European SRI Transparency Code Version 3:0

Transcription

1 European SRI Transparency Code Version 3:0 The European SRI Transparency Code (the Code) focuses on SRI funds distributed publicly in Europe and has been designed to cover a range of assets classes, such as equity and fixed income. All information pertaining to the European SRI Transparency Code can be found at the following website: for Germany, Austria and Switzerland: The code comes with a Guidance Manual for fund managers on how to best use and respond to the Transparency Code. TWO KEY MOTIVATIONS UNDERPIN THIS CODE 1. The opportunity for retail SRI funds to clarify their SRI approach to investors and other stakeholders in an easily accessible and comparable format. 2. Proactively strengthen a self-regulation that contributes to the development and promotion of SRI funds by setting up a common framework for transparency best practices. GUIDING PRINCIPLE Signatories to the Code should be open, honest and disclose accurate, adequate and timely information to enable stakeholders, in particular consumers, to understand the ESG 1 policies and practices of the fund. COMMITMENTS FROM SIGNATORIES The order and exact wording of the questions shall be respected; Responses should be informative and clear, and the resources and methodologies deployed should be described with as much detail and precision as possible; Funds should report data in the currency that they use for other reporting purposes; 1 ESG stands for Environmental, Social and Governance. Bank J. Safra Sarasin AG Elisabethenstrasse 62, Postfach, CH-4002 Basel T: +41 (0) , F: +41 (0) ,

2 Reasons preventing the fund from providing all or part of the information to a given question should be clearly stated and, in such a case, signatories should state when they will be able to answer the question; Responses shall be updated at least on an annual basis and should have a precise publication date; Responses to the Code should be easily accessible from the fund s and/or fund manager s website. In any case, signatories should make it clear where to find the information required by the Code; Signatories are solely responsible for the answers to the questions, and should state this in their response. To clarify these commitments, signatories should include at the beginning of the response document the following two statements: Statement of Commitment by Bank J. Safra Sarasin Sustainable Responsible Investing is an essential part of the strategic positioning and behaviour of Bank J. Safra Sarasin. We have been involved in SRI since 1989 and welcome the European SRI Transparency Code. This is our eleventh statement of commitment and covers October 1, 2016 to September 30, Our full response to the European SRI Transparency Code can be accessed below and is available in the annual report of the retail funds and on our web site. Compliance with the Transparency Code J. Safra Sarasin is committed to transparency and we believe that we are as transparent as possible given the regulatory and competitive environments that exist in the countries in which we operate. Bank J. Safra Sarasin adheres to the full recommendations of the European SRI Transparency Code

3 CODE CATEGORIES Section 1 Basic Details The Fund Management Company 1a Provide the name of the fund management company managing the fund(s) to which this code apply. Unless stated otherwise: JSS Investmentfonds SICAV, Luxembourg umbrella fund. For the JSS Multi Label SICAV New Energy Fund EUR): JSS Multi Label SICAV, Luxembourg umbrella fund. For JSS Sustainable Portfolio - Defensive (CHF), JSS Sustainable Portfolio - Swiss Flexible: JSS Investmentfonds Ltd, Swiss law fund, category other funds. Bank J. Safra Sarasin Ltd Elisabethenstr. 62 CH-4002 Basel, Switzerland Contact person: Ralph Gebhard: ralph.gebhard@jsafrasarasin.com Telephone number:

4 1b Describe the general approach of the fund management company with regards to how it takes environmental, social and governance (ESG) criteria into consideration. The fundamental investment philosophy of Bank J. Safra Sarasin is based on our conviction that it is the fiduciary duty of all long-term-oriented asset managers and investors to integrate Environmental, Social and Governance (ESG) factors into financial analysis. Long-term returns can only be achieved if the ability of future generations to meet their needs is not diminished. Achieving that goal will require extensive economic, environmental, social, governance and regulatory changes to which investors can contribute through investing sustainably. These challenges need to be recognised early and embedded into the entire investment process in order to reduce related investment risks and capture the potential opportunities. Our investment process helps identify companies which take advantage of ESG opportunities and avoid those companies which are exposed to unmanaged ESG risks. Such risks often entail concurrent financially material consequences such as the threat of litigation or reputational loss. The opportunities may stem from exposure to megatrends (e.g. natural resource constraints, climate change, demographical change), as companies with the solutions to face these trends can be expected to increase in value. More efficient use of resources offers further opportunities. The result of our company analysis shows how well a company is positioned to manage its financially material ESG risks and opportunities. As such, the integration of ESG factors into our analysis results in a deeper understanding of the sustainability and viability of a company. It greatly increases the transparency and confidence in the conclusions of our research and significantly improves the risk/return profile of our client portfolios. Is the fund management company approach towards ESG criteria aligned or inspired by its corporate social responsibility approach? Yes, the fund management s approach is influenced by the bank s CSR policy: blications.htm, Annual Report J. Safra Sarasin, Sustainability Report, p. 80. Has the fund management company signed the Principles for Responsible Investment? Yes, Bank J. Safra Sarasin became a founding signatory in The PRI-Report for 2015/2016 is available on the PRI website: signatories current signatories Bank J. Safra Sarasin RI Transparency Code 4 32

