Disclosures

Munich Re Investment Partners (hereinafter “Investment Partners”) considers it very important to have a trusting working relationship with our clients at all times. We therefore strive to clarify your query as quickly and transparently as possible.

Please contact Investment Partners with your query:

Munich Re Investment Partners GmbH
Königinstrasse 107
80802 München, Germany
Telefon: +49(89)3891-0
E-Mail: info@munichreinvestmentpartners.com

We register your query as soon as it is received. Your complaint will be promptly acknowledged and investigated by the complaints management function which is independent from the functions and circumstances giving rise to the complaint. Throughout the investigatory process we will keep you up to date with our progress and aim to provide you with a substantive response. If you are not satisfied with the proposed solution, you can assert your rights with a court of law or seek a settlement of your dispute in an alternative procedure.

Complaints can also be addressed to: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) Dienstsitz Bonn: Graurheindorfer Straße 108 53117 Bonn Dienstsitz Frankfurt am Main: Marie-Curie-Str. 24 - 28 60439 Frankfurt am Main

Principles for avoiding conflicts of interests

Munich Re Investment Partners (hereinafter “Investment Partners“) has put controls, policies and procedures in place to identify and to prevent or manage conflicts of interest between Investment Partners and its clients, as well as between one client and another that arise as a result of the Firm providing regulated activities and services including investment services and activities under the Markets in Financial Instruments Directive 2014/65/EC.

Conflicts of interest can arise, for example, between Investment Partners, other companies of Munich Re Group, Investment Partners management, staff or other persons affiliated to Investment Partners, its clients or between the clients themselves.

Organisational measures in the event of conflicts of interests:

In order to counteract potential conflicts of interest before they arise, Investment Partners took care to ensure separation of functions when structuring its organisation, especially functions that are incompatible with each other. The principle of keeping functions separate applies all the way up to Executive Board level. Investment Partners also has a compliance function to identify, prevent and manage conflicts of interest.

The Company also obliges its staff to observe high ethical standards. It expects the greatest of care and integrity at all times, lawful and professional conduct, the upholding of market standards and especially observance of the clients' best interests.

Despite these organisational precautions, conflicts of interest could arise carrying out investment services and activities including, but not limited to, the following:

• When receiving inducements from third parties in the form of gifts, dining invitations or travel in the context of offering securities services;
• From predominantly success-related remuneration of employees;
• When obtaining information not yet publicly known (insider information);
• From personal relationships of employees or management or people related to or acquainted with them;
• When these persons are active in supervisory boards or other advisory bodies;
• Due to Investment Partners being part of a group of companies;
• Where Investment Partners is acting as a discretionary portfolio manager for more than one client, in particular in respect of issues relating to allocation;
• When clients have identical interests in purchasing a share of an investment;
• When grouping together similar buy/sell orders (block trades);

We counteract or prevent these potential conflicts as follows, by:

• ensuring that the Code of Conduct and organisational guidelines are upheld;
• keeping a watch list to counter possible conflicts of interest, for example by prohibiting certain transactions;
• ensuring compensation governance practices that avoid conflicts of interests by fostering long term thinking;
• having controls in place ensuring that only certain acceptable minor non-monetary benefits are permitted;
• creating areas of confidentiality by erecting information barriers, separating responsibilities and/or through spatial separation (Chinese walls);
• keeping insider and observation lists that monitor the emergence of sensitive information and prevent the misuse of insider information;
• ensuring disclosure and supervision of personal account dealing and outside activities of employees who may be confronted with conflicts of interest within the course of their work;
• ensuring that investors' best interests are served by when delegating tasks;
• monitoring the portfolio turnover rate;
• checking for conflicts of interest when designing new products;
• regulating dealings with block trades;
• regularly training the staff in matters of compliance.

Disclosure:

We should only use disclosure as a measure of last resort where organisational precautions put in place to prevent or manage its conflicts of interest from adversely affecting clients’ interests are not sufficient to ensure, with reasonable confidence, that the risk of damage to the interests of one or more clients will be prevented.

Last update: August 2021

Purpose and Objective

This “Statement” shall outline the principles that apply to the manner in which sustainability risks within the meaning of the Article 2 point 22 of the Regulation (EU) 2019/2088 (“Sustainability Risks”) are taken into account in financial instruments on behalf of the funds and discretionary mandates (the “Clients”) managed by Munich Re Investment Partners.  

