13 | 2023 Investment Outlook | December 12, 2022 CALVERT New Framework for ESG Disclosure and Responsible Investing Underway KEY POINTS John Streur Major events in 2022 have caused a shakeout in the responsible investment industry Chief Executive 1 that will bring meaningful change into 2023 and beyond. Officer, Calvert Research and Globally, the industry is moving toward more intensive ESG research that establishes Management 2 clear connections between corporate behavior and financial outcomes. Government ESG disclosure standards established in 2022 will help create a more 3 transparent, consistent framework for security selection and corporate engagement. The ESG and Responsible Investing markets have grown rapidly over the past decade because investors recognize that the world faces substantial environmental and social challenges, and that companies successfully addressing these challenges stand to benefit. Major events of 2022 have caused a shakeout in the industry and imply meaningful change today and into 2023. To stay relevant as capital market participants in 2023 and beyond, we believe responsible investors must intensify research into how well companies are managing their specific exposures to financially material environmental and social factors, analyzing their near- and long-term financial impacts. Multidimensional research with clear connections between corporate behavior and corporate financial outcomes must inform both security selection and corporate engagement efforts, including ESG activism. Greater Disclosure Required of ESG Asset Managers For years, responsible investors have propelled companies to increase transparency and disclosure of their ESG performance across factors ranging from carbon emissions to workplace diversity. Now it is critical that responsible investment asset managers provide transparency into their own research methodology. Investors need clarity around the linkages between corporate ESG performance, financial outcomes, security selection and the results of corporate engagement and activism. Understanding corporate governance will continue to be relevant for all types of investors, but the need for depth and granularity in responsible investment research and corporate engagement will dominate the ESG and responsible investing business in 2023 and beyond. The responsible investing teams and firms that can succeed in doing this will continue to thrive and gain investor market share, becoming increasingly relevant participants in global capital markets. New Responsible Investing Framework We believe the events of 2022 will prove to have been seminal for responsible investing and ESG research, helping shape the framework for a rapidly changing investment landscape. The combination of powerful geopolitical events, along with ambitious government regulations aimed directly at responsible investing, are together creating a new reality for market participants. The sum of geopolitics largely shows that individual entities—people, companies, countries— predominantly act in their own self-interests, as opposed to the long-term needs of global society. This makes solving issues that impact the global commons, such as climate change or