5 Is the fund Manager a signatory or a member of other international and/or national initiatives supporting SRI practices? Please answer if you deem this information to be useful. Memberships: The Association for Sustainable & Responsible Investment in Asia Ltd (ASrIA) Energie-Agentur der Wirtschaft (EnAW) Carbon Disclosure Project (CDP) CDP Water Disclosure Project European Sustainable Investment Forum (Eurosif) Forum für Nachhaltige Geldanlagen (FNG) Global Footprint Network öbu-netzwerk für nachhaltiges Wirtschaften Schweizer Klimastiftung Swiss Sustainable Finance (SSF) Sustainable Finance Geneva (SFG) UN Principles for Responsible Investment (PRI) Initiatives: Paris Pledge for Action Wasserrisiken in landwirtschaftlichen Lieferketten Investorenerklärung zum Thema Klima Investorenerklärung zu Bangladesch Access to Medicine Index Investorenerklärung zur Zahlungstransparenz in den Bergbausektoren (EITI) Has the fund management company established an ESG engagement policy? In 2016, Bank J. Safra Sarasin developed an Active Ownership Policy 2.0. Its cornerstones are the Active Ownership Guidelines, operative Proxy Voting Guidelines and client-specific evaluation. Our new Active Ownership Approach 2.0 offers the following improvements and advantages: Active Ownership Guidelines: customized approach based on the sustainable investment philosophy of Bank J. Safra Sarasin Operative Proxy Voting Guidelines: voting behaviour as an integral part of the Sustainable Investment Research-approach Extended dialogues: more comprehensive engagement with companies, other investor, the public and politics Regular reporting: tailor-made reporting (bespoke evaluations) for individual clients 5 32

6 Has the fund management company established a voting policy? Please refer to previous answer. Describe how the fund management company or the group contributes to the promotion and the development of SRI. Bank J. Safra Sarasin generates knowledge about sustainability themes and passes it on. The Sustainable Investment Research team consists of 18 members with sustainability and finance experience. Each year the team publishes studies on relevant topics and questions. Different stakeholders use these insights as a basis for understanding the sustainability of individual industries and technologies. These studies also offer other employees, especially client advisors, an important information platform. In 2016, the Bank published numerous studies, both in-depth sustainability reports on sectors (Focus) and sustainability fact sheets (Sustainability Spotlight). Our experts share their knowledge at academic institutions and industry and investor events, as speakers and participants. Bank J. Safra Sarasin has joined and signed many national and international initiatives to promote and further develop sustainability in investing. Please refer to the list above. 1c Describe/List your SRI products and the specific resources allocated to your SRI activities. 6 32

7 Name JSS Multi Label SICAV - New Energy Fund (EUR) B LU SICAV Luxembourg JSS Bluevalor Sustainable Lifestyle Brand Equity P EUR dist CH FCP Schweiz ISIN Legal form Domicile Inception Description Website Makes at least twothirds of its investments in shares of forwardlooking and innovative enterprises that are involved in energy as a resource and that take into account environmental and social sustainability issues. Seeks to achieve longterm capital appreciation through global equity investments in lifestyle brand companies. Bottom-up stock selection helps identify companies with strong brands and sustainable business models. 7 32

8 JSS Sustainable Equity - New Power P EUR dist LU SICAV Luxembourg JSS Multi Label SICAV - OekoFlex (EUR) LU SICAV Luxembourg JSS OekoSar Equity - Global P EUR dist LU SICAV Luxembourg Makes at least twothirds of its investments in shares of forwardlooking and innovative enterprises that are involved in energy as a resource and that take into account environmental and social sustainability issues. Invests directly or indirectly in securities issued by countries, companies or organisations that make a positive contribution to environmentally and socially responsible business practices. Critical activities from a sustainability perspective (e. g. production of nuclear energy or weapons) may be excluded. Invests at least two thirds of its net assets in equities of companies that make a significant contribution to environmentally and socially responsible business practices. Investments in selected forward-looking topics such as clean energy, health, water, 8 32

