<SEC-DOCUMENT>0001214659-18-002721.txt : 20180410
<SEC-HEADER>0001214659-18-002721.hdr.sgml : 20180410
<ACCEPTANCE-DATETIME>20180410171928
ACCESSION NUMBER:		0001214659-18-002721
CONFORMED SUBMISSION TYPE:	PX14A6G
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20180410
DATE AS OF CHANGE:		20180410
EFFECTIVENESS DATE:		20180410

SUBJECT COMPANY:	

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MIDDLEBY CORP
		CENTRAL INDEX KEY:			0000769520
		STANDARD INDUSTRIAL CLASSIFICATION:	REFRIGERATION & SERVICE INDUSTRY MACHINERY [3580]
		IRS NUMBER:				363352497
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		PX14A6G
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-09973
		FILM NUMBER:		18748678

	BUSINESS ADDRESS:	
		STREET 1:		1400 TOASTMASTER DRIVE
		CITY:			ELGIN
		STATE:			IL
		ZIP:			60120
		BUSINESS PHONE:		8477413300

	MAIL ADDRESS:	
		STREET 1:		1400 TOASTMASTER DRIVE
		CITY:			ELGIN
		STATE:			IL
		ZIP:			60120

FILED BY:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TRILLIUM ASSET MANAGEMENT, LLC
		CENTRAL INDEX KEY:			0000884541
		IRS NUMBER:				042549211
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		PX14A6G

	BUSINESS ADDRESS:	
		STREET 1:		TWO FINANCIAL CENTER
		STREET 2:		60 SOUTH STREET, SUITE 1100
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02111
		BUSINESS PHONE:		617-423-6655

	MAIL ADDRESS:	
		STREET 1:		TWO FINANCIAL CENTER
		STREET 2:		60 SOUTH STREET, SUITE 1100
		CITY:			BOSTON
		STATE:			MA
		ZIP:			02111

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	TRILLIUM ASSET MANAGEMENT CORP
		DATE OF NAME CHANGE:	20000519

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FRANKLIN RESEARCH & DEVELOPMENT CORP
		DATE OF NAME CHANGE:	19990326
</SEC-HEADER>
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<div style="TEXT-ALIGN: left">Dear Middleby Corporation Shareholder:</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">We are writing to urge you to vote for a shareholder proposal on The Middleby Corporation&#8217;s (Middleby) 2018 proxy statement regarding Corporate Sustainability or Environmental, Social, and Governance (ESG) Reporting. This document provides a detailed explanation for why we believe shareholders should vote for this proposal, which makes the following request:</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Shareholders request The Middleby Corporation (Middleby) issue a report describing the company&#8217;s environmental, social, and governance (ESG) policies, quantitative performance metrics, and improvement targets, including a discussion of greenhouse gas (GHG) emissions management strategies and metrics. This report should be updated annually, be prepared at reasonable cost, and omit proprietary information.</div>

<div>&#160;</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">Rationale for a yes vote:</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">Middleby&#8217;s 2009 Sustainability Report is clearly outdated and does not accurately reflect its operations in 2018.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">Investors&#8217; expectations and the field of sustainability reporting has evolved significantly since 2010; Middleby now stands out as a laggard.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">Middleby has not provided any disclosure on some key ESG topics such as climate change.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">Disclosure on the Company&#8217;s ESG policies, performance, and improvement targets could lead to financial benefits for Middleby and its shareholders.</div>
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<div>&#160;</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">Discussion</div>

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<td style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; VERTICAL-ALIGN: top; FONT-WEIGHT: bold; WIDTH: 18pt; align: right">1.</td>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">Middleby&#8217;s 2009 Sustainability Report is clearly outdated and does not accurately reflect its operations in 2018.</div>
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<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">In 2010, Middleby published its 2009 Sustainability Report (the 2009 Report; available at: <font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #0563c1"><u>http://phx.corporate-ir.net/phoenix.zhtml?c=85145&amp;p=irol-govHighlights</u></font>). Middleby has not updated this report since, nor has it provided an alternate discussion of its management of environmental, social, and governance (ESG) policies, performance, or improvement targets.</div>

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</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Middleby&#8217;s operations have changed significantly since the 2009 Report was published. Middleby&#8217;s net sales have more than tripled and the Company has acquired numerous businesses since 2010. Case in point, Middleby did not even have a Residential Kitchen business segment in 2010, a segment that now accounts for almost 30% of net sales (according to Middleby&#8217;s 2016 Annual Report).</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">As Middleby grows and evolves, its risk exposure changes and its environmental and social impacts grow along with it. Consequently, the Company should update its policies and practices geared toward management of ESG risks and impacts. Proponents are concerned that Middleby&#8217;s ESG policies and strategies are as out of date as it&#8217;s reporting, and therefore may be insufficient for managing the impacts, risks, and opportunities Middleby faces in 2018. As a result, investors are concerned that Middleby is inadequately protecting shareholder value.</div>

