At Columbia Threadneedle, we believe that understanding sustainability trends and the interactions between people and planet is fundamental to identifying future investment opportunities. Using a deep and grounded research-based approach, and through our ongoing engagement, we consider how environmental, social and wider factors are shaping the companies and industries we invest in.

Recent events in the Middle East have underscored a deeper regime shift that is already underway. The global system, built on efficiency, finance-led growth and open supply chains, is giving way to one defined by security, industrial capacity and physical constraints – with profound implications for portfolios.

Welcome to our 2025 Stewardship Report, which aims to demonstrate Columbia Threadneedle Investments’ commitment to the UK Stewardship Code, Taiwan Stewardship Code, Japan Stewardship Code and Korea Stewardship Code.

As a global, active asset manager and a long-term investor, investment stewardship is critical to how we seek to deliver the investment outcomes our clients expect, while also meeting our fiduciary duty. Our stewardship approach is complementary to our investment approach as major shareholders and bondholders of companies all over the world – a responsibility we take seriously.

Alongside our work on specific sustainability themes, we also make use of the Sustainable Development Goals (SDGs). The SDG framework provides us with a consistent way of assessing our investments and engagements alongside the global sustainable development agenda, enabling us to have a deeper and more holistic view.

At the start of the year, the consensus forecast a big year for Europe – double-digit corporate earnings growth. This was reinforced by multiple factors: strong bank balance sheets and the potential for renewed loan growth; supportive German fiscal policy following the relaxation of the ‘debt brake’; relative consumer strength (compared to the US and China); easing inflation; the potential for interest rate cuts; and cheaper energy.

With oil prices still up by more than 50% as a result of the Middle East conflict, and 20 million barrels a day of supply at risk, it is worth stepping back from the headlines.

Energy markets have become the front line of the Iran conflict’s market impact. Geopolitical risk was widely anticipated, and crude prices had already moved higher in the weeks ahead of the attacks. However, the abrupt slowdown in physical flows through the Strait of Hormuz has introduced a new and more acute supply risk.

Disruptions linked to Iran have translated geopolitical risk into real oil supply constraints, reshaping global energy markets.

Escalating conflict in the Middle East has heightened geopolitical tension and driven sharp swings in energy markets. With the economic impact hinging on the flow of oil, investors should remain disciplined and focus on long‑term fundamentals over fast‑moving headlines.

In a market crowded with active equity strategies, it can be difficult for investors to identify funds that consistently outperform the market through pure stock-picking. While most managers use either a quantitative model or fundamentals-based approach, we believe combining the benefits of both – within a liquid and transparent ETF structure – may support attractive outcomes over time.

From a fundamental standpoint, earnings are inflecting higher for small cap companies after an earnings downturn in 2023 and into 2024. As of January 2026, bottom‑up consensus from Bloomberg suggests the Russell 2000 will deliver 43% year‑over‑year earnings growth over the coming twelve months, the Russell 2500 will grow by 18%, and the large cap S&P 500 is expected to deliver 11% over the same period. While the whole market is forecast to see meaningful earnings growth, smaller companies are expected to lead. In 2025, earnings were one of the main drivers of stock market returns (rather than multiple expansion / contraction), so a strong showing from small cap earnings could support further share price performance.

Technology continues to underpin global economic growth, productivity and innovation.