9 sustainable consumption and sustainable mobility form the core of these investments. JSS OekoSar Equity - Global P EUR acc LU SICAV Luxembourg JSS Sustainable Portfolio - Balanced (EUR) P EUR dist LU SICAV Luxembourg Invests at least two thirds of its net assets in equities of companies that make a significant contribution to environmentally and socially responsible business practices. Investments in selected forward-looking topics such as clean energy, health, water, sustainable consumption and sustainable mobility form the core of these investments. T Invests in securities issued by countries, companies or organisations that make a positive contribution to environmentally and socially responsible business practices. Critical activities from a sustainability perspective (e.g. production of nuclear 9 32

10 energy or weapons) may be excluded. JSS Sustainable Portfolio - Defensive (CHF) P CHF dist CH FCP Switzerland JSS Sustainable Portfolio - Swiss Flexible P CHF dist CH FCP Switzerland JSS Sustainable Bond CHF P CHF dist LU SICAV Luxembourg Investments are mainly made globally in equity and debt securities issued by corporations, governments and organisations that make a contribution to sustainable business practices. Investments are mainly in Swiss equity and debt securities in Swiss francs (CHF) issued by corporations, governments and organisations that make a contribution to sustainable business practices. Invests in debt securities issued by countries, organisations or companies that make a contribution to sustainable business practices. Individual issuers may be excluded on the basis of critical activities (e.g. production of nuclear energy or weapons)

11 JSS Sustainable Bond EUR P EUR dist LU SICAV Luxembourg JSS Sustainable Bond - EUR Corporates P EUR dist LU SICAV Luxembourg JSS Sustainable Equity - Europe P EUR dist LU SICAV Luxembourg Invests in debt securities issued by countries, organisations or companies that make a contribution to sustainable business practices. Individual issuers may be excluded on the basis of critical activities (e.g. production of nuclear energy or weapons). Invests in debt securities issued by companies that make a contribution to sustainable business practices. Individual issuers may be excluded on the basis of critical activities (e.g. production of nuclear energy or weapons). Invests at least two thirds of its net assets in equities of companies that make a contribution to environmentally and socially responsible business practices. These companies are also either domiciled in Europe or chiefly active in Europe. Companies may be excluded on the basis of critical activities from a sustainability perspective (e.g. production of nuclear 11 32

12 energy or weapons). JSS Sustainable Equity Switzerland P CHF dist CH FCP Luxembourg JSS Sustainable Equity - Global P EUR dist LU SICAV Luxembourg The Fund aims to achieve long-term asset growth. Investments are mainly made in equity securities issued by Swiss companies that make a contribution to sustainable business practices. Invests in equities of companies that make a positive contribution to environmentally and socially responsible business practices. Companies may be excluded on the basis of critical activities from a sustainability perspective (e.g. production of nuclear energy or weapons)

13 JSS Sustainable Equity - Real Estate Global P EUR acc LU SICAV Luxembourg JSS Sustainable Equity - Glob. Emerging Mkts P USD acc LU SICAV Luxembourg JSS Sustainable Equity - USA P USD acc LU SICAV Luxembourg Invests in equities and equity securities of companies whose activity is concentrated mainly in the real estate sector and that take environmental and social sustainability aspects into account in their business activities. Invests at least 75% of its net assets in equities of companies domiciled in emerging markets that take environmental and social sustainability aspects into account in their business activities, and in derivative financial instruments (derivatives) on such equities. Invests at least 75% of its net assets in equities of companies that make a contribution to environmentally and socially responsible business practices. These companies are also either domiciled in the US or chiefly active in the US. Companies may be excluded on the basis of critical activities from a sustainability perspective (e.g. production of nuclear 13 32

14 energy or weapons). JSS Sustainable Equtiy - Water P EUR dist LU SICAV Luxembourg Makes at least twothirds of its investments in shares of forwardlooking and innovative enterprises that are involved in sustainable water practices and that take into account environmental and social sustainability issues

