Sustainable Investment Policy

Our investment professionals and our leadership team believe sustainability factors are useful considerations for mitigating risk as well as identifying opportunities. By viewing investments through a sustainability lens, we believe we can more effectively assess risk and opportunity, resulting in more thoughtful credit selection and potentially better risk-adjusted performance for clients.

We have been a signatory since 2010 to the Principles for Responsible Investing (PRI) under our parent company, Principal Asset Management. We recognize that sustainability issues have the potential to impact the performance of investments in our portfolio, and therefore incorporate sustainability considerations in our research process.

More than a decade ago, we realized sustainability factors may have long-term impacts on returns, so we developed a proprietary quantitative ESG scoring model to augment our analysis. Our ESG scorecard is designed to equally weight environmental, social, and governance factors across sectors. Whereas there are third-party providers that may score companies on sustainability-related factors that use more of a relative approach, comparing companies only to others in their sector, we believe our equally weighted, absolute approach has potential benefits.,. In addition, because the high yield and senior loan markets have significant exposure to privately owned companies (where third-party data is not available), we believe having our own proprietary sustainability evaluation tool is critical.

Our ESG Group, comprising an inter-disciplinary team of senior leaders from across the firm, guides the evolution of our sustainability efforts across both investing and operational activities.