Applicable Area

This Statement is applicable to the management of assets by Munich Re Investment Partners. Certain exceptions may apply to specific investment assets where Sustainability Risk management for technical reasons cannot be applied.

Sustainability risk management strategy objective

As a signatory, Munich Re Investment Partners is committed to the six principles of the United Nations Principles for Responsible Investing (UNPRI). This commitment includes the management of portfolio sustainability risks.

Sustainability risk management processes aim at achieving optimal investment outcomes according to our clients’  investment objectives and a better risk-adjusted investment performance over a market cycle. They also  endeavour to analyse and where possible minimize the adverse sustainability impact of invested projects and corporates in the mid- to long-term of assets under management.  

In line with the EU regulation Munich Re Investment Partners’ sustainability risk management strategy addresses two dimensions:

- Analysis and management of sustainability risks (i.e., environmental, social or governance events or conditions that, if they occur, could cause an actual or a potential material negative impact on the value of the investment).

- Analysis and consideration in the investment process of potential negative, adverse impact on the environment, social and employee matters, human rights and/ or impacts which may be connected to governance issues such as corruption and bribery (“Principal Adverse Impact”).

Relevance of sustainability risks

Sustainability risks may have the potential to influence the investment performance of portfolios negatively. Munich Re Investment Partners considers sustainability risks to be potential drivers of financial risk factors in investments such as market price risk, credit risk, liquidity risk and operational risk.

Sustainability risk factors are principally considered as mid- to long-term investment risks, while they can also materialize in the short-term.  

They may materialize along any of the three dimensions: environmental, social and/or governance risks.  

There is research evidence that sustainability risks may materialize as issuer specific extreme loss-risks. Such issuer specific sustainability risks events typically happen with low frequency and probability but may have high financial impact and may lead to significant financial loss.

It is Munich Re Investment Partner’s investment belief that sustainability risks need to be analysed and managed holistically.  

Our sustainability risks management approach aims to ensure that sustainability risks are appropriately identified, measured, monitored and mitigated in accordance with regulatory requirements.

Sustainability risk management processes

Munich Re Investment Partners is a climate and impact driven investment manager. We have joined the Net Zero Asset Manager Initiative to underscore our commitment to build climate risk and opportunity optimized investment solutions that create a measurable, positive improvement for people and the planet.  

As a new asset manager we are in the process to build these innovative investment strategies that aim to cater our clients’ financial and sustainable investment objectives and incorporate sustainability risk management.  

In the investment process for market-traded securities, Munich Re Investment Partners draws on the analyses performed by leading providers of sustainability research data. Environmental, Social and Governance (ESG) risk ratings are used as input to analyze, assess and manage ESG risks of invested corporate and sovereign issuers.

Going forward, Munich Re Investment Partners will update this policy with more details on the sustainability risk management approach, techniques and instruments applied.  

Organizational framework of sustainability risk management

The primary responsibility for Sustainability Risk management lies with the portfolio management function. As a second line of defense, the risk management function performs an independent oversight of sustainability risks. If needed, sustainability risks are escalated to the executive board to decide risk mitigation and management actions including measures to reduce sustainability risk exposures such as sales of assets. The Munich Re Investment Partners’ board is responsible for approving the business and risk strategy, as well as its oversight of its communication and implementation within the entity (risk culture) and through established process structures.

Objective and applicability of the Principal Adverse Impact Statement

This statement describes Munich Re Investment Partners’ approach to, inter‐alia, its regulatory obligations and highest industry standards resulting from applicable rules, regulations and applicable global regulatory principles. This Principal Adverse Impact Statement outlines how Munich Re Investment Partners considers principal adverse sustainability impacts of its investment decisions on behalf of the funds and discretionary mandates.

This statement is applicable to the management of assets by Munich Re Investment Partners. Certain exceptions may apply to specific investment assets where identification of principal adverse impact for technical reasons cannot be applied.  

Identification and consideration of the sustainability factors

Principal adverse impacts are impacts of investment decisions that result in negative effects on sustainability factors (i.e. environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters) — even if they do not affect the value of an investment.  

As a new asset manager, Munich Re Investment Partners will develop a framework to identify and assess those impacts. Going forward we will update this policy statement as soon as the principal adverse impact management framework is established and will disclose more details on processes and instruments applied.    

