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 are committed to our responsibility towards the environment and society. We recognize that we sit at an interface that entails a special responsibility towards all our stakeholders. We therefore also have a vested interest in minimizing the sustainability risks of our investments.

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

II Definition of sustainability risks

Sustainability risks, or "ESG risks" (environmental, social and governance), represent an environmental, social or governance event or condition whose occurrence 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 are:

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

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

Governance sustainability risks such as a lack of diversity on the board or management body, violation or restriction of shareholders' rights, health and safety concerns for the workforce, corruption, tax dishonesty, poor security arrangements for personal data or IT security or other malpractice in a company that may damage the company's reputation or harm its business and therefore the value of the investment made by the client.

Important note: Adverse sustainability impacts must be distinguished from sustainability risks. While sustainability risks show the effects of climate change on the economy or companies, adverse sustainability impacts have an ecological significance and reflect the influence of the economy or companies on the climate. Examples include 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) with minimum scores in the environmental, social and corporate governance areas for the individual financial instruments or companies.
• Use of investment funds whose investment policy includes holistic ESG integration.
• Use of investment funds that have set up specific exclusion criteria for environmental, social or company-related values (negative screening).

These exclusion criteria may apply to issuers with violations of the UN Global Compact and precisely defined shares of sales in controversial business areas. These business areas include 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 can only be found in investment strategies that promote environmental and / or social characteristics or have a sustainable investment as their objective. 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. The specific strategy for taking sustainability risks into account can be found in the pre-contractual information.

IV. No consideration of adverse effects of investment decisions on sustainability factors

Investment decisions can
have a negative impact on the environment
(e.g. climate, water, biodiversity), on social and employee issues and can also be detrimental to the fight against corruption and bribery.
be detrimental to the fight against corruption and bribery. Against this background, the European legislator has defined specific sustainability factors and metrics to measure the company's impact on the environment. Serafin Asset Management GmbH does not currently take into account any adverse effects of investment decisions on sustainability factors as part of its financial portfolio management in accordance with Article 4 (1) (b) of Regulation (EU) 2019/2088 (Disclosure Regulation). We are not yet able to systematically record and assess the main adverse impacts on sustainability factors due to a lack of readily available data. This would require the invested companies and product providers to publish data on their environmental or social footprint and on their good corporate governance in a standardized form so that we can take this information into account as a basis for decision-making.

We will monitor the growing supply of ESG data on the market and the quality of the information provided by product providers and decide on the establishment of a corresponding process as soon as the supply of reliable data permits. A full review of data quality and quantity is expected to take place in the course of 2025.

V. No consideration of adverse effects on sustainability factors in investment advice

Serafin Asset Management GmbH does not currently take into account any adverse effects of investment decisions on sustainability factors in accordance with Article 4 (1) (b) of Regulation (EU) 2019/2088 (Disclosure Regulation) when providing investment advice. Please refer to the declaration in section IV.

VI 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 remuneration policy is in line with the inclusion of sustainability risks.

Change history:

Amendment as of 20.04.2023: Specification of the various strategies for taking sustainability risks into account (Section III).

Amendment as of 12.01.2024: Addition to Section V "No consideration of adverse effects on sustainability factors in investment advice".