15 JSS Sustainable Bond - EUR High Grade P EUR acc LU SICAV Luxembourg Invests globally in firstclass debt securities issued by countries, companies or other organisations that make a contribution to a sustainable economy. At least 75% of the investments in debt securities must fulfil this criterion. Individual issuers may be excluded on the basis of critical activities (e.g. production of nuclear energy or weapons). For further fund share classes, please consult the fund prospectus

16 Describe/Detail the resources allocated by the fund management company (organisation, ESG research internal/external, dedicated portfolio management team, ) and indicate where this information is available. J. Safra Sarasin employs a dedicated Sustainable Investment Research team within Asset Management. This team comprises 18 employees whose task it is to rate companies, institutions and countries from an environmental, social and governance perspective. Our analysts are able to draw on aggregated sustainability data from leading third party providers (MSCI ESG, Reprisk, Vigeo-Eiris and GMI). Our analysts follow up with a detailed analysis using available company information (annual reports, sustainability reports, direct contact with IR and sustainability departments, on-site inspections), detailed media analysis by means of Reprisk, SRI broker information and information from other specialised institutions / NGOs. We systematically consider negative news flow in our analysis. Our sustainability research has been applied in mandates since The first eco-efficiency fund was launched in 1994 (present name: Sustainable Portfolio Balanced (EUR)). The funds are advised both by an internal and an independent external sustainability advisory council. The internal council, the Corporate Sustainability Board (CSB), is composed of leading members of the Bank, including management. The CSB has a total of seven members. Its tasks are: further developing the sustainability strategy, identifying strategically relevant themes, e.g. by stakeholder dialogues, strategically planning implementation as well as monitoring operative implementation by means of KPIs. The external sustainability advisory council (SAC) has four members. Its tasks include: review of and recommendations on the sustainability strategy and its implementation, dialogue on best-practice-examples focussing on asset management and sustainability and providing access to the results of academic research on sustainable investing. Please also see the answer to Question 4a. 1d Describe the content, frequency and resources allocated/used by the fund management company to inform investors about the ESG criteria taken into account. The following information on our sustainability funds is available: Sustainability Company profiles upon request Sustainability Report in Annual Report Regular studies on sustainability (ca. every 6 weeks): on ent/ch_publications.htm Bank J. Safra Sarasin AG Elisabethenstrasse 62, Postfach, CH-4002 Basel T: +41 (0) , F: +41 (0) ,

17 ESG portfolio analysis upon request (for a fee) The SRI Fund(s) 1e Provide the name of the fund(s) to which this Code applies and its (their) main characteristics. Describe the main characteristics of the fund(s): geographical focus, asset class, SRI strategy used (use the classification provided by Eurosif/EFAMA). Name JSS Multi Label SICAV - New Energy Fund (EUR) B JSS Sustainable Equity - New Power P EUR dist JSS Sustainable Equity - New Power P EUR acc JSS OekoSar Equity - Global P EUR dist JSS OekoSar Equity - Global P EUR acc JSS Sustainable Equity - Europe P EUR dist JSS Sustainable Equity - Global P EUR dist JSS Sustainable Equity - Real Estate Global P EUR acc JSS Sustainable Equity - Global Emerging Markets P USD acc JSS Sustainable Equity - USA P USD acc JSS Sustainable Equity - Water P EUR dist ISIN Risk class LU LU LU LU LU LU LU LU LU LU LU SRI Strategy Sustainability Themed Investment + exclusion + best in class + integration Sustainability Themed Investment + exclusion + best in class + integration Sustainability Themed Investment + exclusion + best in class + integration multi-themed sustainability investment + exclusion + best in class + integration multi-themed sustainability investment + exclusion + best in class + integration Best in class + exclusion + integration Best in class + exclusion + integration Best in class + exclusion + integration Best in class + exclusion + integration Best in class + exclusion + integration Sustainability Themed Investment + exclusion + best in class + integration Regional focus Global Global Global Global Global Europe Global Global Global USA Global 17 32

18 JSS Sustainable Equity - Water P EUR acc JSS Sustainable Equity Switzerland P CHF dist LU CH Sustainability Themed Investment + exclusion + best in class + integration Best in class + exclusion + integration Global Switzerla nd The funds listed above invest exclusively in equity. For further fund share classes, please consult the fund prospectus

19 For all J. Safra Sarasin funds, the approach to sustainability is a combination of Best-in-Class Investment Selection, Integration of ESG Factors in Financial Analysis and Exclusion of Holdings from Investment Universe (see Section 3a). 1f What is (are) this (these) fund(s) trying to achieve through taking into account ESG criteria? Please see our answer to Question 1b). If part of the fund(s) assets is invested in unlisted organisations with high social, community or impact investing relevance, please specify. Not applicable

