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Eaton Vance Corp.

PRI reporting framework 2020

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Investment policy

SG 01. RI policy and coverage

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01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Across the Eaton Vance affiliates, we afford clients the opportunity to choose among a range of investment approaches. EVM offers equity, income, alternative and multi-asset strategies that integrate consideration of material ESG factors into fundamental research processes seeking sustainable alpha creation. Similarly, Atlanta Capital applies a fundamental approach to investing in companies identified as high-quality, analyzing material ESG issues as a component of the investment research process.

Calvert offers fully integrated responsible investment strategies that incorporate disciplined ESG research and structured engagement as core principles, primarily serving investors who seek to effect positive change through their investments. Calvert's investment principles are described in the Calvert Principles for Responsible Investment, available at calvert.com. Link: https://www.calvert.com/media/34498.pdf

Parametric investment philosophy is the observation that most capital markets are highly efficient and that risk control, diversification and careful cost management can make or break long-term investment success. Parametric offers engineered portfolio solutions that are transparent and rules-based and do not require tactical insights into valuations or market direction.

 

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Eaton Vance Corp. Responsible Investment Philosophy

Overview

Eaton Vance provides advanced investment strategies and wealth management solutions to forward-thinking investors around the world. Through principal investment affiliates EVM[1], Parametric, Atlanta Capital and Calvert, Eaton Vance offers a diversity of investment approaches, encompassing bottom-up and top-down fundamental active management, responsible investing, systematic investing and customized implementation of client-specified portfolio exposures. Exemplary service, timely innovation and attractive returns across market cycles have been hallmarks of Eaton Vance since 1924.

Across our investment affiliates, we include consideration of environmental, social and governance (ESG) insights in our evaluation of investment opportunities and/or in the construction of the investment portfolios we manage. In our discretionary decision-making processes, we focus on ESG criteria we consider financially material. We define financially material ESG criteria as ESG risks or opportunities likely to affect the financial condition or performance of the issuer over a long-term investment horizon. We are active owners. Each of our affiliates addresses ESG issues in their own unique way, which may include direct dialogue with companies, proxy voting and/or other engagement activities.

Approach

Our multi-affiliate model affords clients the opportunity to choose among a range of investment approaches. Calvert offers responsible investment strategies that incorporate disciplined ESG research and structured engagement as core principles. EVM offers equity, income, alternative and multi-asset strategies that may integrate consideration of financially material ESG factors into fundamental research processes seeking to enhance each portfolio’s risk/return profile. Atlanta Capital applies a fundamental approach to investing in companies identified as high-quality, analyzing financially material ESG issues as a component of the investment research process. Parametric specializes in rules-based systematic investing and customized implementation of benchmark-based portfolios that offer clients the ability to align their investment exposures with their personal values.

Our approach to responsible investing is both flexible and evolving. Our affiliates’ portfolio managers and analysts seek to understand the potential impacts of how issuers manage ESG risks and opportunities using both proprietary and third-party research. Because these risks and opportunities vary across industries, geographies and business models, we believe that maintaining a focus on financial materiality is necessary to effective responsible investing.

Our governance structure for incorporating ESG insights into investment decisions and portfolio construction has two tiers. The first level is the Responsible Investing Leadership Team, which includes selected equity and fixed income chief investment officers from various affiliates, Calvert’s chief executive officer and other senior investment leaders. The Responsible Investing Leadership Team meets quarterly to discuss emerging developments and to track progress as it relates to responsible investing and ESG integration.

The second tier of the governance structure is the Research Working Group, whose membership consists of selected analysts and portfolio managers from our affiliates representing diverse investment strategies and multiple office locations across the globe. The group meets monthly to discuss new ESG information and best practices, and reports to the Responsible Investing Leadership Team at least quarterly.

Engagement

We believe that active engagement is an essential component of responsible investing. In addition to direct dialogue with issuers, our affiliates may use their power as shareholders to vote proxies in accordance with their guidelines.

Additionally, Calvert offers a structured form of engagement. Informed by proprietary ESG research, Calvert analysts identify financially material issues on which to engage with company management. Calvert believes that by working with companies to address areas for improvement, companies can improve their performance on these material environmental, social and/or governance issues, as well as improve Calvert’s position as a shareowner. These improvements may, in turn, elevate both company and industry standards, offering the potential for positive societal and economic impact.

