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Managing Sustainability Risks

Our Strategies for Managing Sustainability Risks

Transparency regarding strategies for managing sustainability risks (Article 3 of REGULATION (EU) 2019/2088 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of November 27, 2019 on sustainability-related disclosure requirements in the financial services sector—the Sustainability Disclosure Regulation)

As a company, we want to contribute to a more sustainable, resource-efficient economy, with the goal of reducing, in particular, the risks and impacts of climate change.

According to Article 2(22) of the Disclosure Regulation, sustainability risks are events or conditions in the areas of the environment, social issues, or corporate governance whose occurrence could, in fact or potentially, have a material adverse effect on the value of the investment.

As part of our operations, we consistently take sustainability risks into account. We are also signatories to the UN Principles for Responsible Investment (PRI).

Consideration of sustainability risks relates to the areas mentioned above: the environment (E), social standards (S), and corporate governance (G).

The individual areas generally represent (non-exhaustive list):

Environment:

  • Climate Protection

  • Adaptation to Climate Change

  • Protection of Biodiversity

  • Sustainable Use and Protection of Water and Marine Resources

  • Transition to a circular economy, waste prevention, and recycling

  • Prevention and Reduction of Environmental Pollution

  • Protection of Healthy Ecosystems

  • Sustainable Land Use

Social:

  • Compliance with recognized labor standards (no child labor or forced labor, no discrimination)

  • Compliance with Occupational Safety and Health Regulations

  • Fair compensation, fair working conditions, diversity, and opportunities for training and professional development

  • Freedom of Association and Assembly

  • Ensuring adequate product safety, including health protection

  • Same Requirements for Companies in the Supply Chain

  • Inclusive projects and consideration of the needs of communities and social minorities

  • Tax Compliance

Corporate Governance:

  • Measures to Prevent Corruption

  • Sustainability Management by the Executive Board and Supervisory Board

  • Executive Compensation Linked to Sustainability

  • Enabling Whistleblowing

  • Ensuring Workers' Rights

  • Ensuring Data Protection

  • Disclosure of Information

Environmental conditions, social upheavals, and/or poor corporate governance can have a negative impact on the value of investments and assets in a number of ways. This means that these so-called sustainability risks can have a direct impact on the financial position, results of operations, and net assets of an investment, as well as on its reputation. Since such risks cannot ultimately be completely ruled out, we have developed specific strategies for the financial services we offer to identify and mitigate sustainability risks.

  • We take sustainability risks into account by identifying, through appropriate monitoring—such as tracking and analyzing general news developments—issues that could lead to sustainability risks in the course of our operations, and by taking appropriate action.

  • Furthermore, by making the Sauren Responsibility Scoring process an integral part of our fund manager analysis, we aim to have a positive impact on mitigating sustainability risks. Before an investment is included in a Sauren fund of funds, all potential target funds undergo the Sauren Responsibility Scoring process. For each fund, we assess the extent to which the fund manager of the respective target fund incorporates environmental, social, and corporate governance (ESG) factors into investment decisions. Even though it remains possible to select target funds for the portfolio that do not yet take environmental, social, or corporate governance aspects into account: the Sauren Responsibility Scoring can contribute to greater responsibility by engaging in dialogue to scrutinize fund managers’ investment decisions and by raising awareness of the need to consider environmental, social, and good corporate governance factors. This also includes reviewing exclusion criteria for target investments of certain Sauren fund of funds. Against this backdrop, we are able to align investment decisions and recommendations with environmental, social, or corporate values and manage sustainability risks.

  • Furthermore, our entire Sauren Research & Portfolio Management team is highly qualified to address issues related to the integration of environmental, social, and corporate governance (ESG) factors into fund manager analysis. Through close dialogue with fund managers—a hallmark of Sauren’s unique investment philosophy—our research and portfolio management team is always up to date. Regular participation in industry events rounds out their professional training and continuing education.