FLOW OF THE PRESENTATION

SBI FUNDS
SBI ESG PORTFOLIO MANAGEMENT
ADVANTAGE
 PORTFOLIO CONSTRUCTION PROCESS

STEP 1 STEP 2 STEP 3 STEP 4 STEP 5

QUALITATIVE EXTERNAL FORENSIC INVESTMENT INVESTMENT

FACTORS ANALYSIS ANALYSIS THESIS DECISION
• Analysis of Business • Geo-Politics and its • Derive Quality • Financial • Target price
model impact on business Score with input analysis of last 5 • Attractiveness of
• Impact of Macro- • Channel checks of ROE, ROIC, years potential Upside
economic variables on • Management Earnings Risk • Building • Strategic fit with
the business model Meetings and Debt investment other stocks in
• Company analysis • Work place / Plant repayment thesis the portfolio
based on factors visits capabilities • Valuation model
including Porter’s Five
Factors
• Sell-side research
interaction

The strategy and the composition mentioned above, of the portfolio is subject to change within the provisions of
the disclosure document. The parameters stated above are only for illustration purpose and may or may not be
exhaustive. Please refer to the disclosure document fordetails.
CENTRAL THEME OF OUR PORTFOLIO

Negative Screening High Conviction Long only Focused

Exclusion of certain stocks Investing
sectors/ companies/ Niche Businesses having Disproportionate
practices based on conducive universe for beneficiaries of Economic
specific ESG criteria multi-fold growth Growth at reasonable price

Multi Cap Strategy Absolute Return Fundamentals driven Green is clean

Traversing across
market caps – Large,
Mid and Small
focus well formulated Investing in companies
Not being slave of investment strategy meeting positive
momentum standards of ESG
At least 3-5 years’
investment perspective responsibility
PORTFOLIO PHILOSOPHY

Companies we look for ‘Growth’ for us

• Disproportionate beneficiaries of Economic Growth

• Market Leadership
• Businesses conducive to take the advantage of size of
• Return on Capital
opportunities
• Improving OCF / EBIDTA
• Porter’s 5 Forces - Guiding Principles for evaluation of business
• Low Leverage
• Business strategies encompassing
o Market share gain through penetration
o Market share gain through New Product introduction /
Extensions

Buyer’s
Companies we look for
Power

• Positive Standards of ESG

o Energy Conservation, Social Impact, Good
Threat
from new
Industry Supplier’s Governance
Rivalry Power
entrants • Qualitative factors to match ‘Values’ expectations
o Minority Shareholder Interest
o Best in class governance standards
Threatof
o True independence of Board
Substituti
on
PORTFOLIO PHILOSOPHY - CIRCLE OF INFLUENCE

COMPETITION. Are the products / markets differentiated

Is competition rational not to impact profitability

NEW ENTRANTS. Does business have meaningful entry barrier

Is the potential universe large enough to accommodate new
entrants

SUPPLIER’S POWER. Does the company have enough levers

to absorb input inflation

BUYER’S POWER. Can the company price product / services

to protect profitability
Strategies for better product / service offerings

THREAT OF SUBSTITUTION. Low Threat of substitutions

Low threat of business disruption
PORTFOLIO PHILOSOPHY
Listed Stocks
Traded Stocks Recent Trading History
Price Performance
Active + Passive Long Term opportunity
Benchmark existence
Universe
Active Research Analyst preference
Stock Coverage
Universe Inhouse Financial Model
Positive standards of ESG
ESG Filter
Exclusion screener
ESG Profitable Growth
Universe Capital Efficient
Sustainable multifold growth
ESG Best Fit – Opportunity &
Portfolio Valuations
PM’s conviction
The Universe
• Active + Passive Coverage
o ~550+ companies
• Passive Coverage
o ~220+ companies
• Active Coverage
o Dynamic list ~330-340 companies
We Prefer
• Consistency over Cyclicality
• Triple Bottom line
We Avoid
• Companies impacted by excessive leverage
We are Agile
• Because protecting capital is equally
important as growing it
• More concentrated with better focus on
environment
BUY A GOOD BUSINESS, RUN BY GREAT
PEOPLE AT AN ATTRACTIVE PRICE!

• Integrity
• Long-term Vision
• Size of Opportunity
• Track record
• Return on Capital
• Skin in the Game
• Pricing Power
• Capital Allocation
MANAGEMENT BUSINESS • Capital Intensity
• Transparency and
• Risk of Disruption
Accountability
UNIVERSE

VALUATION

• Discounted Cash Flow

• Relative Valuations
RESPONSIBLE INVESTING IS SUSTAINABLE INVESTING

ESG Compliant

Engage with Companies

Proxy Voting, Dialogue
Invest Efficiently

Environment (E) Social (S) Governance (G)

• Climate Change • Human Capital • Independent

• Carbon Emission • Labour Standard Board
• Natural Capital • Product Liability • Pay
• Water Stress • Privacy and Data • Accounting
• Renewable Security • Business Ethics &
Energy Minority
Shareholder
Protection
GROWTH DRIVERS OF ESG INVESTING

Data & Analytics are evolving

Better data, policy nudge combined
with better ESG research and analytics
capabilities; facilitates systematic,
quantitative, objective and financially
relevant approaches to ESG key issues.

