Sustainability

Climate change is rapidly transforming the world we know. As responsbile asset manager, our role is to effectively support the mechanism of risk transfer from companies to investors.

I. General explanations

Serafin Asset Management GmbH falls within the scope of Regulation (EU)2019/2088 on sustainability-related disclosure requirements in the financial services sector on the basis of the provision of investment services, - in particular investment advice and financial portfolio management.

Due to our position as a financial services provider, we at Serafin Asset Management GmbH acknowledge our responsibility towards the environment and society. We recognize that we sit at a crossroads that implies a special responsibility towards all our stakeholders. Therefore, we also have our own interest in keeping the sustainability risks of our investments as minimal as possible.

As a holistic asset manager, however, for diversification purposes we also enable our clients to make investments that do not explicitly take sustainability risks into account.

II. Definition of sustainability risks

Sustainability risks, or « ESG risks » (Environmental, Social and Governance), represent 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 the investment.

Examples of sustainability risks that could potentially have a material negative impact on the value of an investment include :

Environmental sustainability risks such as climate change, carbon emissions, air pollution, rising sea levels or coastal flooding or forest fires ;

Social sustainability risks such as human rights abuses, human trafficking, child labor or gender discrimination ; and

Governance sustainability risks such as a lack of diversity on the board or governing body, violation or restriction of shareholders’ rights, health and safety concerns for the workforce, corruption, tax dishonesty, poor personal data or IT security safeguards, or other acts of malfeasance in a company that may damage the company’s reputation or harm their business and, in turn, the value of the investment made by the client.

Important note : Principal adverse impacts must be distinguished from sustainability risks. While sustainability risks show what impact climate change has on the economy or companies, principal adverse impactss have an ecological meaning and reflect the influence of the economy or companies on the climate. Examples are greenhouse gas emissions or the consumption of fossil fuels, which accelerate climate change.

III. Our strategy for taking sustainability risks into account

Depending on the investment strategy, Serafin Asset Management has defined the following strategies for taking sustainability risks into account:

• Use of ESG rating models (e.g. MSCI ESG Ratings), specifying minimum environmental, social and corporate governance scores for individual financial instruments or companies.
• Use of investment funds whose investment policy includes holistic ESG integration.
• Use of investment funds that have established specific exclusion criteria for environmental, social or corporate values (negative screening).

These exclusion criteria may concern issuers with violations of the UN Global Compact as well as well-defined shares of sales in controversial business areas. These business areas include, but are not limited to, controversial weapons (e.g., cluster munitions, landmines, biological weapons), nuclear weapons, alcohol, gambling, adult entertainment, tobacco, and predatory lending.

The strategies for taking sustainability risks into account are exclusively found in those investment strategies that promote ecological and / or social characteristics or have a sustainable investment as a goal. The scope of the strategies used to take sustainability risks into account (e.g. the defined minimum ESG rating score) may vary depending on the investment strategy.

IV. No consideration of principal adverse impacts on sustainability factors.

Currently, Serafin Asset Management GmbH does not consider principal adverse impacts of investment decisions on sustainability factors according to Article 4(1)(b) of Regulation (EU) 2019/2088 (Disclosure Regulation) as the regulatory framework has not yet been fully implemented. Due to a lack of readily available data as well as ambiguities associated with the regulatory framework, we believe that companies and market data providers are not yet ready to provide all the necessary data to identify, manage and monitor princiapl adverse impacts on sustainability factors.

We are generally positive about the regulatory conditions and will continue to closely monitor the regulatory developments and reconsider our decision regarding the consideration of the principal adverse impacts on sustainability factors after the full implementation of the regulatory framework and when the necessary information is available.

V. Transparency of the remuneration policy in connection with the consideration of sustainability risks

The remuneration of our employees and managing directors does not include any factors that conflict with sustainable development. In this respect, the compensation policy is in line with the inclusion of sustainability risks.

Change history:

Amendment as of 04/20/2023: Specification of the various strategies for taking sustainability risks into account (Section III.)