20 Section 2. Approach to ESG Evaluation of Companies 2a What fundamental principles underlie the ESG research methodology? The aim of the sustainability analysis is threefold: 1) to analyse a company s ability to manage its ESG risks and opportunities adequately and compare its actual ESG-performance with its peers, 2) to create an investable universe of companies by means of the J. Safra Sarasin Sustainability Matrix and 3) to generate sustainability insights for the subsequent sustainable investment analysis. Please refer to sections 2d and 3a. During the research process, we consider information from non-governmental organizations (NGOs) and other independent reports. When necessary, analysts approach the concerned stakeholders directly (for instance NGOs and unions). 2b What internal and external resources are used to carry out this research? Describe the general information used to carry out the ESG research: internal analysis, ESG rating agencies, other external sources of information. J. Safra Sarasin employs a dedicated Sustainable Investment Research team within Asset Management. This team comprises 18 employees whose task it is to rate companies, institutions and countries from an environmental, social and governance perspective. Our analysts are able to draw on aggregated sustainability data from leading third party providers in order to build the Bank s sustainable investment universe (including MSCI ESG, GMI for governance data and RepRisk for negative news and reputational risks). These data points are also used for the subsequent detailed company analyses. In addition, our sustainable investing specialists use a wide range of other sources: generally accessible company information and reports (e.g. annual report. sustainability report) company visits and management contacts systematic monitoring of the print media specialized electronic media and the Internet research reports 20 32

21 contacts with non-governmental organisations This information is interpreted by the respective analysts by means of a comprehensive catalogue of criteria. The results are scored for every individual criterion and entered into a proprietary database (Sustainable Value Builder). The data are then evaluated numerically. The analyst then assesses the results for plausibility and adjusts them if necessary. This is followed by a peer review. 2c Which ESG analysis criteria are used? Indicate what the main criteria for each of the environmental, social/societal and governance dimensions are. Specify if these criteria differ according to sectors, the geographical zones, the type of company, If appropriate, provide an example. The assessment criteria are categorized as follows and weighted differently according to industry: environmental criteria: climate change use of natural resources pollution & waste environmental opportunities social criteria: human capital product liability opposition from interest groups social opportunities governance criteria: corporate governance business conduct Companies that generate revenues with activities in the following areas are excluded from the investment universe: Nuclear energy (a revenue threshold of 5% is applied), defence and armament (a revenue threshold of 5% is applied and the 25 global largest defence companies are excluded), genetic engineering (agriculture), genetic engineering (medicine), tobacco, adult entertainment, human rights violations and coal (as of )

22 2d What is your ESG analysis and evaluation methodology (how the investment universe is built, rating system, )? Describe the ESG evaluation/rating system and how it is built by explaining how the various ESG criteria are articulated. If appropriate, provide an example. What are the ESG investment criteria of the funds? Each investment receives a sustainability rating composed of two constituents. For companies, these are: The sector rating: The ESG-criteria are weighted according to the industry (environmental criteria are less critical in banking than in metals and mining). The Sustainable Investment Team as well as the advisory councils evaluate the criteria and their weighting annually. The company rating: Here the positioning and effective performance of each company relative to its industry are analysed. The positioning of companies within the Sarasin Sustainability-Matrix, including sector weighting, is elucidated under 3a. 2e How frequently is the ESG evaluation reviewed? Please briefly explain the methodology update process and who is involved. If appropriate, explain if the methodology has changed in the past 12 months and the nature of the key changes. The research process is reviewed on a yearly basis and adjusted if necessary. The ESG evaluation has changed over the last twelve months. For example, we have changed the evaluation of governance in all sectors. On the basis of a research project conducted in cooperation with an academic partner organisation, we found that some indicators were correlated to equity stability and therefore offered downside protection. We therefore increased the weighting of these indicators in our rating methodology

