination of service provider and direct engagement. We report on our responsible investment activities (including voting and engagements) each calendar year in our first Responsible Investment Review of each year and through our annual PRI Transparency. Our PRI Transparency Report is available to view on our website

Asset Allocation (Blend Funds) Danish Fund Range Sparinvest SICAV Mix Hoj Risiko KL Mix Lav Risiko KL Mix Mellem Risiko KL Sparinvest - Balance EUR R Sparinvest - Procedo EUR R Sparinvest - Securus EUR R These funds consist of a fixed allocation Equity component and Bond component. Both rely on combinations of Sparinvest funds and strategies as follows: Equity Component The Mix Fund equity component consists of a combination of Sparinvest Index funds, Sparinvest Quant funds and Sparinvest actively-managed value equity funds. (see RI Policies for each of these es above) Bond Component Consists of investment in a combination of Sparinvest s corporate, sovereign and securitized bond fund strategies (RI policy for these asset classes described above) Equity Component As for Sparinvest Equitas, (see RI Policy for quantitatively-managed equities, described above) Bond Component Consists of investment in a combination of Sparinvest s corporate, sovereign and securitized bond fund strategies (RI policy for these asset classes described above)