Our strategies for dealing with sustainability risks
Transparency of sustainability risk policies (Article 3 of REGULATION (EU) 2019/2088 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November 2019 on sustainability‐related disclosures in the financial services sector – Disclosure Regulation)
As a company, we wish to contribute to more sustainable and resource-efficient economic activity, with the aim of reducing in particular climate change-related risks and implications.
Pursuant to Article 2 No. 22 of the Disclosure Regulation, sustainability risks mean environmental, social or governance events or conditions that, if they occur, could cause an actual or a potential material negative impact on the value of the investment.
Within the scope of our business activities, we generally consider sustainability risks. Furthermore, we are a signatory to the UN Principles for Responsible Investment (PRI).
When taking sustainability risks into account, we mean the aforementioned areas environment (E), social standards (S) and governance (G).
The individual areas generally refer to the following issues (non-exhaustive list):
Environment:
- Climate protection
- Adjustment to climate change
- Protection of biodiversity
- Sustainable use and protection of water and marine resources
- Transition to circular economy, waste prevention, and recycling
- Prevention and reduction of environmental pollution
- Protection of healthy ecosystems
- Sustainable land use
Social standards:
- Compliance with accepted labour law standards (no child labour or forced labour, no discrimination)
- Adherence to occupational safety and health protection
- Appropriate remuneration, fair workplace conditions, diversity, as well as training and continuing professional development opportunities
- Freedom of association and assembly
- Ensuring adequate product safety, including health protection
- Equal requirements for companies in the supply chain
- Projects aimed at inclusion, and consideration for the needs of communities and social minorities
- Tax compliance
Governance:
- Anti-corruption measures
- Sustainability management measures taken by management boards and supervisory boards
- Management board remuneration linked to sustainability
- Enabling whistleblowing
- Safeguarding employee rights
- Safeguarding data protection
- Disclosure of information
Environmental conditions, social distortions and/or bad corporate governance may negatively impact the value of investments and assets in many respects, meaning that these so-called sustainability risks may directly affect assets, financial position and earnings, as well as the reputation of an investment. Given that such risks cannot be fully ruled out, we have developed specific strategies for the financial services we offer, allowing us to recognise and limit sustainability risks.
● By monitoring, e.g. tracking and analysing general news within the scope of our business activities, we integrate sustainability risks, recognising facts that may incur sustainability risks and acting accordingly.
● In addition, we strive to realise a positive influence on limiting sustainability risks by making the Sauren ESG scoring process an integral part of our fund manager analysis. Before including an investment in a Sauren fund of funds, all potential target funds undergo the Sauren ESG scoring process. The process looks at each individual fund to determine the extent to which the manager of the respective target fund includes environmental aspects, social aspects and principles of sustainable corporate governance in their investment decisions. However, it may be the case that target funds which do not yet take any sustainability aspects into account are still selected for the portfolio. This is due to the fact that Sauren ESG scoring can better raise awareness of ESG criteria and contribute to greater sustainability in a process of dialogue, by calling the investment decisions made by fund managers into question. This includes enquiring about exclusion criteria for target investments of certain Sauren funds of funds. Against this background, we believe that we are able to align investment decisions and recommendations with environmental, social or corporate values, and to manage sustainability risks.
● Furthermore, our entire Sauren Research & Portfolio Management Team is highly qualified with respect to topics surrounding the involvement of sustainability aspects in the fund manager analysis. Thanks to the close dialogue we maintain with fund managers, which characterises Sauren’s unique investment philosophy, our Research & Portfolio Management Team is always up to date. Regular attendance at industry events rounds off training and continuing professional development.