Labour Standards or Environmental, Social or Ethical Considerations ESG risks are ordinarily considered by Hyperion as part of the Fund’s investment process. Examples of ESG risks which may be considered by Hyperion include poor workplace health and safety, management culture, high carbon emissions, whether a company has strategies to reduce carbon emissions and climate related risks, energy efficiency, modern slavery concerns, data protection and privacy and poor corporate governance such as shareholders’ rights, executive compensation and board composition. Hyperion’s ESG risk integration approach is primarily focused on assessing and managing issues with the greatest materiality to financial and/or operating performance, issues with systemic influence (such as climate change), and adequacy of public disclosure on ESG factors/performance. Hyperion’s detailed long-term based fundamental research is highly structured, and all the key qualitative information and insights are captured in a proprietary research document. This detailed document is regularly updated for each portfolio company. The document addresses ESG and sustainability factors including isolation of potential long-term ESG and climate risks, carbon intensity, composition and quality of management and the board, and company specific ESG initiatives and disclosures. This analysis extends to a company’s broader stakeholder group, including its supply chain. This subsequently translates into an ‘ESG Score’, which encapsulates all ESG and climate research that has been completed and is compared to other holdings. The ESG Score ultimately feeds into the company’s ‘Business Quality Score’, which feeds directly into portfolio weightings through the portfolio construction process. In terms of the extent to which the ESG considerations are taken into account, Hyperion does not apply a set methodology for taking ESG considerations into account, and has no set approach to monitoring or reviewing these standards. Hyperion does not use a weighting system to apply a weight to the standards and considerations. Additionally, Hyperion does not have a set time for monitoring or reviewing investments. As such, Hyperion has no predetermined view about how far ESG considerations are taken into account. Where Hyperion determines that an investment is no longer suitable due to ESG considerations, Hyperion may elect to divest such investment, in accordance with the guidelines set out in Hyperion’s ESG Policy. For more information on how Hyperion excludes securities and sectors, as well as reporting and other ESG related measures which have been adopted by Hyperion, please download a copy of Hyperion’s ESG Policy here or on Hyperion’s website.

Sustainability has been core to Hyperion’s investment philosophy and process since it was established in 1996. Hyperion has a long-term investment horizon and we have always invested as business owners, not short-term share traders, with the long-term growth of those businesses core to our philosophy. This is evidenced by the fact that historically our average stock holding period for our portfolios is approximately 10 years.

We only invest our clients’ capital in those businesses that we believe are extremely high-quality with strong and sustainable value propositions to all stakeholders. The stakeholders include the wider community and an assessment of the company’s future likely long-term impact on the overall natural environment, including its carbon footprint. At Hyperion, we believe that a high standard of business conduct, as well as a responsible approach to social, environmental, and ethical issues, makes good business sense and enhances shareholder value over the long term. We have always given consideration to long-term economic and environmental sustainability when constructing our portfolios and our investing style favours low carbon-intensive businesses.