T. Rowe Price Global Impact Equity Fund

Impact Case Study:

Trex

Did you know we use over 5 Trillion plastic bags globally in a year?¹

The average 500-square foot composite Trex deck contains 140,000 recycled plastic bags!²

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¹https://www.unep.org/interactives/beat-plastic-pollution/

² According to Trex notes on their website.

Most recent data available.

Note: T. Rowe Price uses a proprietary custom structure for impact pillar and sub-pillar classification.

Pressure Points

Plastic pollution is one of the most pressing environmental issues our Planet faces. Over the past twenty years, annual plastic production and plastic waste generation have more than doubled. In 2019, only 9% of plastic waste was ultimately recycled, while 19% was incinerated and almost 50% went to sanitary landfills. The remaining 22% was disposed of in uncontrolled dumpsites. The carbon footprint of the plastics lifecycle is significant, contributing 3.4% of global greenhouse gas emissions throughout their lifecycle, coming primarily from their production and conversion from fossil fuels¹. Innovation in waste prevention and recycling, leading to more affordable solutions from the private sector, in tandem with more ambitious public policies, are paramount to reducing the environmental impact of plastics.

Impact Thesis

Trex is a manufacturer of wood alternative composite decking products.

Trex’s manufacturing approach uses recycled materials as a feedstock to the extent it is possible. Recycled plastic film and reclaimed wood fiber make up 95% of its residential decking products.

Key Performance Indicator (KPI): Amount of recycled plastic and wood used/ diverted from landfill (lbs millions).

Five Dimensions of Impact

What: Reducing plastic waste otherwise sent to landfill or oceans by recycling it as a feedstock, while contributing to forests preservation by using reclaimed wood fiber by-products (as opposed to cutting trees).

Who: Planet

How much: Largest manufacturer of composite decking globally with growth in capacity of 70% between 2019 and 2021.

Contribution: Trex has completed a USD$200m expansion plan while investing in material science and product development to be able utilize “cruder” and more contaminated feedstock. This will enable additional waste reduction.

Risks: Trex’s impact potential is tied to demand volumes and therefore linked to macroeconomic growth, as well as adoption of its specific composite products, which is inherently dependent on quality and affordability versus competitors.

Progress Monitoring

During our engagement with Trex, we were pleased to learn that the company is making significant capacity investments to help meet rising demand in products using recycled materials. It was also encouraging to learn that the greater the investment in capacity, the greater the tonnage of plastic taken out of landfill. However, recycled plastic film supply is becoming a challenge due to new competitors entering the market, higher demand for recycled plastic content in packaging, and higher costs for non-recycled plastics. We are monitoring the firm’s approach to supply challenges which includes a focus on contaminated and less consistent material streams as part of research and development, in addition to capturing post-consumer waste.

T. Rowe Price

Global Impact Equity Fund

The T. Rowe Price Global Impact Equity Fund targets specific companies that not only make good economic sense, but also focus on making the world a better place for all.

It’s really about pursuing more meaningful returns for investors who care.

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*Investment returns are not guaranteed.

Additional Disclosures

Impact pillar and sub-pillar (T. Rowe Price): Impact activities that are aligned to the UN SDGs which guide all investment decisions. All stocks in the impact universe are linked to at least one of the three pillars and eight sub-pillars. See Impact universe (T. Rowe Price).

Impact universe (T. Rowe Price): The universe of stocks that is available to the T. Rowe Price Global Impact Equity Fund to invest. To define our impact universe, we start by applying the T. Rowe Price Impact Exclusion list to the global developed and emerging all-cap opportunity set (MSCI All Country World ex-Australia Index (net of withholding tax)). This list excludes areas of the global economy that, in our view, do not generate positive impact. Our pillar alignment process and impact analysis based on the Five Dimensions of Impact then ensure a starting point for deeper impact eligibility and inclusion.

The Five Dimensions of Impact is a measurement framework developed by the Impact Management Project (IMP), an impact practitioner community of over 2,000 organizations. The IMP is a project by Bridges Fund Management Ltd (company number 10401079) (“Bridges”).

The specific security identified and described is for informational purposes only and do not represent recommendations or statement of opinion intended to influence a person or persons in making a decision in relation to investment. It does not represent all of the securities purchased, sold, or recommended for the portfolio, and no assumptions should be made that the securities identified and discussed were or will be profitable.

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