At Calvert, dialogues with issuers that do not result in desirable outcomes may result in the filing of shareholder resolutions, sometimes in collaboration with other like-minded investors and coalitions. In a time when many investment managers claim to be working toward similar goals, Calvert is among the few to regularly bring material ESG issues to a vote at shareholder meetings.

A History of Dedication

A leader in responsible investing, Eaton Vance has been a signatory of the United Nations Principles for Responsible Investment (PRI) since 2015. Eaton Vance acquired the business assets of CIM in 2016, which has further inspired and served as a catalyst to significantly advance Eaton Vance’s commitment to leadership in responsible investment. CIM became a founding signatory of PRI in 2006 and Parametric became a standalone signatory in 2018.

Eaton Vance’s primary goal in incorporating material ESG factors into investment processes and engagement efforts is to develop a more comprehensive review of investment risks and opportunities and to seek to unlock investor value. We believe this holistic approach provides direct benefit to clients. As the availability of ESG information and consideration of ESG factors by corporations, consumers and governments continue to evolve, so will our investment approach.

 

[1] Eaton Vance’s controlled subsidiaries in Europe, Eaton Vance Advisers International, Ltd and Eaton Vance Global Advisors Limited, follow the same approach to responsible investing as EVM.

 

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk (Private)


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

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02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

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02.3. Additional information [Optional].

EVC is reporting across the entire organization and in the event that one or more of our subsidiaries has done work on responsible investing, we have incorporated that into our responses. EVC's affiliates offer mandated responsible investment products through Calvert, Parametric and Atlanta Capital.

While many of our responses are tied to Calvert, since Calvert has been a leader in responsible investment for many years, Parametric also has long-standing and well-established portfolio management practices that allow it to incorporate ESG considerations into any separately managed equity portfolio per client request.

The section above represents Calvert and their policies on The Calvert Principles, which inform the ESG research for Calver, EVM, and Atlanta Capital.


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Employees of EVC and its affiliates are subject to a firm-wide Code of Ethics (the “Code”), which sets forth standards of conduct to help Eaton Vance employees avoid potential and actual conflicts that may arise from their actions and their personal securities transactions.

In addition,  EVC and its affiliates are subject to various inherent and firm-specific conflicts of interest. Examples of such conflicts of interest include but are not limited to; favoring higher fee paying accounts in investment allocations, receipt of brokerage research from counterparties, employees trading for their personal accounts, and employee compensation, among others. To eliminate or mitigate such conflicts of interest, EVC has adopted policies and procedures we believe are reasonably designed to address such conflicts of interest.

Each affilate's Form ADV Part 2A provides a more comprehensive list of conflicts of interest and ways we seek to eliminate or mitigate such conflicts.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within investee entities.

04.2. Describe your process on managing incidents

With regard to Calvert's process for managing ESG factors: Calvert has access to a variety of data sources that describe controversies at issuers in their portfolios. An issuers' reactions to controversies are an integral part of Calvert's evaluation process. As these occur, Calvert's team of ESG research analysts assess the information to determine whether the size, scale, severity of impact as well as the financial materiality of the controversy changes their view on the issuer's management of its material ESG risks. Issuers experiencing severe or material controversies may receive lower ratings and rankings versus their peers. If an analyst deems the controversy severe enough to reconsider Calvert's investment altogether, the analyst may present to the firm's ESG governing body for evaluation and reconsideration, and the issuer may in some cases be determined to be ineligible for investment.

Parametric relies on dedicated ESG research providers to perform comprehensive, company-level research on a wide variety of issues. Parametric undertakes careful review of each provider's methodology and resources, as well as oversees and quality-checks any incoming data. This information may be used for both portfolio construction as well as ongoing ownership. In the case of portfolio construction, Parametric works with clients to determine the most appropriate data set and incorporation method for the particular mandate. Any related Parametric research would pertain to overall implementation types of issues such as tracking error, risk biases, or tax management impact, rather than individual security level observations. Current subscriptions span the following data types: business involvement, controversies, carbon reporting, sanctions, faith-based criteria or overall environmental, social and/or governance scores.


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