Regulations (EU) 2019/2088 and (EU) 2020/852 require certain disclosures on the sustainability of financial market participants. With this document, Estably Asset Management Ltd (ESTABLY) complies with these disclosure requirements.
ESTABLY is a securities institution that provides the service of asset management to its clients. ESTABLY offers various investment strategies as part of its asset management services. Where necessary, a distinction is made between these different offerings in the following statements.
The present document is provided to interested parties as pre-contractual information within the framework of the contract initiation. As the contents of this document are amended from time to time, in particular, to comply with legal or other regulatory requirements, the current version is always available on ESTABLY’s website.
2. Explanation for not taking adverse impacts on sustainability factors into account.
Investment decisions may have adverse impacts on the environment (e.g. climate, water, biodiversity), on social and labour concerns and may also be detrimental to the fight against corruption and bribery. ESTABLY strives to fulfill its responsibilities as an investment institution and to contribute to avoiding such adverse effects at the level of the company.
As the relevant regulatory requirements (of which this Mandatory Disclosure is one) have not been fully published at the time of writing, ESTABLY is not yet in a position to make a binding statement as to whether (and in what way) adverse effects of investment decisions on sustainability factors will be taken into account.
Therefore, ESTABLY declares not to take into account adverse effects of investment decisions on sustainability factors in a binding manner until further notice. Once the relevant regulatory guidance is published in full, ESTABLY will review this guidance and reassess and, if necessary, adjust its position on the adverse impact of investment decisions on sustainability factors.
3. Consideration of sustainability risks
As a company, we want to contribute to a more sustainable, resource-efficient economy with the aim of reducing the risks and impacts of climate change in particular.
Our investment process considers E (environmental), S (social), and G (governance) criteria (ESG criteria). Sustainability risks resulting from the analysis of the ESG criteria are continuously analyzed with regard to their financial impact and the resulting findings on the sustainability risks of individual issuers are taken into account within the framework of the investment process when evaluating the return and risk assessment. Sustainability risks are environmental, social and governance (ESG) events or conditions, the occurrence of which may have an actual or potential material adverse effect on the value of the investments. Sustainability risks can affect all known risk types and contribute as a factor to the materiality of these risk types. The affectedness, probability, and severity of sustainability risks differ depending on the industry, business model, and sustainability strategy of the issuer.
The analysis of sustainability risks is carried out on the basis of publicly available information from issuers (e.g. annual and sustainability reports) or internal research, as well as using data and ESG ratings from research or rating agencies. The company uses a non-financial risk committee as a control instrument, which continuously reviews the assessment of sustainability risks of individual issuers and provides concrete specifications for the investment universe that can be invested in under sustainability risks. In addition to information at the individual issuer level, this also includes assessments made on the basis of a global economic analysis (influence of ESG criteria on economic growth or the socio-demographic demand situation). Here, the way in which ESG criteria form macroeconomic trends is illuminated down to the sector level. Furthermore, the company’s employees regularly receive comprehensive training and further education on the topic of sustainability.
Sustainability risks can have a negative impact on the return of the investment strategy in the investment process. In particular, they can lead to a material deterioration in the financial position, profitability or reputation of the issuers and have a significant impact on the valuation level of the investment. The investment strategies offered by ESTABLY do not take into account the EU criteria for environmentally sustainable economic activities.
The performance of the investment strategy may be affected by sustainability risks. Sustainability risks, as defined in Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosure requirements in the financial services sector, are environmental, social or governance events or conditions, the occurrence of which could have an actual or potential material adverse effect on the value of the Portfolios’ investment. Sustainability risks can affect all known risk types and contribute as a factor to the materiality of these risk types. Examples include the following risk types: market risk, liquidity risk, counterparty risk, and operational risk.
How sustainability risks are taken into account
ESTABLY considers sustainability risks in the investment process.
However, there is neither an application of environmental or social characteristics nor an effort to comply with sustainability objectives within the meaning of Regulation (EU) 2019/2088 and the EU criteria for environmentally sustainable business activities, nor any minimum proportions of such investments.
