Sustainability-related disclosure | Berenberg Core Strategy 3

Sustainability-related disclosure according to Article 10 of Regulation (EU) 2019/2088 in conjunction with Article 24 et seq. of Delegated Regulation (EU) 2022/1288

The subject of this document is mandatory information about the environmental and/or social characteristics of this asset management strategy. It is not advertising material. This information is required by law to transparently explain the environmental and/or social features advertised by the asset management strategy.

a) Summary

No sustainable investment objective

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

This asset management strategy promotes environmental and social characteristics within the meaning of Article 8 of the Disclosure Regulation.

Environmental and social characteristics are taken into consideration when making investment decisions, including for example climate change and pollution in the area of environmental, as well as working conditions, health and safety in the area of social. In addition, aspects in the area of corporate governance are taken into account.

Investment strategy

To fulfil the promoted characteristics, the investment strategy of the asset management strategy focuses on ESG exclusion criteria applied to potential investments to ensure compliance with minimum ESG standards. The evaluation is based on data from external data providers, which are provided in our systems in an automated way.

The Berenberg ESG exclusion criteria set a minimum standard from an ESG perspective to be investable for the portfolio. In addition, based on the ESG controversy analysis of our external ESG data provider, all companies directly involved in ongoing very severe ESG controversies are identified for individual security investments. These are generally excluded for investment. Further ESG elements, in addition to the exclusion criteria and the ESG controversy analysis, can be implemented in the asset management strategy.

Proportion of investments

The asset allocation of the asset management strategy and the extent to which it may take direct or indirect risk positions vis-à-vis companies can be found in the investment guidelines.

The category "Other investments" includes cash holdings as well as investments in products used for hedging purposes or portfolio balancing.

Monitoring of environmental or social characteristics

The attainment of the promoted environmental and social characteristics is monitored, among other things, by system-side checks for compliance with the binding elements of the investment strategy. The evaluation is based on data from external data providers that are provided automatically in our systems. Underlying screens for this automated external data are defined and regularly reviewed by the Berenberg Wealth and Asset Management ESG Office.

Methodologies

As part of the ESG exclusion process, companies are excluded on the basis of activity- and norm-based exclusion criteria. The Berenberg ESG exclusion criteria represent a minimum standard that companies must meet in order to be investable for the portfolio. Among others, companies which are directly involved in ongoing very severe ESG controversies are identified and fundamentally excluded from single security investments.

Data sources and processing

To attain the environmental and social characteristics promoted by the asset management strategy, the following data sources are used:

  • Exclusions and controversy monitoring based on data provided by MSCI ESG Research.
  • Regular review of active target funds within framework of a holistic qualitative and quantitative analysis based on input collected from external asset managers via internally developed questionnaire and personal discussions as well as sustainability assessments by recognised external agencies

Limitations to methodologies and data

There may be limitations on the retrieval of data from data providers such as MSCI ESG due to their lack of coverage in the universe for certain companies, data errors, or methodological shortcomings. Where such misrepresentations are suspected we conduct internal review and potentially engage with the data providers to limit the impact on how the environmental and/or social characteristics promoted are met.

Due diligence

In addition to reviewing legal and contractual requirements as well as analysing financial metrics, the environmental and social characteristics of portfolio positions are taken into account depending on the ESG elements implemented in the asset management strategy.

The Berenberg ESG exclusion criteria represent a minimum standard that companies must meet in order to be investable for the portfolio. The compliance with the Berenberg ESG exclusion criteria is monitored, among other things, by system-side checks for compliance.

A due diligence is being performed as part of the data procurement process when selecting data providers by subject matter and technical experts, incl. evaluation of portfolio and benchmark universe coverage, review of providers’ underlying models and frameworks, comparison of provider data with internal analysis and assessments.

Engagement policies

Engagement is not an explicit part of the environmental or social investment strategy of this asset management strategy.

Designated reference benchmark

The asset management strategy does not currently use an index as a benchmark to determine whether the strategy is aligned with the advertised environmental and/or social characteristics.


b) No sustainable investment objective

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

c) Environmental or social characteristics of the financial product

This asset management strategy promotes environmental and social characteristics within the meaning of Article 8 of the Disclosure Regulation.

Environmental and social characteristics are taken into consideration when making investment decisions, including for example climate change and pollution in the area of environmental, as well as working conditions, health and safety in the area of social. In addition, aspects in the area of corporate governance are taken into account.

d) Investment strategy

To fulfil the promoted characteristics, the investment strategy of the asset management strategy focuses on ESG exclusion criteria applied to potential investments to ensure compliance with minimum ESG standards. The evaluation is based on data from external data providers, which are provided in our systems in an automated way.

The Berenberg ESG exclusion criteria set a minimum standard from an ESG perspective to be investable for the portfolio. In addition, based on the ESG controversy analysis of our external ESG data provider, all companies directly involved in ongoing very severe ESG controversies are identified for individual security investments. These are generally excluded for investment. Further ESG elements, in addition to the exclusion criteria and the ESG controversy analysis, can be implemented in the asset management strategy.

