What are Sustainable Funds?

Sustainable funds invest with two lenses: They analyze company performance with regard to ESG criteria (environmental, social, and governance) alongside traditional factors such as valuations and earnings growth.

ESG analysis can give a fund manager a better understanding of the sustainability of a company's business operations and profits while also bringing to light risks that might be overlooked in a more limited analysis.

Putnam has a dedicated sustainable investing team that engages in ESG analysis. Examples of environmental factors we consider include a company's carbon intensity, water use, or waste reduction efforts. Social factors include employee well-being and commitments to workplace equality and diversity. Governance factors include board independence and alignment of management incentives with the company's sustainability objectives.

Our analysts have ongoing dialogue with companies of all sizes and across all sectors around the world. As experts in their industries, the analysts can assess the level of commitment in a company to investing in sustainable practices, and they can model the impact of these investments on a company's future business prospects.

Putnam's approach

• We incorporate ESG information in our investment processes because, as active managers, we are committed to conducting thorough research when pursuing investment opportunities.
• Putnam Sustainable Future Fund invests in growth companies that are dedicated to solving sustainability challenges.
• Putnam Sustainable Leaders Fund invests in growth companies that are committed to sustainable practices.