Guideline on incorporating sustainability risks into the investment decision-making process and the main adverse impacts of investment decisions on sustainability factors in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosure requirements in the financial services sector.
- As a company, we want to contribute to a more sustainable, resource-efficient economy with the aim of reducing the risks and impacts in particular of climate change. In addition to observing sustainability goals in our corporate organization itself, we also see it as our task to sensitize our customers to aspects of sustainability in the way the business relationship they have with us is structured. In order to fulfill our social responsibility as a company, LOYS AG decided in 2020 to sign the Principles for Responsible Investment (PRI) of the United Nations Environment Programme (UNEP).
- LOYS AG acts as fund manager of the LOYS funds and generally makes investment decisions taking sustainability risks into account. Sustainability risks can arise from environmental and social influences on a potential asset as well as from the corporate governance of the issuer of an asset.
- Each investment fund shall, in accordance with the requirements of Article 6 (1) of the SFDR, disclose in the pre-contractual information whether and how ("comply or explain") sustainability risks are taken into account in the investment decision-making process. More detailed information on this can be found in the respective sales prospectuses of the funds, as well as on the website of the respective management company. The consideration does not necessarily lead to a restriction of the investment universe.
- The aim of taking sustainability risks into account is to identify the occurrence of these risks as early as possible and to take appropriate measures to minimize the impact on the affected assets or the overall portfolio of the investment fund, as sustainability risks can have a negative impact on the value or price of an asset of the investment fund.
- The sustainability factors that may be responsible for a negative impact on the investment fund's return are divided into environmental, social and corporate governance aspects. Environmental aspects include, for example, climate protection, including physical climate events or conditions such as heat waves, rising sea levels and global warming. In addition, social aspects include, for example, consideration of internationally recognized labor law requirements. Corporate governance aspects include, for example, consideration of anti-corruption and anti-bribery requirements as well as data protection.
- Key risk indicators can be used to assess sustainability risks. The risk indicators can be quantitative or qualitative in nature and are based on environmental, social and governance aspects and serve to measure the risk of the aspects under consideration.
- LOYS AG also obtains ESG data from the leading research provider MSCI. To minimize sustainability risks, all investments are analyzed for their share of sales in particularly critical industries such as armaments, tobacco, or coal. A high proportion in these critical industries generally leads to the exclusion of the investment. In addition, each investment is expected to comply with the 17 Sustainable Development Goals (SDGs) of the United Nation.
- Article 4 of the SFDR establishes the principle of principal adverse impacts ("PAIs") of investment decisions on sustainability factors. For the different categories of sustainability factors, different underlying sustainability indicators can be used for the assessment. Sustainability indicators also form the basis for identifying and assessing sustainability risks. In this context, LOYS AG has decided that PAIs should be considered for the managed investment funds that invest part of their portfolio in sustainable investments as defined in Article 2 (17) SFDR. The Company is aware of the potentially material impact that sustainability risks can have on the managed investment funds and considers sustainability risks relevant in principle for all managed investment funds. Sustainability risks can be assessed both qualitatively and quantitatively. Portfolio managers consider the main negative impacts of investment decisions on sustainability factors. The ability to consider the most important negative impacts depends significantly on the availability of relevant data and information for the invested assets. The availability and quality of relevant data and information for the systematic assessment of sustainability indicators and the consideration of PAIs is currently not considered sufficient for each asset. The portfolio manager will periodically reassess the availability and quality of relevant data and information with the goal of expanding the consideration of key negative impacts.
- Our company's strategies for incorporating sustainability risks are also incorporated into the company's internal organizational guidelines. Observance of these guidelines is decisive for the evaluation of our employees' work performance and thus has a significant influence on future salary development. In this respect, the compensation policy is in line with our strategies for incorporating sustainability risks (Art. 5 Disclosure Regulation)
For more detailed information and detailed explanations, please contact our sales team.