World is Changing
Flood risk and sea level rise, privacy
and data security, demographic shifts,
and regulatory pressures - new risk
factors for investors. Modern investor Investors are Changing
may re-valuate traditional investment Over the next two to three decades,
approaches. the millennial generation would look
forward for investing in ESG assets
across the globe.

Source : MSCI Report on ESG Investing

 ESG INDEX PERFORMANCE IN DEVELOPED & EMERGING
MARKETS

Nifty 100 vs Nifty 100 ESG MSCI EM vs MSCI EM ESG

500 400
450 350
400 300
350
250
300
250 200

200 150
150 100
100
50
50
0
0

Sep-12

Sep-13

Sep-14

Sep-15

Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21

Sep-22
Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Mar-23
Sep-12

Sep-13

Sep-14

Sep-15

Sep-16

Sep-17

Sep-18

Sep-19

Sep-20

Sep-21

Sep-22
Mar-12

Mar-13

Mar-14

Mar-15

Mar-16

Mar-17

Mar-18

Mar-20

Mar-21

Mar-23
Mar-19

Mar-22

M2EFES Index MXEF Index

NSEESG Index NIFTY 100

Nifty 100 ESG Index outperformed Nifty 100 by MSCI EM ESG Index outperformed MSCI EM
3063 bps (Mar’12-Mar’23) by 12188 bps (Mar’12-Mar’23)

Source: Bloomberg. Past performance may or may not be sustained in future and is dependent on various economic and social factors. Source:
Bloomberg, Data period – 31st Mar 12 to 31st Mar 23. Index values have been rebased to 100. MXEF: MSCI Emerging Market Index. M2EFES: MSCI
EM ESG Gross Total Return Index.
ESG IS EVOLVING IN INDIA

RBI joined the Central

India second largest BRSR compulsory for
India took net zero Banks Network for
issuer of green bonds top 1000 listed
carbon pledge for 2070 Greening the Financial
in emerging markets companies from FY23
System (NGFS)

50% of India’s ESG AUM jumped to ESG Disclosures

electricity to come INR 109.6 billion in mandatory for ESG 10 ESG Equity funds in
from renewables by Nov 2022, from INR Schemes from Apr India 2018-21
2030 26.3 billion in Nov 2019 2022

India targets to be Stewardship Reporting

Battery swapping Green Hydrogen policy
100% electric vehicle mandatory for MFs,
policy to be announced announced
nation by 2030 AIFs, Insurance and PFs
ESG FACTORS WHICH WE FOLLOW - SNAPSHOT
Sensitivity to Environmental
ESG Factors
• Adequacy of Data on • Progressive reduction in
ESG footprint energy consumption
• Sensitivity towards • Progressive reduction in
environmental and water consumption CO2
social impact and other toxic gas
emissions
• Renewable Energy
v v
Social Governance
Factors Factors
• Transparency to • Competence & diversity
Government, local of Board of Directors
bodies and affected • Independence of the
communities regarding board and rotation of
consent, Rehabilitation independent directors
& Resettlement during • Independence of Audit
land acquisition & & Remuneration
clearance Committee
• Cordial Industrial • Evidence of tax evasion
Relations • Transparency in the
• Training & skill related party
development transactions
• Minority Shareholder
protection
ESG ANALYSIS PROCESS

Evaluate investee companies on ESG

factors
Evaluate

Voting Practices
Engage Communicating with investee companies
before and after the AGM

Integrate Integrate active management practices

into investment decisions
ESG – Investment Process

External:
Ratings from global
reputed ESG ratings
Investment Universe firm/s
Internal coverage
Internal: Fundamentals:
Build SBIFM Return on capital
Exclusion's capabilities
Earnings growth
Sector + Controversy
Leverage Amundi
Internal research: expertise Competitive advantage
Coverage of 340+
companies ESG Ratings / Scorings Longevity / scale of
External + Internal opportunity
Sectors:
Tobacco
Valuations
Controversial weapons
Alcohol Portfolio construction
Gambling Fundamentals
Adult entertainment

Controversies:
High/Severe impact on
society, environment
and risks to the long-
term sustainability of
the business
Source: SBIFM
Forensic Accounting Framework

Objective: Are published accounts a true reflection of actual business performance?

Process: Listed companies graded into quartiles on 18 financial ratios

Profit & Loss Balance Cash flow Related Audit quality

checks Sheet checks checks party checks checks

Purpose
Are cashflows
Extent of related
Aggressive consistent with Quality of Auditor
Is Balance sheet party transactions
accounting of other statements and Audit process
misstated? on P&L and
P&L items. like P&L and
Balance Sheet
Balance Sheet?