23 Section 3. Fund Management Process 3a How do you take into account ESG criteria when defining the universe of eligible investments? If appropriate, describe the eligibility threshold and the resulting level of selectivity. How are the results of ESG research integrated into the investment process, including selection and approval of companies/issuers for investment? How are the results of ESG research integrated into the investment process, including selection and approval of companies/issuers for investment? The ESG criteria are described in section 2c. The investment process is as follows: 1) Industry Analysis Our analysts identify the key ESG sector issues and assign them a weighting. Certain ESG aspects, especially those concerning Governance, such as Board and Pay, are the same for all industries. Other criteria may be different depending on the industry or are weighted differently. At the same time, we derive general industry insights for use in the company analysis. 2) Sustainability Analysis We analyse whether a company is sufficiently positioned to manage its relevant ESG risks and opportunities. Its actual ESG performance is then compared to its peers in its industry. The results of the sustainability research flow into the investment process in two ways: Negative: Companies that generate revenues with activities in the following areas are excluded from the investment universe: Nuclear energy (a revenue threshold of 5% is applied), defence and armament (a revenue threshold of 5% is applied and the 25 global largest defence companies are excluded), genetic engineering (agriculture), genetic engineering (medicine), tobacco, adult entertainment, human rights violations and coal (as of ). The criterion human rights violations, for instance, includes consideration of the UN Global Compact norms

24 Positive: Companies, countries and institutions are plotted on the Sarasin Sustainability-Matrix on the basis of the research findings using the criteria specified in point 2c. The fund managers may only invest in issuers if they are positioned in the area shaded blue of the matrix shown below. Figure 1 Sarasin Sustainability-Matrix for Classic Funds and the Multi-Theme Fund The thematic funds JSS OekoSar Equity Global, JSS Bluevalor Sustainable Lifestyle Brand Equity, JSS Sustainable Equity New Power und JSS Sustainable Equity Water invest in innovative, forward-looking companies with a long-term commitment to sustainability that is higher than the national and international norm and which also make a positive contribution to environmentally and socially responsible development. The core of each portfolio is built around investments in selected future-oriented themes, industries and activities. The investment themes of JSS OekoSar Equity Global, for instance, are advanced materials, changing consumer behaviour, energy & climate, sustainable finance, health, mobility and water. JSS Sustainable Equity New Power pays special attention to companies active in renewable energies such as wind, water, biomass, solar and geothermal power, or in climate investments, improving energy efficiency or fossil transition energy (such as natural gas). JSS Sustainable Equity Water invests in the entire value chain of the water industry, which includes the following sub-segments: supply and disposal, technologies and services (including R&D, planning and consulting, plant engineering and construction, pumps, pipes, filters, installation technology, water-saving devices, consumption metering, chemicals and analytics), as well as products and services that enable efficient water use

25 While the Matrix in Fig. 1 is applied for the JSS OekoSar Equity Global, the single theme funds (JSS Sustainable Equity New Power und JSS Sustainable Equity Water) is slightly modified due to the fact that the focus on companies with a high exposure to a single sustainability theme is already a pre-selection. Only companies that already have a close link with the fund s sustainability theme are eligible. The fund management can therefore invest in all companies which are positioned in the shaded area of the Matrix below. Compared to the diagram above, which illustrates the investment universe for the classic sustainability approach (Fig.1), no distinction is made between industries (Fig. 2). This leads to a slightly larger investment universe without compromising the sustainability approach. Figure 2 Sarasin Sustainability-Matrix for Single Theme Funds For the JSS Sustainable Equity Global Emerging Markets the Sarasin Sustainability Matrix is also adjusted slightly, to expand the selection of eligible titles in a meaningful way (Fig.3). The fund management can thus invest in all titles positioned in the area shaded blue

26 Figure 3 Sarasin Sustainability-Matrix for the Emerging Markets Fund 3) Sustainable investment analysis The integration of financially material ESG factors into our fundamental analysis creates more transparency and confidence within our investment process. In order to determine a Fair Value for each share, we consider, in addition to ESG aspects, fundamental criteria such as a company s sales growth, operational profit margin, tax rate, net investments, capital structure and cost of equity and of debt. The Fair Value makes it possible to identify under- and overvalued companies for investment. 4) Selection process Bank J. Safra Sarasin s Investment Committee is responsible for defining the investment policy. This committee regularly holds market update and asset management positioning meetings. It also holds additional ad hoc meetings to respond to specific events. The investment committees of Asset Management (AM) AM Equities, Multi-Asset Institutional and AM Bonds/Absolute Return adopt the key parameters produced for the entire bank by the Investment Committee within the specific investment strategy in question. For sustainably managed portfolios, proposals and recommendations which differ from the general parameters due to the consideration of sustainability criteria may be discussed. The respective meetings of the three investment committees set down the detailed decisions on asset allocation in the model 26 32