Investment decisions might cause, contribute to or be directly linked to effects on sustainability factors that are defined as environmental, social and employee matters which include topics such as respect for human rights, anti‐corruption and anti‐bribery matters. These effects can be negative, material or likely to be material.  

‘Principal adverse sustainability impacts’ are defined as those impacts of investment decisions that result in negative effects on sustainability factors. These impacts are derived from the issuers, as well as projects that are related to invested securities.  

Statement updates and maintenance

Munich Re Investment Partners reviews and updates its principal adverse impact statement once a year. Within the review process, Munich Re Investment Partners updates the statement where necessary with actual practice and to ensure that it is fully compliant with regulatory requirements.

Introduction & summary

Munich Re Investment Partners GmbH (“Investment Partners”) is authorised as an investment firm by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, “BaFin”) and jointly supervised by the BaFin and the German Central Bank (Deutsche Bundesbank).

Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial sector (the “SFDR”) entered into force on 10 March 2021. For the products and activities that fall under its scope of application, the SFDR makes it obligatory for financial market participants (“FMP”) such as Investment Partners to disclose information on their approach to integrating sustainability risks and principal adverse impacts (“PAIs”) on a corporate level as well as on the level of financial products.

In Article 2 (24), SFDR defines sustainability factors as environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters. Connected thereto, PAIs are defined as substantial negative effects on these sustainability factors. In accordance with the requirements laid out in Article 4 SFDR, Investment Partners discloses a qualitative as well as quantitative statement for PAIs on sustainability factors in line with the timeline outlined in Article 4 of the Delegated Regulation (EU) 2022-1288.

The following statements can be made:

(a) Information about policies on the identification and prioritisation of PAIs and indicators

Investment Partners considers sustainability essential for a holistic approach towards research and investment decision making. Consequently, Investment Partners’ investment process integrates environmental, social and governance factors (“ESG”) in its research and portfolio management. This includes an assessment of the PAIs for each product managed by Investment Partners. PAI analysis strongly depends on the type of asset class. The PAI identification and selection of PAI metrics including definition of threshold values starts at product development stage where Investment Partners carefully assesses which PAIs are of particular relevance for a new investment strategy. PAIs are monitored regularly across products. PAI values are subject to regular checks against defined thresholds and integrated into investment decision-making by Investment Partners. The compliance of PAI values against defined thresholds are controlled via technical implementation and regularly reviewed on an ex-post basis. In case a PAI threshold is breached, the portfolio is reviewed in-depth. The PAI review process can potentially lead to changes in portfolio constituents. Periodically, Investment Partners assesses whether the initially defined PAI indicators and thresholds defined are still relevant and if changes should be made.

(b) a description of the principal adverse impacts and of any actions in relation thereto taken or, where relevant, planned

Investment Partners pursues the strategy of integrating ESG into investment decisions across all portfolios where Investment Partners acts as delegated portfolio manager. It integrates the results from a periodically repeated PAI threshold check directly into its investment decisions, effectively changing portfolio constituents where the set threshold for a PAI indicator has been breached. All functions which are part of the investment decision process including research, portfolio management and trading are informed, trained and monitored against sustainability-related policies of Investment Partners and other process relevant documentation. The assessment of both ESG in general and PAI in particular is based on publicly available data, data provided by third party research vendors and proprietary research.

(c) brief summaries of engagement policies in accordance with 3g of Directive 2007/36/EC, where applicable;

At the time being, this section is not applicable to Investment Partners.

(d) a reference to the adherence to responsible business conduct codes and internationally recognised standards for due diligence and reporting and, where relevant, the degree of their alignment with the objectives of the Paris Agreement.

Investment Partners is a member of the Net Zero Asset Owner Alliance (“NZAMI”) and a signatory to the United Nations Principles for Responsible Investments (“UN PRI”).

In accordance with Article 5 of the SFDR, financial market participants and financial advisers shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks.  

Munich Re Investment Partners has implemented regulations, policies and processes through which it is ensured that the renumeration policy of Munich Re Investment Partners does not give rise to substantial sustainability risks.

Principles for Sustainable Investments

1     Objective

Munich Re Investment Partners ("Investment Partners") is convinced that investors have a significant role to contribute to climate mitigation. We aim to deliver contributions to real-world economy climate transition, effective carbon mitigation, and financial performance. 

