DISCLOSURES ON SUSTAINABILITY-RELATED DISCLOSURE REQUIREMENTS IN THE FINANCIAL SERVICES SECTOR PURSUANT TO ART. 3, ART. 4 ABS. 3, 5 LIT. A AND ART. 5 ABS. 1 REGULATION (EU) 2019/2088 (HEREINAFTER THE "REGULATION")

  1. Information on its strategies for incorporating sustainability risks into investment decision-making processes and statement on due diligence strategies related to the main adverse impacts of investment decisions on sustainability factors pursuant to Art. 3 (1) and Art. 4 (3) of the Regulation

    The sustainability methodology of Marcard, Stein & Co (hereinafter "MSC") is based on a transparent, multi-stage process in which both exclusion criteria and minimum requirements for companies and states are defined. We source the underlying data from MSCI ESG Research, one of the world's leading providers of sustainability analysis and globally recognized indices and indicators. We are convinced that the use of our sustainability methodology is another building block that enables us to better meet our responsibility to our customers and society.

    Our minimum standards
    The minimum standards form the basis for asset management. A quantitative screening process is used to exclude companies from the investable investment universe that do not meet the minimum environmental, social and ethical standards we have set. This includes equities and bonds of companies that are active in the field of controversial weapons or nuclear weapons, or that have strong corporate controversies ("red flag" as defined by the MSCI methodology / violation of the UN Global Compact). This is understood to mean serious misconduct in the areas of environmental, social and employee concerns, human rights and the fight against corruption and bribery. In addition, companies that exceed certain sales thresholds in the area of thermal coal mining or energy generation from thermal coal are excluded. We hereby pay particular attention to reducing the carbon footprint of our investments with regard to the assessment of environmental damage.

    With the exception of the results from the "controversial weapons" area, which immediately lead to a direct exclusion from the investment universe, the quantitative result in the subsequent qualitative consideration is assessed by an ESG committee of the Warburg Group, whose membership combines the expertise of the portfolio management of various Group companies and in which MSC is represented by its Chief Investment Officer. Additional insights (such as from direct company discussions) on the companies can be added. In this way, all exclusions are continuously reviewed and adjusted if necessary. Active dialog is sought with selected companies in order to make sound assessments of the severity of controversies.

    Focused sustainability strategies
    Beyond the minimum standards, we also offer focused sustainability strategies, which have a much more comprehensive methodology in terms of ESG criteria.

    MSC portfolio management looks at the sustainability performance of a country or company using the MSCI ESG rating. This aggregates environmental, social and ethical aspects together into a rating on a scale of AAA to CCC. Countries or companies with a rating lower than BBB are excluded from the sustainability universe.

    The assessment of sovereigns is based on various criteria. We refer to globally recognized institutions such as Freedom House, the UN or Transparency International. Important criteria include climate protection, corruption, money laundering, military spending and the death penalty.

    The sustainability methodology for selecting companies is set up as a multi-stage filter process. Absolute and relative exclusion criteria for business activities are combined with minimum ratings and quality standards for dealing with controversies. The absolute exclusion criteria include controversial business activities such as the production of tobacco products, controversial weapons and the generation of electricity from nuclear energy. In addition, companies are excluded from an investment if they are rated as below average in terms of sustainability by the MSCI ESG rating in a sector comparison. If a company violates accepted conventions such as the UN Global Compact, it will also not be invested in.

  2. Information on our strategies for incorporating sustainability risks into our investment advisory activities pursuant to Art. 3 (2) of the Regulation

    Within the scope of investment advice, we offer and recommend suitable and - if requested - also sustainable financial instruments and take sustainability risks into account in our investment advice.

    The consideration of sustainability risks in investment advice is primarily carried out through the selection of financial instruments that we recommend to our customers as suitable for them. In this context, the minimum standards described under I. form the basis for investment advice and exclude products from the investable investment universe that do not meet the minimum requirements set by us in environmental, social and ethical terms. This is to reduce the risk that an environmental, social or governance event or condition, the occurrence of which could have an actual or potential material adverse effect on the value of an investment.

    The exclusions include stocks and bonds of companies engaged in controversial weapons or nuclear weapons activities or that have strong corporate controversies. This is understood to mean serious environmental, social and corporate governance misconduct. In addition, companies active in thermal coal mining or energy production from thermal coal are excluded. We hereby place particular emphasis on reducing the carbon footprint of our investments with regard to the assessment of environmental damage. If a company violates accepted conventions such as the UN Global Compact, this company is also not recommended for investment.

  3. Information on the consideration of the main adverse impacts on sustainability factors in our investment advice, given its size, the nature and scope of its activities and the types of financial products that are the subject of its advice according to Art. 4 (5) lit. a) of the Regulation

    The sustainability performance of a country or company is considered using the MSCI ESG rating. This aggregates environmental, social and ethical aspects into a rating on a scale from AAA to CCC.

    The investor is informed about the characteristics of the respective sustainability aspects and the associated sustainability risks. This is done comprehensively in the advisory discussion by the advisor and - if available - the printing of the respective characteristics on product-specific information sheets (marketing communications).

  4. Disclosure on remuneration policy and inclusion of sustainability risks pursuant to Article 5 (1) of the Regulation

    Our remuneration policy is consistent with the consideration of sustainability risks, in particular the avoidance of incentives for misconduct. As part of our remuneration policy, we ensure that the performance of our employees is not remunerated or evaluated in a way that conflicts with our duty to act in the best interests of customers. In particular, compensation does not create incentives to recommend a financial instrument that is less appropriate to customers' needs. Our compensation structure is based on collective bargaining agreements or individual employment contract provisions and our compensation principles. It does not encourage excessive risk-taking with regard to the sale of financial instruments with high sustainability risks.
To top