Disclosure requirement under Regulation (EU) 2019/2088


PRELIMINARY REMARK

Regulation (EU) 2019/2088 ("Disclosure Regulation" or "SFDR") requires financial market participants, including investment firms providing portfolio management services, UCITS management companies and alternative investment fund managers, to disclose information for increased transparency, including in relation to sustainability risk management strategies and potential or identified adverse sustainability impacts.

 

ARTICLE 3 OF THE SFDR: TRANSPARENCY IN THE STRATEGIES FOR DEALING WITH SUSTAINABILITY RISKS

Through the fundamental approach of ESG integration, the group-wide defined exclusions and the consideration of sustainability risks, Flossbach von Storch AG fulfils the fiduciary duties in the best possible way to appropriately classify potential risks (and opportunities) of investment decisions.

ESG factors are considered in depth in the proprietary evaluation and assessed for opportunities and risks. Each of the three factors (E, S and G) is considered from the perspective of a long-term investor to ensure that none of the aspects lead to a potential conflict of interest of long-term value creation. Sustainability risks are environmental, social or governance events or conditions that, if they occurred, could have an actual or potential material adverse effect on the value of an investment. Sustainability risks can have a significant impact on other risk types, including, for example, general price risk, operational risk, liquidity risk, currency risk, and contribute as a factor to the materiality of these risk types.

The analysis process also includes the examination of reputational risks as well as climate-related physical risks and transition risks, which can have a direct and indirect impact on the value of a company. The following points, amongst others, can be named as exemplary standards with regard to the ongoing analysis of target investments:

  • Are climate-related physical and transition risks that may affect the business model sufficiently monitored and taken into account in the company's long-term direction?
  • Are sufficient measures taken to address sustainability risks that have a significant impact on the company's reputation and can have a lasting effect on the value of the investment if there is a loss of confidence?

Within the framework of the multi-level analysis, special attention is paid to good corporate governance with integrity, which is important for the sustainable development of the company. This increases a company's long-term prospects for success and can only be achieved by taking ecological as well as social factors into account. The following points, amongst others, can be named as exemplary standards:

  • Does the company's management properly and sufficiently take into account ecological, social and economic framework conditions?
  • Do the employed managers of the target company act like responsible and sustainable owners?

 

ARTICLE 4 OF THE SFDR: TRANSPARENCY OF ADVERSE SUSTAINABILITY IMPACTS AT COMPANY LEVEL

The Flossbach von Storch Group takes into account the main adverse effects of investment decisions on sustainability factors in accordance with Art. 4 Nr.1 a) of the Disclosure Regulation. Relevant information on this can be found by clicking on Downloads.

 

ARTICLE 5 OF THE SFDR: TRANSPARENCY OF REMUNERATION POLICY IN RELATION TO THE CONSIDERATION OF SUSTAINABILITY RISKS

The Flossbach von Storch Group's strategies for incorporating sustainability risks are also incorporated into the company's internal organisational guidelines. The adherence to these guidelines is decisive for the evaluation of employee performance and thus has a significant influence on future salary development. In this respect, the remuneration policy is in line with the strategies for the inclusion of sustainability risks.

 

ARTICLEs 8, 10, 11 OF THE SFDR: TRANSPARENCY IN THE PROMOTION OF ENVIRONMENTAL OR SOCIAL FEATURES

If a financial product is classified as an Article 8 product pursuant to the SFDR, relevant information about the environmental and social characteristics will be available from Downloads.