Munich Re Group established Investment Partners as a boutique asset manager with a dedicated focus on climate investing. We aim to build innovative investment solutions for institutional investors. Our goal is to deliver contributions to real-world economy climate transition, effective carbon mitigation, and financial performance. Investment Partners considers sustainability essential for a holistic approach towards research and investment decision making. We believe that sustainability risks, especially climate transition and physical climate risks, can negatively influence the financial performance of investment strategies over time. Our proprietary research and systematic, rules-based investment process contribute to disciplined investment outcomes. Consequently, our investment approach integrates environmental, social, and governance (“ESG”) criteria and sustainability risk in our research and portfolio management. The following outlines our general framework of principles for sustainable investments, describing the processes through which ESG criteria are integrated into our investments.

As a signatory of the United Nations Principles for Responsible Investing (“UNPRI"), Investment Partners is committed to its six principles. As such, we are committed to incorporate ESG criteria and sustainability risks into our portfolio management. Moreover, we joined the Net Zero Asset Manager Initiative to underscore our conviction and commitment to sustainable investing. We aim to build climate risk and opportunity optimised investment solutions.

2     Governance

Sustainability is at the core of our corporate strategy, for which our Executive Board bears the overall responsibility. Responsible conduct is embedded at all levels of the organisation. This includes the investment process where all relevant functions execute on all implemented policies, guidelines and procedures.  Regarding the integration of sustainability aspects within our investment process, Investment Partners’ risk function is responsible for defining a framework that includes the roles and responsibilities. Our sustainability investment framework specifically outlines each process step and assigns responsibilities accordingly.

Generally, the relevant members of Investment Partners' Executive Board are responsible for approval of any ESG indicators or thresholds. The sustainability integration framework also outlines escalation procedures in case any ESG screen yields results that are not in line with the defined threshold. The ultimate decision regarding the inclusion of any issuer or investee company follows an in-depth analysis and is to be taken by the relevant members of the Executive Board.

With regards to conflicts of interest, Investment Partners’ compliance function has set up the framework regarding effective arrangements for appropriate action to identify relevant conflicts of interest and to avoid any adverse effect on client interests. Special treatment is given for the prevention and detection of insider dealing and market abuse, personal transactions, conflicts of interest that are caused by the receipt of inducements from third parties or Munich Re Investment Partners' own remuneration structure or other incentive structures. Conflicts of interest are monitored on an ongoing basis. Also, a register of potential and actual conflicts of interest is maintained by the compliance function. 

3     Sustainability Investment Approach

3.1  ESG integration

Our investment team selects the most viable approach and process depending on the asset classes and the respective investment strategy, and the guidelines and conditions associated therewith. However, there are communalities which are considered across asset classes.

Our commitment to incorporate sustainability considerations in our investment process is reflected in each step of the investment process; from conducting our own research, analysing financial, alternative, and proprietary data, to portfolio construction and investment strategies. We pursue the strategy of integrating sustainability considerations into investment decisions across all portfolios where we act as delegated portfolio manager. This includes Principle of Adverse Impact (PAI) metrics and sustainability risk indicators.

Generally, the assessment of sustainability factors is based on publicly available data, data provided by third party research vendors, and proprietary research. As part of our strategic asset allocation, we seek to apply ESG screenings to all assets, using ESG ratings supplied by external data providers. These ratings address all companies' and issuer's resilience to sustainability risks, including environmental (e.g., GHG intensity), social (e.g., government EU sanctions), and governance risks (e.g., corruption score).

The PAI identification and selection of metrics, including definition of threshold values, starts at product development stage where we carefully assess which PAIs are of particular relevance for a new investment strategy. Given our focus on climate, we find PAI indicators relating to greenhouse gas emissions particularly important. We also consider "Green Securities". "Green Securities" for us are defined as Bonds issued and certified as defined under the EU Green Bond Standard; these are calculated as the share of bonds issued under European Union legislation on environmentally sustainable bonds.

As we work with government bonds, we have also defined government sanctions and average corruption score as relevant indicators. The prior represents the number of investee countries subject to social violations as referred to, for example, the United Nations principles. The latter is based on the corruption perception index, which measures the perceived level of public sector corruption in different countries around the world.

