Principal Adverse Impact Statement
The Sustainable Finance Disclosure Regulation (SFDR) defines sustainability factors in the form of environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. Principal Adverse Impact is generally understood to mean the negative impact that an investment decision has on these factors. This statement describes how we consider the Principal Adverse Impact (PAI) of our investment decisions on sustainability factors in accordance with Article 4 of the SFDR.
Almost all types of economic activities have the potential to affect various sustainability indicators both positively and negatively. The PAI indicators can be used to measure whether and to what extent investments are made in sustainability factors.
We try to manage the risk of negative impacts on sustainability factors through various means. These include exclusion criteria, the monitoring of norm violations and minimum requirements for issuers with regard to their ESG rating. In addition, we specifically monitor and assess a number of PAI indicators.
> Current PAI indicators monitored and scored by BlackPoint Asset Management
Description of actions taken to identify and address the main negative sustainability impacts
Subject to data availability, our portfolio management monitors the selected PAI indicators for all investments involved on an ongoing basis. For this purpose, data is determined and analyzed with the help of specialized third-party providers who meet the highest international standards and/or internal analyses. Issuers that show a high negative impact on certain indicators or groups of indicators are identified on the basis of this data and further analysis is analyzed. The results flow into our internal ESG assessment method and are taken into account in our investment process.
Measures to reduce negative sustainability impacts
With the help of our multi-stage ESG process, we ensure that in the area of sustainability, predefined minimum standards apply to the portfolio as a whole and to individual investments. Standard-based filters, exclusion criteria and minimum ratings are used for this. When analyzing individual investments, more factors are involved in the decisions.
Our PAI monitoring system applies a risk-based approach. First, the influence of an issuer on the individual PAI indicators is evaluated. The issuers are then evaluated based on this rating, both for individual indicators and at an overall level. The result feeds into an overall rating that indicates the performance of each issuer. Issuers that perform particularly poorly on individual indicators or overall are analyzed further by our portfolio management. These further analyzes can already contribute to solving the problem, for example if additional information from other sources leads to different results.
Possible outcome actions
If the further analyzes confirm the critical results of an issuer with regard to the PAI, a decision will be made on suitable measures. The spectrum includes the following possible measures:
- No Action: The issuer's PAI indicator score IS deemed acceptable or established as not reflecting actual company performance.
- Commitment: The issuer is asked to improve its performance in the areas concerned or to provide further data.
- Foreclosure: The issuer is deemed unsuitable for investment in the portfolios that we influence and will be disqualified from investing.
In addition to direct exchange with companies, we attach great importance to pursuing and promoting our ESG goals by exercising voting rights at annual general meetings. As soon as company shares have been acquired by us, a vote is taken within the framework of the participation policy we have set and in this way influence is exerted on companies and their management (unless there are important reasons against exercising voting rights). In order to be able to exercise the voting rights in a timely manner and in accordance with our participation policy, we have commissioned the leading independent provider of global governance services, IVOX Glass Lewis, with the execution.
Our participation policy includes extensive goals in the areas of the environment, social affairs and good corporate governance and is particularly applicable in the areas of management composition, reporting, remuneration structures and proposals from shareholders or management. For example, we not only vote against inefficiently structured management, excessive compensation in upper management or inadequate standards in reporting, but also vote for strategy adjustments with the aim of reducing environmental risks or improving the social impact of business activities.
With the help of our service provider, every voting point is carefully weighed in line with the participation policy, so that the exercise of our voting rights does not counteract our (ESG) goals as a whole.
Consideration of international standards
Our ESG policy, which includes this PAI statement, is based on the United Nations Principles for Responsible Investment and other relevant international conventions and standards, including:
- United Nations Global Compact
- OECD Principles of Corporate Governance
- OECD Guidelines for Multinational Enterprises
- United Nations Universal Declaration of Human Rights
- United Nations Guiding Principles on Business and Human Rights
- Rio Declaration on Environment and Development
- United Nations Convention against Corruption
- Convention on Cluster Munitions
We aim to respect these international standards and to promote compliance within our influence.
Various data sources, which are supplied by different data providers, can be used throughout the process described. Should there be different data points on the same factors, the source considered to be the most appropriate is selected. The importance of each indicator is ranked using parameters that are reviewed and maintained by our portfolio management.
* When making an investment decision, not only sustainability aspects have to be taken into account, but also all the characteristics/goals mentioned in the sales documents.
> Sustainability-related disclosures (German), BlackPoint Evolution Fund