Examples
Revenue
Cash balance Gold plating on
recognition, Audit independence,
misstatement, capital expenditure, Loans and advances,
expense audit qualifications,
off-balance sheet cashflow vs receivables, sales
recognition, non- quality of auditor
risk, working capital corresponding P&L and purchases
core profit etc
position etc entries etc
recognition etc
PORTFOLIO PHILOSOPHY - SNAPSHOT

Portfolio • High conviction ideas

Market Cap • Market Cap Agnostic – Multi-cap strategy

Inception Date: July 8, 2016
• Sector Agnostic – outcome of Bottom Up
Sector Position
approach
Benchmark: Nifty 50 TRI
Stock Weight • “Highest Conviction First Methodology”,
Risk Parameters:
• Sales Growth ahead of Real GDP Growth, ▪ Sector active weight based on
Key Decisive factors
Profitable Growth, Focus on capital efficiency
market dynamics and our long
Business Universe •Conducive for company’s multi-fold long term term view
sustainable growth ▪ Risk managed through investing
across market cap curve
Capital Efficiency •Improving trend in return ratios like ROE, ROCE,
and ROE higher than Cost of Capital ▪ Cash call and small cap allocation
will be quality of the business
• Meeting positive standards of Environmental,
ESG focus
Social and Governance responsibility

Earnings Risk • Targeted Lower than benchmark at portfolio level

Please refer to disclosure document for risk factors and details about the portfolio before investing.
 SBI FUNDS
SBI ESG PORTFOLIO MANAGEMENT
ADVANTAGE
THE SBIFML ADVANTAGE

PROFESSIONAL INVESTMENT MANAGER

SBI Funds Management Limited has been managing pooled investments over 2 decades.
Besides, domestic mutual funds, SBIFM also manages PMS/ advisory mandates and offshore investments

INVESTMENT TEAM
We have a dedicated fund manager to manage the scheme along with strength of in-depth research support of
SBIFM

ROBUST AND METICULOUS INVESTMENT PROCESS

We have meticulous and robust investment process, which helps us identify stocks that are on the cusp of
improving trajectory, thereby tends to give us a significant early mover advantage

AT YOUR SERVICE
We have an exclusive set-up to cater to all clients need. We have also appointed professional service providers
who will assist us to provide high quality service, seamlessly
SBIFML Pioneering ESG in India

THE MANY FIRSTS AT SBI MF

First ESG themed Mutual Fund product
in India

Amongst the earliest asset managers to

start voting on company resolutions

First Indian AMC to First Indian AMC to adopt the Stewardship

support impact Code
investing ecosystem Amongst the first Indian AMCs to adopt
through SDG Cart a Responsible Investment Policy
Innovation contest
Won the ICGN Global Stewardship
Champion Award 2020
Amongst first Indian Signatories to
UNPRI and CA100+
Participating in various
Developed in-house frameworks for
Sustainable Finance
forensic study of accounting anomalies,
Sub-Groups in India
director and KMP compensations
 DISCLAIMER

In the preparation of the material used in this document, SBI Funds Management Limited (SBIFM) has used information that is publicly available, including
information developed in-house. Information gathered and material used in this document is believed to be from reliable sources published by third parties.
While such publications are believed to be reliable, however, neither the SBIFM, its officers nor any of their associates / affiliates or representatives assume
any responsibility of the accuracy, reasonableness and/or completeness of any information. For data referred to of any third party in this material no such
party will assume any liability for the same. Further, all opinion included in this material are as of date and are subject to change without any notice. The
same may or may not be relevant at a future date. SBIFML takes no responsibility of updating any data/information in this material from time to time. All
recipients of this material should seek appropriate professional advice and carefully read the Disclosure Document before dealing and / or transacting in any
of the products referred to in this material make their own investigation. There is no assurance of principal or returns in this portfolio and the value of the
portfolios may fluctuate and can go up or down. The Stock(s)/Sector(s) mentioned in this material do not constitute any recommendation of the same and
the portfolios may or may not have any future positions in these Stock(s)/Sector(s). The composition of the portfolio is subject to changes within the
provisions of the disclosure document. This material has been prepared for general information only and this may undergo change in the future. The
expected return mentioned in this presentation is only indicative and may not be achieved due to change depending upon prevailing market rate, taxation,
regulatory and other relevant factors. Further, investments in proposed securities are subject to certain risks, including but not limited to investments in
illiquid securities, restriction on withdrawal and transfer of investments, changes in market conditions, levy of taxes and other regulatory changes, etc.
SBIFM reserves right to modify or make investment in accordance with provisions of the Disclosure Document / agreement entered into in this regard. The
details of deals / sectors / investments mentioned in this material are only for illustration purpose. There is no guarantee or assurance of investments will be
executed by SBIFM

This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things,
projections, forecasts, estimates of yields or returns, and proposed or expected portfolio composition. This material is not intended to be relied upon as a
forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
The opinions expressed are as of the date of the document and may change as subsequent conditions vary. The information and opinions contained in this
material are derived from sources deemed to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that
any forecasts made will come topass.

SBIFM and any of its directors, officers, employees and its associates shall not liable for any loss, damage of any nature, including but not limited to direct,
indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner whatsoever. The
recipient alone shall be fully responsible/are liable for any decision taken on the basis of this material. Please note that past performance of the financial
products, instruments and the portfolio does not necessarily indicate the future prospects and performance thereof.