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<td style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; VERTICAL-ALIGN: top; FONT-WEIGHT: bold; WIDTH: 18pt; align: right">2.</td>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">Investors&#8217; expectations have changed as the field of sustainability reporting has evolved, leaving Middleby as a laggard.</div>
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<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Just as Middleby&#8217;s operations have changed since 2010, investors&#8217; expectations around sustainability-related disclosures have changed as well. More companies than ever before are publishing sustainability reports &#8211; the Governance and Accountability Institute reports 82% of the S&amp;P 500 published sustainability reports in 2016. Globally, 73% of 4,500 companies published ESG reports in 2015, according to KPMG.</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">This includes many companies that could be considered peers of Middleby. The proposal notes: &#8220;Assa Abloy, Barnes Group, Donaldson Company, Masco Corporation, Flowserve Corporation, Lennox International, and Lincoln Electric are examples of the numerous small industrial companies publishing sustainability metrics alongside qualitative supporting details.&#8221;</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Perhaps the strongest signal that investors are interested in enhanced ESG disclosure from Middleby is this proposal received a 44.6% vote in 2017.</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">The following points demonstrate additional ways in which the field of sustainability reporting and investor interest in sustainability topics have grown since publication of Middleby&#8217;s 2009 Report.</div>

<div>&#160;</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">The Sustainability Accounting Standards Boards (SASB) was established in 2011; it has since become a major source of information on ESG-related reporting.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">The Financial Stability Board appointed a Task Force on Climate-related Financial Disclosures that in June 2017 published its widely circulated recommendations.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">State Street Global Advisors states: &#8220;In their public reporting, we expect companies to disclose information on relevant management tools and material environmental and social performance metrics.&#8221;<sup style="vertical-align: text-top; line-height: 1; font-size: smaller">1</sup></div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">195 countries adopted a global goal to address climate change under the Paris Agreement of 2015.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">GRI, SASB, and CDP, three common ESG reporting frameworks, have gone through multiple iterations of reporting guidelines since Middleby&#8217;s 2009 Report.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">The Principles for Responsible Investment, which is backed by nearly 1,700 signatories with approximately $70 trillion in Assets under Management, pledges to seek &#8220;appropriate disclosure on ESG issues&#8221;.</div>
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">650 investors with $87 trillion in assets support CDP, requesting disclosure on climate change, forests, or water.</div>
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<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Proponents believe updated disclosure from Middleby would be in shareholder&#8217;s best interest as the Company is not capitalizing on this well-established and commonplace business practice.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">_____________________________</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller">1</sup> State Street Global Advisors Global Proxy Voting and Engagement Principles. <font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #0563c1"><u>https://www.ssga.com/investment-topics/environmental-social-governance/2015/Proxy-Voting-and-Engagement-Principles.pdf</u></font></div>

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<div style="TEXT-ALIGN: left">
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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">Middleby has not provi</font>ded any disclosure on some key ESG/sustainability topics such as climate change.</div>
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<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Even the outdated 2009 Report did not provide investors with substantive discussion on the Company&#8217;s management of many important ESG impacts, risks, and opportunities. For example, Middleby did not provide a discussion of its climate change policies, performance, strategies, or risk exposure in the 2009 Report. This is a huge concern for investors as it signifies the Company may not be mitigating its risk exposure or maximizing shareholder value as effectively as it could be.</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Middleby claimed in its Opposition Statement to have published information on its commitment to energy efficiency in its 10-k. However, the Company&#8217;s 2016 10-k mentions energy efficiency only once in a list of 12 factors that it competes on. Asking investors to believe this constitutes a commitment to energy efficiency in its operations is a stretch.</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">This proposal also asks for Middleby to publish annual updates, a common practice that Middleby understands is important, but has not implemented. In its 2009 Report, the Company stated: &#8220;<font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; FONT-STYLE: italic">For the 2010 sustainability report</font> [emphasis added], we expect to report energy efficiency improvements in more detail.&#8221; Even then, Middleby stated an expectation to publish an annual update. Yet Middleby claims in its Opposition Statement that it has provided extensive information regarding its ESG policies (referring to its 2009 Sustainability Report) as if reporting once was enough.</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Providing updated and expanded ESG reporting, including a discussion of climate change policies and greenhouse gas (GHG) emissions reduction targets would help shareholders evaluate management&#8217;s handling of related risks and opportunities.</div>

