We are committed to conduct our investment activities at any time with a strong sense of responsibility and in the best interest of our customers, business partners as well as our environment. This commitment has led us to consistently integrate ESG and responsible business practices into our business practices, whether in portfolio construction, risk management, or our corporate strategy itself. We use a comprehensive set of ESG criteria from MSCI in our equity investment processes.
We believe that sustainability and business success complement each other well and intend to make a disproportionately growing contribution to this crucial future trend.
Sustainable Finance Disclosure Regulation
Following funds are classified as Art. 8 under the EU Sustainable Finance Disclosure Regulation:
First Private Aktien Global
First Private Euro Dividenden STAUFER
First Private Europa Aktien ULM
First Private Wealth
First Private Systematic Flows
In addition, our affiliate, re:cap global investors ag, advises institutional investors in the renewable energy sector, focusing on sustainable infrastructure investments in the solar/PV, hydro and wind energy sectors.
Sustainability risk management strategies
We consider sustainability risks as part of our investment decision-making processes for a large part of the time, in addition to standard financial data.
Sustainability risks (“ESG risks”) are events or conditions in the environmental (“environment”), social (“social”) or corporate governance (“corporate governance”) areas, the occurrence of which may actually or potentially have a significant negative impact on the net assets, financial position and results of operations as well as on the reputation of the investments and may thus be influenced in their market value.
We regard sustainability risks as a type of risk that affects already known and established types of risk, such as market price risk, credit default risk, reputational risk or operational risk. When they occur, sustainability risks can have a negative impact on the return of a investment in securities.
The following examples (not exclusive) are intended to illustrate ESG risks:
- Extreme weather events caused by climate change (physical risks) can, for example, lead to production losses at companies and/or in regions. These may include storm damage, storms, heat or flooding.
- Risks associated with the transition to a more climate-friendly/low-carbon economy (transition risks) can lead to fossil fuels becoming scarcer or more expensive, such as a carbon tax or a coal phase-out. Likewise, new technologies (e.g. electromobility) or adjusted market conditions/customer preferences can jeopardize existing business models.
- Social risks are characterized by negative impacts on a company’s stakeholders. They could result, for example, from non-compliance with labor standards or negative treatment of social minorities or communities.
- Risks from corporate governance include, for example, corruption, non-compliance with tax honesty or intransparency with regard to the disclosure of information
For the vast majority of our investment processes, we have established a procedure to incorporate sustainability risks into investment decision processes and to consider or avoid sustainability risks.
For this purpose, exclusion criteria have been implemented in the investment process, which apply to all investments. These include the exclusion of controversial arms manufacturers and the exclusion of stocks with poor ESG ratings. Furthermore, issuers with clearly negative ESG momentum (trend of rating development) are handled disadvantageously, while issuers with positive momentum are preferred.
These exclusion criteria, the consideration of ESG ratings and their momentum are used to evaluate sustainability risks in the context of the investment decision and are thus taken into account in the allocation decision.
In addition, we are a signatory to the Principles for Responsible Investment (PRI) and are thus committed to expanding sustainable investments and complying with the six principles for responsible investment established by the UN.
A part of the invested assets of selected investment funds is represented by derivative instruments to gain exposure to equities, bonds and alternative assets (i.e. commodities / real estate). Sustainability risks are currently not systematically taken into account, as the data required to assess sustainability risks for the underlying financial instruments is currently not available to a sufficient extent and in the required quality. In the future, it is planned to establish processes and a corresponding data pool in order to take sustainability risks into account for all investment decisions.
Sustainability impacts at company level
Adverse impacts of investment decisions on sustainability factors are currently not taken into account. The relevant data required to identify and evaluate the adverse sustainability impacts are not yet available in the market to a sufficient extent or of the required quality. We intend to have internal strategies in place to consider the main adverse impacts of investment decisions on sustainability factors.
As part of its engagement policy, First Private takes appropriate measures to work towards reducing the PAI of the companies in its investment universe. With the support of an external service provider, Institutional Shareholder Services Germany AG, grievances are drawn to the attention of companies in discussions, if necessary, and solutions are pointed out.
The voting results at Annual General Meetings are available at the following link.
The focus areas as well as the results of the engagement activities can be found in the engagement report: ISS ESG Norm Based Engagement Summary Annual Report