When an asset owner develops an ESG investment philosophy, the selection of material ESG factors is least likely influenced by:

An asset owner’s ESG investment philosophy is fundamentally shaped by strategic considerations

such asasset classandgeographic exposure, which determine the types of ESG risks and opportunities

likely to be material. The CFA UK manual emphasizes these as structural determinants of ESG

relevance.

“Asset owners primarily select material ESG factors based on characteristics of the portfolio such as

asset class, time horizon, and geographic exposure. These influence the kinds of risks—such as water

scarcity, regulatory landscape, or governance standards—that may be relevant. Manager-level

exposure is operational and tactical and does not typically drive philosophy formation.”

Therefore,manager exposureis less influential because it pertains to the implementation of the

strategy, not its conceptual foundation.

Reference:CFA UK Level 4 Certificate in ESG Investing – Official Training Manual (2021), Chapter 9:

Investment Mandates, Portfolio Analytics and Client Reporting