27 portfolios, discuss industries, regions, currencies and individual stocks and determine their weightings. The members of the three investment committees comprise the portfolio managers of the corresponding teams. Representatives of client divisions and Asset Management units are admitted as observers. The Head of Asset Management take part in the meetings or are informed of the decisions taken. The portfolio managers must select titles from among those determined to be sustainable by the Sustainable Investment Team (that is, only those positioned in the area of the Matrix shaded blue). The portfolio is continually monitored so that the latest return expectations and investment constraints can be taken into account. In total, around 6150 companies are evaluated with respect to their ESG performance. Around 2600 are included within the J. Safra Sarasin investment universe and are therefore available for investment. 3b How do you take ESG criteria into account into the portfolio construction? Describe how you link ESG selection with the financial analysis or with portfolio management. More precisely, describe how the results of the analysis of each of the dimensions (E, S and G) are integrated into the investment / divestment process. If applicable, state where you provide information on divestments occurred in the past year on the basis of ESG criteria? If appropriate, explain how potential ESG weightings are defined and describe your treatment of companies that are not subjected to an ESG analysis. Fund managers may only select securities that are rated in the blue-shaded areas of the matrices (see above, 3a). Financially material sustainability aspects are directly integrated into the financial analysis (see above, 3a). J. Safra Sarasin s policy with regard to securities which, due to a sustainability re-rating, are excluded from the investment universe, is to sell them within one month, while taking into account market conditions and preserving the interests of the investor. Disinvestments owing to changes in sustainability ratings occur at regular intervals, including within the last 12 months. For example: 27 32

28 Sempra Energy: The company experienced a natural gas leak at its Aliso Canyon natural gas storage facility. It took nearly 3 months until the company managed to control it. This incident highlighted the company s deficiencies in addressing environmental and safety risks. As a result, the company was downgraded and excluded from the sustainable investment universe. Vale SA: The Samarco accident (dam burst at a Vale co-owned mine in Brazil) highlighted the company s insufficient management of operational risks related to environmental and social aspects of mining projects. Consequently, the company was downgraded and excluded from the sustainable investment universe. Petrobras: The company s involvement in an important corruption scandal revealed the company s deficiencies in managing key business risks, thus jeopardizing its license to operate while destroying shareholder value. As a result, the company was downgraded and excluded from the sustainable investment universe. 3c Does (do) the fund(s) have a specific ESG engagement policy? Please explain what you mean by engagement. Describe how you select the companies/themes for engagement activities and the impact on the portfolio management of the fund(s). Who undertakes engagement on behalf of the fund (internal and/or service providers)? Please see our answer to 1b. 3d Does (do) the fund(s) have a specific voting policy integrating ESG criteria? Please see our answer to 1b. 3e Does (do) the fund(s) engage in securities lending activities? No 3f Does (do) the fund(s) use derivative instruments? Derivatives can be used for the purposes of investment and hedging. 3g Is a share of the fund(s) invested in unlisted entities pursuing strong social goals? No

29 Section 4. Controls and ESG Reporting 4a What internal/external control procedures are in place to ensure the compliance of the portfolio with the ESG rules defined in section 3 of this Code? State who is carrying out the controls, their frequency and within which timeframe the fund(s) have to comply should a breach be detected. An external Advisory Board for sustainable investments provides advice for the further development of our sustainable investment products and, when necessary, our corporate sustainability. The permanent members are Dr. Wolfgang Engshuber und Dr. Andreas G. F. Hoepner, both proven and internationally renowned experts in the field of sustainable investment, who are joined by other external experts or organizations, depending on the thematic focus. A department organizationally separate from Asset Management examines whether the invested securities carry an appropriate rating, using the database provided by the Sustainable Investment Research Team. 4b Please list all public media and documents used to inform investors about the SRI approach to the fund, and include URLs. This should include a link to the detailed, no more than 6 months old, list of holdings of the fund(s). Prospectuses, annual and semi-annual reports, appendices, KIID (Key Investor Information Document) and fund fact sheets can be found on our product website: Fund selection publications Engagement/voting policy/votes (if applicable) The Active Ownership Guidelines of Bank J. Safra Sarasin, as well as the publication The Power of Investors and the presentation Active Ownership Approach 2.0 can be presented to clients in German and English. Link to Web page of ESG Analysis provider(s) (if applicable) tm 29 32

