Letter from Our President

During 2021, Breckinridge will mark a decade of integrating environmental, social and governance factors into our research. Launching our first sustainable investing strategy composite in March 2011 is significant because our appreciation of the value of ESG in investing inspired our work to integrate sustainability across
our operations, leading to the publication of our inaugural corporate sustainability report in 2013. In our 2020 corporate sustainability report, we are pleased to report on Breckinridge’s continued progress with ESG
research and the many other aspects of our work toward improving our own sustainability-related policies and practices.

Several important steps preceded the 2013 corporate sustainability report. To organize our efforts, we created the position of Chief Sustainability Officer in May of 2011. We established Environmental, Social/Charitable and Governance Committees comprised of team members from across our firm to mobilize our staff to scrutinize our practices, identify areas of risk and suggest ideas for improvement.

In 2013, we chose to demonstrate our commitment to transparency by becoming a Certified B Corporation and, subsequently, a Massachusetts Benefit Corporation. B Corp certification structured our efforts to benchmark our own ESG performance and challenged our team to fully understand and improve our ESG impacts on all our stakeholders: customers, employees, suppliers, and communities.

Lessons learned as we more fully integrated ESG and sustainability into our research as an investor and our operations as a company are considered enduring truths at Breckinridge today. Among our enduring truths is a commitment to a long-term view, an appreciation for the
value of science, research and data, and that leadership—true and genuinely positive leadership—has value.

As investors, our process seeks to understand potential future costs of unsustainable present practices and then incorporate our insight into the risks and, ultimately, the price of bonds. As corporate citizens, we seek to understand the risks short-term business decisions have for the long-term sustainability of our world and then change our behavior to mitigate those risks.

During 2020, global financial markets and the health and economic security of billions of the world’s citizens were threatened in ways that they never have been before. Existing risk models and mitigation responses were tested by a global novel virus pandemic, social unrest and bitter political division on domestic and global levels. Life often was framed by uncertainty that undermined principles widely considered enduring truths in the past.

These extreme conditions once again have proven the devastating consequences of taking a short-term view and ignoring science. And they have reaffirmed the value of strong, positive leadership.

During 2020, issues that we consider to be enduring truths of ESG and sustainability gained greater relevancy in our view, and broader acceptance. We saw evidence that companies and cities increasingly recognize the worth of responsive human capital management (HCM)
and diversity, equity and inclusion (DEI) policies, including programs that deliver positive change.

During our engagement meetings with bond issuers, we discussed steps that they are taking and more that they can do to address climate risk, mitigation and adaptation. These initiatives are delivering tangible
results among an increasing number of issuers we speak with every year.

For ourselves, too, we recognized in the challenges of 2020 the work that we still have ahead of us to attain the sustainability goals we have set for our company. We strengthened our commitment to operating in ways that support the sustainability of our environment, our workforce, and the communities in which we live, work and invest.

This report documents progress made and goals yet to be achieved. I invite your attention to them. I also encourage you to ask us questions about our results and the work we very clearly still have ahead of us.

Sincerely,

Peter Coffin
President