The Sauren ESG scoring by Sauren Finanzdienstleistungen GmbH & Co. KG offers a new, systematic evaluation for sustainable investment decisions. The qualitative analysis of the sustainability processes that is performed as part of the Sauren ESG scoring dovetails perfectly with our company’s tried-and-tested qualitative fund manager analysis.
Sauren ESG scoring: how the process works
Sauren ESG scoring puts fund managers’ decision-making and investment processes at the centre of the analysis. These processes are evaluated based on the importance attached to sustainability aspects in the management of the fund portfolio concerned. This encourages fund managers to support positive environmental, social and ethical conditions or to work towards an improvement without prescribing specific tools or criteria for them to use. In this respect, the ESG scoring process is not designed to serve as a seal of quality. Rather, the underlying process is a measurement process that aims to analyse the extent to which ESG aspects have been taken into account in the fund concerned.
The Sauren ESG scoring process systematically translates the qualitative analysis findings into numeric values. Sauren ESG scoring is based on a scale ranging from -5 to +5. The greater the attention paid to sustainability aspects as part of the decision-making process, the higher the score tends to be. The Sauren ESG score that emerges from the first step in the process can be reduced as part of the subsequent portfolio check to reflect controversial portfolio positions.
Total Sauren ESG score
The total score is calculated by adding up the individual scores in the environmental, social and governance categories, assigning an equal weight to each of these aspects.
Implementation in Sauren funds of funds
Before they are included in one of our funds 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 a 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 that do not yet take any sustainability aspects into account are 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.
Sustainability aspects are given even greater consideration in the three Focus funds of funds: the Sauren Global Defensiv Focus, the Sauren Global Balanced Focus and the Sauren Select Global Growth Focus. These funds assign greater importance to the Sauren ESG scoring process when selecting target funds. Investments in target funds that return insufficient scores are permanently excluded for as long as the score assigned to target funds fails to show a long-term improvement. An insufficient score is currently defined as a single score below -1 in one of the categories (as at September 2019 – as the process is a dynamic one and ESG aspects can evolve, the definition of the insufficient Sauren ESG score may also change in the future). The result is not an “ESG-compliant” fund of funds. However, the Sauren focal funds of funds are designed to offer the opportunity to invest in a portfolio which reflects a greater emphasis placed on ESG aspects in the fund manager processes, both at the fund of funds level and at the level of the target funds.
The procedure described in this document for the three Sauren Focus funds of funds applies with the entry into force of the new prospectuses on 14 October 2019.
The new Prospectus, including the Articles of Association, and Key Investor Information has been available free of charge since 14 October 2019 from the registered offices of the management company, the depositary, the paying agents and the sales office, as well as from the management company's website at www.ipconcept.com and the sales office's website at www.sauren.de.