Sustainability

For purposes of this Policy, APC has adopted the CFA Institute’s definition of ESG Integration: the ongoing consideration of ESG factors within an investment analysis and decision-making process with the aim to improve risk-adjusted returns. The In-Scope Strategies incorporate ESG Integration primarily through the Investment Team’s annual scoring process.

In-Scope Strategies

The Corporate (Bank) Loan Strategy and Trestles CLO Platform

The Corporate (Bank) Loan Strategy seeks to outperform the Morningstar LSTA US Leveraged Loan Index by investing primarily in bank debt instruments of non-investment grade companies. The Trestles CLO Platform seeks to generate attractive risk-adjusted returns for debt and equity investors by investing primarily in bank debt instruments of non-investment grade companies.

APC’s mandate for these strategies is not to explicitly exclude or screen out any sector or industry, but to include the evaluation of material sustainability factors to better inform the investment team of material risks and the sustainability of business models.

During the annual scoring process, investment professionals conduct research and produce proprietary scores referencing the SASB Materiality Framework, including climate risk and resilience, natural resources and ecological impacts, employee health and safety, human rights and community relations, governance structure, and management of the regulatory environment.

Investment professionals assign an industry risk score, company disclosure score, and company quality score for each name. Together, these scores reveal a credit’s overall sustainability risk relative to its industry based on available information, alongside other material financial information. Sustainability risk is one of many factors in the assessment of portfolio investments and may not be determinative in APC’s investment decisions.

For names deemed outliers under APC’s methodology, an analyst may document the rationale for the position for Portfolio Managers’ consideration. This research may also be supplemented by third-party datasets and research when available.

ESG integration does not apply to APC’s Traditional Strategies because sustainability factors are not considered in the same explicit or systematic way as they are for the In-Scope Strategies.

APC seeks to ensure relevant investment professionals are aware of material sustainability-related risks and opportunities through its standard credit research process. This includes education on the Firm’s approach, financial materiality, proprietary sustainability dashboards, and third-party data and research. The SASB Materiality Map and Materiality Finder may also be used to identify material sector-specific sustainability topics.

Although sustainability considerations are not systematically integrated across all Traditional Strategies, investment professionals may consider them when deemed financially material. APC believes this broader awareness strengthens the Firm’s ability to identify, evaluate, and mitigate portfolio risks.

APC’s ability to direct or otherwise control integration or action taken to address sustainability-related risks or opportunities varies across strategies, subject to the limitations outlined in this Policy and relevant governing or other legally binding documents.

APC recognizes the importance of stewardship activities for the companies we invest in, and ultimately our clients.

Industry Involvement

APC is a member of the Principles of Responsible Investment (PRI), the International Corporate Governance Network (ICGN), the LSTA Sustainability Working Group, and the IFRS Sustainability Alliance, and is a CDP Capital Markets Signatory. APC also licenses and applies the SASB Standards in its work.

Through these organizations, APC may dialogue with investors and industry participants to better understand and advance sustainable investment practices, engage corporate leaders, and advocate for key policy and regulatory solutions.

APC believes learning about sustainability best practices, opportunities, and challenges directly from companies can encourage appropriate and reasonable processes that may result in reduced risks and improved value for investors over the long-term. APC prioritizes engagement on disclosure efforts related to material topics, including discussions with existing and prospective issuers through quarterly meetings, road shows, conferences, and other opportunities.

Given APC’s near-exclusive focus on fixed income, APC is rarely presented with opportunities to vote proxies. When the opportunity arises, APC takes a thoughtful approach to voting on behalf of its clients. APC’s Proxy Voting Guidelines guide voting actions, including on shareholder and ESG-related proposals.