PAI indicators are monitored regularly across products. Values are subject to regular checks against defined thresholds and integrated into investment decision-making by Investment Partners. The compliance of PAI and sustainability risk indicators against defined thresholds are controlled via technical implementation and regularly reviewed on an ex-post basis. In case a PAI or sustainability risk threshold is breached, the portfolio is reviewed in-depth. This review process can potentially lead to changes in portfolio constituents. Investment Partners regularly assesses whether the initially defined PAI indicators and thresholds defined are still relevant and if changes should be made.

3.2  Exclusions

The exclusion strategy takes place in the definition of the investment universe from which the assets for analysis and portfolio construction are to be selected for the given investment strategy.

Firm-wide, certain companies, sectors or countries are excluded from the investment universe on the basis of predefined criteria. For the detailed exclusions we apply, please refer to chapter 4.3 of the Munich Re Group RIG, here. Where there are full economic sanctions that prohibit any financial dealings with a foreign state, including investment in entities operating under the authority of the foreign state, we will not invest in securities that fall within the sanctions.

Beyond these firm-wide investment exclusions, specific portfolios and/or investment funds may apply additional/different exclusions as part of their investment strategies, as described in the investment mandate. We also define exclusions for our investment portfolio, further ensuring our investment strategies are aligned to our ESG philosophy.

4     Sustainability Engagement

4.1  Engagement

We engage with market participants to promote responsible management and good corporate governance, to promote sustainability-oriented investments, mitigating investment risks and aligning with net zero pathways.

Investment Partners engages with market participants to understand the policies and strategies, as well as their sustainability principles in order to ensure alignment of sustainability ambitions with our investment philosophy. We also aim to influence their sustainability-related goals by educating them on best practice climate investment policies. As we are currently not investing into corporate issuers, we currently do not engage with those.

As asset manager, we disclose information regarding our products and operations, including sustainability-related disclosures. We make all relevant information available to our investors, as well as share certain information publicly. For example, as part of our effort to increase transparency regarding our responsible investing, we disclose our approach to integrating sustainability risks and PAI indicators. 

4.2  Collaborative Engagement

We believe that a transition to net-zero greenhouse gas emissions requires collaborative engagement to fully unleash investors' active stewardship influence. While focusing on individual high-emission companies seems to yield the greatest mid-term leverage, we deem it crucial to engage a broader spectrum of companies across industries to achieve a net-zero greenhouse gas emissions economy. Thereby, collective engagements address the key challenges of a shared vision and scale. For specialist asset managers, like us, collective engagement is a particularly effective way to amplify our influence. 

4.3    Divestments

We believe divestments are an effective step concluding unsuccessful stewardship. Portfolio Management will divest (sell) an investment if the analyses and evaluations of publicly available information and documents, or those obtained as part of the active engagement, reveal a breach of material ESG standards based on their judgement of the investment case.

Currently, we are working to further develop our engagement capabilities. Moving forward, Investment Partners will update this framework with more details on our engagement practices.

5       Sustainability Risk Management

Investment Partners has a holistic view on ESG risks – this includes the review and if necessary, adjustment of the business strategy and risk strategy under consideration of ESG risks, the integration of ESG risks into the business organization and risk management procedures specifically addressing ESG risks. Sustainability risks are assessed both on a corporate level as well as within the investment process.

Our sustainability risk management approach aims to ensure that sustainability risks are appropriately identified, measured, monitored and mitigated in accordance with regulatory requirements.

Investment Partners’ sustainability risk management strategy with regards to the investment process addresses two dimensions:

1.  Analysis and management of ESG risks (i.e., climate change events or conditions that, if they occur, could cause an actual or a potential material negative impact on the value of the investment).
2.  Analysis and consideration in the investment process of potential negative, adverse impact on the environment, social and employee matters, human rights and/ or impacts which may be connected to governance issues such as corruption and bribery (“Principal Adverse Impact”).

In relation to (1), Investment Partners' investment process draws on the analysis performed by leading providers of sustainability research data. ESG risk ratings are used as input to analyse, assess, and manage ESG risks of our assets.

With regard to (2), Investment Partners will select key performance indicators to assess the principals of adverse impacts on sustainability factors when evaluating new investments, and throughout the management of our assets.

Sustainability risk management processes aim to achieve optimal investment outcomes according to our clients’ investment objectives and a better risk-adjusted investment performance over a market cycle. They also endeavour to analyse and where possible minimise the adverse sustainability impact of investments.