30 URL to the research findings that are available to investors (if appropriate) On request. Detailed fund holdings (no more than 6 months old) Please choose the relevant fund name Publications Annual report/semi-annual report CSR Policy of the Company l (if applicable) blications.htm, Annual Report J. Safra Sarasin, Sustainability Report, p. 80. Additional If applicable, specify what the amount of donations and the percentage of management fees that the fund gave to charities in the last year. The Bank invests in its social environment through sponsoring partnerships. In order to ensure that these engagements do not benefit projects or partners whose values do not harmonize with those of the J. Safra Sarasin Group, the Handbook of Sustainability was extended to the Group as a whole. Philanthropy, the arts and sports were the strategic focus for the Group s sponsoring activities in This embraced, in particular, the Esmeralda Charity Cup 2015 of the Limmat Foundation in Zurich. The proceeds from the golf tournament went to a new project in Colombia which offered practical training and support to private day mothers ( Madres Comunitarias ) caring for children in slums. In the UK the Honeypot Green Day was supported. J. Safra Sarasin employees from London spent a day in Hampshire working hands-on with Honeypot, a childrens charity. Honeypot offers socially disadvantaged children a safe environment outside of the city, in nature, where they are able to ride, swim, cycle or simply play in the fresh air

31 COMMITMENT FROM EUROSIF AND THE NATIONAL SUSTAINABLE INVESTMENT FORUMS Eurosif is responsible for maintaining and publicising the Transparency Code. For Germany, Austria, Liechtenstein and Switzerland the Fo rum Nachhaltige Geldanlagen (FNG) e.v. is the key interlocutor. Eurosif and FNG publish responses to the Code on their websites. Eurosif maintains a transparency logo that is awarded to those funds complying with the Code and whose answers have been sent to Eurosif. Complying funds can use this logo in their marketing material, in accordance with the Logo Specifications Manual (see and provided the Code is up to date. The Code must be updated annually. Eurosif commits to regularly reviewing the Code. The process for reviewing the Code will be open and inclusive. ABOUT EUROSIF The European Sustainable Investment Forum (Eurosif) is the leading European membership association whose mission is to develop sustainability through European financial markets. Eurosif works as a partnership of the national Europe-based national Sustainable Investment Forums (SIFs) with the support and involvement of Member Affiliates. Eurosif Member Affiliates include a range of organisations covering the entire value chain of the sustainable investment industry, from institutional investors, asset managers to financial services providers, ESG analysis firms, academic institutes and NGOs. Through its members Eurosif represents assets amounting to around a trillion EUR. Eurosif membership is open to all organisations in Europe which are committed to sustainable investing. Eurosif is recognized as an important voice in the area of sustainable and responsible investing. The main activities of Eurosif are public policy, research and creating platforms for nurturing sustainable investing best practices. For more details, please see National sustainable investment forums in Europe to date include: Dansif, Denmark Finsif, Finland Forum Nachaltige Geldanlagen* (FNG) e.v., Germany, Austria, Liechtenstein and Switzerland Forum per la Finanza Sostenibile*(FFS), Italy 31 32

32 Forum pour l Investissement Responsable* (FIR), France Norsif, Norway Spainsif*, Spain Swesif*, Sweden UK Sustainable Investment and Finance Association* (UKSIF), UK Vereniging van Beleggers voor Duurzame Ontwikkeling* (VBDO), the Netherlands *Member of Eurosif You can contact Eurosif by telephone at +32 (0) or by at contact@eurosif.org. Eurosif A.I.S.B.L. 331, rue du Progrès, 1030 Brussels, Belgium Tel. : +32 (0) FNG The Forum Nachhaltige Geldanlagen (FNG) is the industry association promoting sustainable investment in Germany, Austria, Liechtenstein and Switzerland. It has over 170 members committed to promoting sustainable investing. This includes banks, asset managers, rating agencies, financial advisors and academic institutions. FNG promotes the dialogue and exchange of information between business, academia and politics and has been active in improving the legal and political framework for sustainable investing since FNG awards the transparency logo for sustainable retail funds, publishes the FNG-sustainability profiles and the FNG matrix and is a founding member of the European parent organization Eurosif. You can reach the Forum Nachhaltige Geldanlagen on +49 (0) or under office@forum-ng.org. Forum Nachhaltige Geldanlagen e.v. Rauchstr. 11 D Berlin For further information on Eurosif und on the European SRI Transparency Code, please refer to and to Disclaimer Eurosif does not accept responsibility or legal liability for errors, incomplete or misleading information provided by signatories in their responses to the European SRI Transparency Code. Eurosif does not provide any financial advice nor endorse any specific funds, organizations or individuals. Please also note the disclaimer under