At Affirmative Investment Management, or AIM, our portfolio and verification teams invest in impact fixed income bonds with a objective of delivering mainstream returns, but how do we do this? AIMS investment process really has three steps, and it's in some ways the beginning and the end where we truly differentiate. Step one, it's all about credit and verification. Half of AIMS team spend their day evaluating issues and issuers that make up part of the $400,000,000 self labelled fixed income impact market. The output of this process is to determine whether a bond should be included in our investible universe. There are a number of factors that should be considered when doing this evaluation. We call this the spectrum factors. We start with credit and ESG, a base credit check and ESG scores of the issuer are a critical first hurdle to get through. But from there, we need to determine whether the bond is aligned to the overall purpose of supporting the UN sustainable development goals and the Paris Climate Agreement.

The bond must have a positive environmental, climate, or social impact. The issuer must have transparent reporting. Also very important is the context. The issuer must be irresponsible issuer with strong integrity and standards. Another important factor in the spectrum process is actually what we call use of proceeds. The proceeds of the bond must be segregated for a particular purpose, and then finally, a very important part of the spectrum process. The issue must have a material, social, or environmental impact.

From the spectrum process, we developed a list of eligible securities from which our portfolio management teams build portfolios seeking to deliver mainstream financial alpha against a mainstream benchmark, very similar to most other fixed income managers out there.

The final part of what we do, step through the process, is impact reporting. This is where we monitor and review each issue for it to ensure that there is alignment with those UN sustainable development goals. It's here that we report through our annual impact report back to our clients the actual impact that their capital has had. At Affirmative Investment Management were solely focused on managing impact fixed income portfolios. This allows us to leverage our deep expertise to deliver those mainstream returns, but with impact in what is a fast growing and income world.