Good corporate governance practices of the companies invested in will be assessed based on the following elements of the investment strategy:

  • Application of norm-based ESG exclusion criteria and monitoring of ESG controversies with the exclusion of companies directly involved in ongoing very severe ESG controversies, including on governance practices and compliance with international norms based on the Berenberg Wealth and Asset Management ESG Policy and ESG Exclusion Policy.

e) Proportion of investments

The asset allocation of the asset management strategy and the extent to which it may take direct or indirect risk positions vis-à-vis companies can be found in the investment guidelines.

#1 Aligned with E/S characteristics includes the investments of the financial product used to attain the environmental or social characteristics promoted by the financial product.

#2 Other includes the remaining investments of the financial product which are neither aligned with the environmental or social characteristics, nor are qualified as sustainable investments.

The category #1 Aligned with E/S characteristics covers: The sub-category #1B Other E/S characteristics covers investments aligned with the environmental or social characteristics that do not qualify as sustainable investments.

The category "Other investments" includes cash holdings.

f) Monitoring of environmental or social characteristics

The attainment of the promoted environmental and social characteristics is monitored, among other things, by system-side checks for compliance with the binding elements of the investment strategy. The evaluation is based on data from external data providers that are provided automatically in our systems. Underlying screens for this automated external data are defined and regularly reviewed by the Berenberg Wealth and Asset Management ESG Office.

The internal control of this monitoring and the underlying regulatory classification is carried out by Portfolio Management, the ESG Office, Compliance and Internal Audit, among others.

g) Methodologies

As part of the ESG exclusion process, companies are excluded on the basis of activity- and norm-based exclusion criteria. The Berenberg ESG exclusion criteria represent a minimum standard that companies must meet in order to be investable for the portfolio. Among others, companies which are directly involved in ongoing very severe ESG controversies are identified and fundamentally excluded from single security investments.

The attainment of the promoted environmental and social characteristics is measured through regular automated check on compliance with the binding elements of the investment strategy and with sustainability indicators based on these binding elements.

h) Data sources and processing

To attain the environmental and social characteristics promoted by the asset management strategy, the following data sources are used:

  • Exclusions and controversy monitoring based on data provided by MSCI ESG Research.
  • Regular review of active target funds within framework of a holistic qualitative and quantitative analysis based on input collected from external asset managers via internally developed questionnaire and personal discussions as well as sustainability assessments by recognised external agencies

To ensure data quality and to process data, the following measures are taken:

  • A due diligence is being performed as part of the data procurement process when selecting data providers by subject matter and technical experts, incl. evaluation of portfolio and benchmark universe coverage, review of providers’ underlying models and frameworks, comparison of provider data with internal analysis and assessments,
  • Furthermore, an engagement with data provider will take place in case of material changes to underlying data and/or data concerns,
  • An automatic integration of provider data feeds into internal systems for portfolio management and monitoring purposes,
  • Internal assessment and analysis of controversy data,
  • Input from external asset managers for review of active target funds within framework of a holistic qualitative and quantitative analysis is collected via internally developed questionnaire and personal discussions. This input is subsequently documented in an internal database, assessed for completion and analysed further within the framework. In case of missing or erroneous information, we may engage further with the respective asset managers and/or enrich with further externally collected information.

Estimated figures may be required e.g., in case of non-existent corporate disclosure and may be directly sourced from data providers. As coverage and methodologies changes and further develops, a proportion of data that is estimated cannot be given.

i) Limitations to methodologies and data

There may be limitations on the retrieval of data from data providers such as MSCI ESG due to their lack of coverage in the universe for certain companies, data errors, or methodological shortcomings. Where such misrepresentations are suspected we conduct internal review and potentially engage with the data providers to limit the impact on how the environmental and/or social characteristics promoted are met.

When analysing active target funds, we depend on the accurate transmission of data from the external asset managers. Here we carry out plausibility tests on a random basis and verify the information in personal interviews.

j) Due diligence

In addition to reviewing legal and contractual requirements as well as analysing financial metrics, the environmental and social characteristics of portfolio positions are taken into account depending on the ESG elements implemented in the asset management strategy.

The Berenberg ESG exclusion criteria represent a minimum standard that companies must meet in order to be investable for the portfolio. The compliance with the Berenberg ESG exclusion criteria is monitored, among other things, by system-side checks for compliance. The evaluation is based on data from external data providers that are provided automatically in our systems. Underlying screens for this automated external data are defined and regularly reviewed by the Berenberg Wealth and Asset Management ESG Office. The ESG exclusion criteria are determined by the ESG Committee, which forms the ESG governance and oversight body within Berenberg Wealth and Asset Management and is composed of Wealth and Asset Management members and executives.

A due diligence is being performed as part of the data procurement process when selecting data providers by subject matter and technical experts, incl. evaluation of portfolio and benchmark universe coverage, review of providers’ underlying models and frameworks, comparison of provider data with internal analysis and assessments. An engagement with the data provider will take place in case of material changes to underlying data and/or data concerns.

k) Engagement policies

Engagement is not an explicit part of the environmental or social investment strategy of this asset management strategy.

More detailed information on our engagement approach can be found in the publicly available Berenberg Wealth and Asset Management Engagement Policy as well as the annual Berenberg Wealth and Asset Management Active Ownership Report.

l) Designated reference benchmark

The asset management strategy does not currently use an index as a benchmark to determine whether the strategy is aligned with the advertised environmental and/or social characteristics.