MSCI calculates so-called ESG ratings, which assess the extent to which companies take into account the above-mentioned sustainability indicators in the areas of environment, social affairs, and corporate governance. These ESG ratings are used by ESTABLY to take sustainability risks into account. To prevent greenwashing, the external MSCI ESG ratings are used for the consideration of sustainability risks.
Do these investment strategies take into account significant adverse impacts on sustainability factors? No, these investment strategies do not currently take into account any material adverse impacts on sustainability risks.
Methods for measuring the promotion of environmental and social characteristics
In ESTABLY’s investment universe, companies are selected according to a variety of quantitative and qualitative criteria. Companies that produce landmines, cluster munitions and nuclear weapons or that violate the United Nations Global Compact are excluded.
In addition, ESTABLY evaluates the investments based on their ESG score. The approach used to calculate the ESG Quality Score is a rule-based methodology to measure the resilience of companies to long-term environmental, social and governance risks. Companies are rated on a scale from “AAA” to “CCC”, depending on the ESG risks relevant to their industry and their ability to manage these risks compared to their peers. The higher the ESG Quality Score, the better for the environment.
Data sources and data processing
ESTABLY works with one of the world’s leading providers of sustainability data: MSCI ESG Research via yoursri.com. This data allows us to integrate our responsible approach into the selection of investments. In doing so, publicly available company documents and data from alternative sources, including those from governments, agencies, and non-governmental organizations, are analyzed. In addition, MSCI ESG Research LLC accesses over 3,400 media outlets to gather data. These ratings are critically reviewed for plausibility by the Investment Committee, which meets regularly.
Duty of care
ESTABLY obtains ESG ratings from the provider MSCI via yoursri.com.
ESTABLY has set the following benchmarks for the Value Green strategy:
Value Green 20: 10,5% MSCI World ESG, 4,5% Euro STOXX 50 ESG, 70% Euro Corporate Total Return Index Value, 15% Cash
Value Green 40: 24,5% MSCI World ESG, 10,5% Euro STOXX 50 ESG, 55% Euro Corporate Total Return Index Value, 10% Cash
Value Green 60: 38,5% MSCI World ESG, 16,5% Euro STOXX 50 ESG, 35% Euro Corporate Total Return Index Value, 10% Cash
Value Green 80: 52,5% MSCI World ESG, 22,5% Euro STOXX 50 ESG, 15% Euro Corporate Total Return Index Value, 10% Cash
Value Green 100: 63% MSCI World ESG, 27% Euro STOXX 50 ESG, 10% Cash
Sustainable investment strategy
ESTABLY’s Value Green strategy considers companies that meet certain ESG standards.
The way in which sustainability risks are included
The Value Green strategy therefore promotes environmental, social and governance sustainability, but does not seek to achieve a sustainability target as defined in Regulation (EU) 2019/2088 and the EU criteria for environmentally sustainable business activities, nor a minimum proportion of such investments.
Which environmental and/or social features are promoted by the investment strategy?
When selecting companies, the three aspects of sustainability (environmental, social and corporate governance) are taken into account in addition to the selection criteria in the non-sustainable investment strategies. ESTABLY primarily selects companies from the investment universe on which the classic ESTABLY strategies are based, whose composition takes certain ESG standards into account.
As a rule, the following indicators, among others, can be taken into account:
- Exclusion of companies whose main source of income is energy extraction from coal; and
- Exclusion of companies involved in the extraction of oil from oil sands or the mining of oil sands.
- Exclusion of companies whose main source of income is the sale or distribution of tobacco products; and
- Exclusion of companies involved in business with civilian and socially controversial weapons or nuclear weapons; and
- Adherence to high standards of occupational health and safety.
- Compliance with the principles (including compliance with human rights) of the UN Global Compact; and
- Consideration of violations of competition rules and corruption laws.MSCI analyses controversial business areas, assessing the extent to which the companies take the above indicators into account.
ESTABLY uses this rating when selecting companies for the Value Green strategy.
Our company’s strategies for incorporating sustainability risks also flow into the company’s internal organisational guidelines. The 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 remuneration policy is in line with our strategies for the inclusion of sustainability risks.