Strategy for managing sustainability risks in investment decision-making processes
As a company, we want to support the shift to a sustainable economy by contributing to the achievement of climate protection and the UN Sustainable Development Goals. We are committed to the Sustainable Development Goals (“SDGs”) of the United Nations and the Paris Climate Agreement.
Sustainability risks describe environmental, social, or governance (“ESG”) events or conditions, the occurrence of which may have an actual or potential material adverse effect on the value of an investment. As part of our strategy, we incorporate sustainability risks into our investment decisions in a number of ways.
A key aspect of TFC’s consideration of sustainability risks in investment decisions is the investment strategy, which is the basis for investment selection upstream of portfolio management. In order to limit sustainability risks, TFC develops exclusion criteria to avoid investments in companies with an increased risk potential wherever possible. Through this approach, we strive to align investment decisions with environmental, social or corporate values.
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Strategy for considering the most significant adverse impacts of investment decisions on sustainability factors.
Sustainability factors circumscribe environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery.
TFC is not legally required to consider adverse impacts of investment decisions on sustainability factors. Nevertheless, TFC has made the strategic decision to generally design investment decisions in the context of financial portfolio management in a way that avoids undue adverse impacts on sustainability factors.
Already now, in accordance with the investment strategy and investment review, a special preliminary review of the target company is a fundamental part of the investment process. In addition to checking creditworthiness, this preliminary screening also includes, in particular, environmental and social risks, the developmental impact of the companies and the investment projects.
Transparency of compensation policy in connection with consideration of sustainability risks
Our remuneration policy is in line with our strategies for taking sustainability risks into account. As part of our remuneration policy, we ensure that our employees are not remunerated in a way that conflicts with our duty to act in the best interests of investors. Our compensation policy also does not incentivize brokering investments that are not in line with TFC’s investment strategy. Our compensation structure also does not favor any willingness with respect to investments with high sustainability risks.