<div>&#160;</div>

<div>&#160;</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold">Disclosure on the Company&#8217;s ESG policies, performance, and improvement targets could lead to financial benefits for Middleby and its shareholders.</div>
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<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Clearly Middleby is a laggard when it comes to disclosure of its management of ESG policies, performance, and improvement targets. While sustainability reporting is clearly something investors are interested in, reporting could unlock numerous other benefits for Middleby as well.&#160; As noted in the proposal: &#8220;Transparent, substantive reporting allows companies to better integrate and capture value from existing sustainability efforts, identify gaps and opportunities in policies and practices, strengthen risk management programs, stimulate innovation, enhance company-wide communications, and recruit and retain employees.&#8221;</div>

<div>&#160;</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">There is compelling evidence that shows companies with strong sustainability programs outperform peers financially. The University of Oxford and Arabesque Partners recently reviewed 200 studies on sustainability and corporate performance and concluded 90 percent of studies show &#8220;sound sustainability standards lower the cost of capital of companies&#8221; and 80 percent show &#8220;stock price performance of companies is positively influenced by good sustainability practices.&#8221;<sup style="vertical-align: text-top; line-height: 1; font-size: smaller">2</sup> As it currently stands, proponents are concerned that Middleby is one of the peers that is being outperformed.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller">2</sup> Clark, Gordon L.; Feiner, Andreas; Viehs, Michael. &#8220;From the Stockholder to the Stakeholder.&#8221; University of Oxford and Arabesque Partners. March 2015.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">The business case for managing climate change responsibly is also very convincing. In 2013, World Wildlife Fund (WWF) and CDP found 79% of the S&amp;P 500 that responded to the CDP earned a higher return on investments intended to reduce GHG emissions than on overall capital investments. They also found investments in energy efficiency improvements earned an average return on investment of 196%, with an average payback period between two and three years.<sup style="vertical-align: text-top; line-height: 1; font-size: smaller">3</sup> Middleby has not comprehensively reported whether it has GHG reduction or energy efficiency policies or programs in place, which leaves investors wondering if it is leaving money on the table that could otherwise be returned to shareholders or reinvested.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Furthermore, a study by the Society for Human Resource Management found employee morale was 55% better, loyalty 38% better, and workforce productivity 21% better in firms with strong sustainability programs.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">For all of these reasons, investors are clearly interested in and have a justified expectation that Middleby disclose how it is managing ESG impacts and mitigating risk, thereby maximizing shareholder value.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left">Conclusion</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Middleby does not provide up to date or comprehensive information on its management of important ESG issues that can present material financial risks and opportunities and impact shareholder value. Moreover, Middleby has not demonstrated that it is managing its ESG risks and impacts in a responsible way.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">We urge you to vote for this proposal on Middleby&#8217;s 2018 proxy statement, to send a signal to Middleby&#8217;s leadership that shareholders value disclosure on how the Company is managing its ESG impacts, risks, and opportunities.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Please contact Allan Pearce at 503-953-8345 or <font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #0563c1"><u>apearce@trilliuminvest.com</u></font> for additional information.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Allan Pearce</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Shareholder Advocate</div>

<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left">Trillium Asset Management, LLC.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-WEIGHT: bold; TEXT-ALIGN: left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">IMPORTANT NOTICE:&#160; The cost of this communication is being borne entirely by Trillium Asset Management, LLC.&#160; Trillium is NOT asking for your proxy card and is not providing investment advice.&#160; We will not accept proxy cards, and any proxy cards received w</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif">ill be returned.&#160;&#160;</font></div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-STYLE: italic; TEXT-ALIGN: left">The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. The securities mentioned have been selected by the authors on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients. A complete list of companies that are on Trillium&#8217;s &#8216;Buy List&#8217; is available on request. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is for informational purposes and should not be construed as a research report.</div>

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<div style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; TEXT-ALIGN: left"><sup style="vertical-align: text-top; line-height: 1; font-size: smaller;FONT-STYLE: italic">3</sup><font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; FONT-STYLE: italic">&#160;</font>WWF-US and CDP. &#8220;The 3% Solution.&#8221; <font style="FONT-SIZE: 10pt; FONT-FAMILY: 'Times New Roman', Times, serif; COLOR: #0563c1"><u>https://www.worldwildlife.org/projects/the-3-solution</u></font>. 2013.</div>

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