Funds Group: Brown Advisory Funds
Management Company: Brown Advisory LLC
Funds Affected: (1) Brown Advisory Sustainable Growth Fund and (2) Brown Advisory Sustainable Bond Fund
Sustainable Investing Strategy: ESG Integration, Exclusions
(1) To achieve its objective, the fund invests in equity securities of sustainable domestic companies. The adviser defines sustainable companies as:
• Companies whose internal sustainability strategies are driving tangible business benefits,
such as revenue growth, cost improvements, enhanced franchise value, or risk mitigation;
• Companies whose products have a competitive advantage as a result of sustainability drivers such as resource efficient design or manufacturing; or
• Companies whose products or services offer solutions to long-term sustainability challenges.
(2) The Brown Advisory Sustainable Bond Fund utilizes environmental, social and governance (ESG) analysis in connection with its investments in fixed-income securities. The fund will invest primarily in securities of issuers where the use of proceeds exhibit one or more of the following:
• Have strong environmental factors, including performance on critical environmental impacts;
• Apply extensive sustainability criteria throughout their supply chains;
• Minimize risks to air, water and public health;
• Act as socially responsible companies in the communities in which they operate;
• Have strong governance and labor practices;
• Are environmental innovators such as energy efficiency and clean energy companies; and
• Are sustainable agriculture companies involved in natural and organic foods.
The fund particularly seeks to invest in fixed-income instruments that provide direct exposure to issuers and/or individual projects that reflect positive social or environmental impact. The Fund will avoid investing in securities where the use of proceeds is primarily used for:
• Fossil fuel extraction, processing, or refining;
• Fossil fuel fired power generation and companies with carbon reserves;
• Producers of genetically modified organisms (“GMOs”);
• Civilian firearms and military weapons;
• Nuclear power; or
• Companies that derive revenues from tobacco.
If one consideration is a concern, it does not automatically exclude an issuer from potential investment, and the ESG evaluation process will evaluate all risks and opportunities in an industry. Investing on the basis of ESG criteria is qualitative and subjective by nature, and there can be no assurance that the process utilized by the fund’s vendors or any judgment exercised by the Adviser will reflect the beliefs or values of any particular investor.