Sustainability at portfolio level
Management of sustainability risks and ESG integration approach
Our approach to sustainability risks and our ESG integration process are described in detail below. The articles mentioned below refer to Regulation EU SFDR 2019/2088.
Transparency (Art. 3)
In accordance with Regulation (EU) 2019/2088 of the European Parliament and the Council of the European Union of November 27, 2019 on sustainability-related disclosures in the financial services sector, Bellevue Asset Management AG is committed to transparency with respect to:
- policy for managing sustainability risks,
- adverse sustainability impacts at entity level
- compensation policies in relation to the integration of sustainability risks,
- the integration of sustainability risks,
- adverse sustainability impacts at financial product level,
- the promotion of environmental or social characteristics in pre‐contractual disclosures,
- sustainable investments in pre‐contractual disclosures,
- the promotion of environmental or social characteristics and of sustainable investments on websites
- the promotion of environmental or social characteristics and of sustainable investments in periodic reports
Principal adverse impacts on sustainability factors at entity level (Art. 4)
Bellevue Asset Management AG does currently not consider adverse impacts of investment decisions on sustainability factors at the company level, unless otherwise stated on its website at a later date. The main reason is the actual lack of available information and data to adequately assess such material adverse effects.
As soon as the Management Company takes into account any adverse impact of investment decisions on sustainability factors, the relevant disclosure will be updated (i) on its website and (ii) in the prospectus at the earliest opportunity.
Notwithstanding the above, individual investment strategies may take into account adverse impacts on sustainability factors as part of the investment decisions according to EU SFDR Art. 7.
Compensation policy at entity level (Art. 5)
In the spirit of identification with the company and the entrepreneurial activities of each employee at his or her level, we give employees across all hierarchical levels a share in the success of their own company.
Part of the variable salary components (profit-sharing) are distributed in the form of treasury shares or fund units and remain blocked for a predefined period. In this way, the interests of employees are to a large extent aligned with the interests of investors, shareholders and other stakeholders.
Furthermore, Bellevue Asset Management periodically offers an employee share ownership program under which rights to purchase Bellevue Group shares are offered at a discounted purchase price.
The compensation of Bellevue Asset Management employees is designed to motivate employees in all units to perform very well. This is «entrepreneurial compensation with commitment» – a meritocratic model. An attractive entrepreneurial profit-sharing bonus is available as variable compensation. This profit-sharing is directly linked to the operational financial performance of Bellevue Group. In addition, part of this variable profit-sharing is paid out in the form of blocked shares and commitments in managed products (credo: «We eat our own cooking»). This approach promotes a long-term performance culture. Further details and numbers are publicly disclosed in the audited annual Remuneration report of Bellevue Group AG.
“Sustainability risks” is defined in Regulation (EU) 2019/2088 of the European Parliament and of the Council of the European Union of November 27, 2019 on sustainability-related disclosures in the financial services sector (Sustainable Finance Disclosure Regulation, SFDR) as an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
Bellevue Asset Management AG and its subsidiaries have integrated sustainability risks into the investment decision-making processes of all their actively managed strategies and associated funds with the aim of identifying, assessing and, if possible and appropriate, mitigating such risks.
While every investment strategy can be exposed to such sustainability risks to varying degrees, the projected impact of sustainability risks on the returns of the investment strategies will depend on the specific investment strategy.
The results of this integration and evaluation are summarized as follows:
For those investment strategies that promote environmental or social characteristics in the sense of SFDR, the projected negative impact on financial returns is lower compared to “non-ESG” investment strategies. This is attributed to the risk-mitigating ESG investment strategies, their future-oriented investment approach, their emphasis on sustainable financial frameworks, their activism in dealings with companies/issuers as well as their avoidance of non-compliant companies/issuers.
All investment strategies may invest in accordance with international environmental, social and corporate governance standards (hereinafter referred to as "ESG"). The investments or securities selected in accordance with such criteria can entail a significant subjective element. ESG factors that are integrated into the investment process may differ with respect to investment themes, investment categories, investment philosophy and the subjective application of ESG indicators that determine portfolio design and the underlying assets. Accordingly, no guarantee is made that every investment by an investment strategy will meet all of the ESG criteria.
Responsible investment
ESG FRAMEWORK IN PORTFOLIO MANAGEMENT
Principal adverse impacts on sustainability factors at financial product level (Art. 7)
Some investment strategies may consider the main adverse impacts of investment decisions on sustainability factors (Principle Adverse Indicators - PAI) as part of their investment and portfolio management activities. This can be implemented through direct action within portfolio management, issuer exclusion, engagements, or through combinations of the activities described.
Consideration of adverse sustainability impacts depends largely on the availability of relevant information. The necessary data is not always available in sufficient quantity and quality for all assets in which Bellevue Asset Management invests. Consequently, the list of PAI indicators taken into account is continuously reviewed depending on data availability and data quality.
EU SFDR 2019/2088 Regulatory Product Disclosures (Art. 10) / Commission Delegated Regulation (EU) 2021/1253 to MiFID II - Sustainability Preferences (Art. 9)
The following information refer to regulatory requirements of the EU Disclosure Regulation 2019/2088 (EU SFDR) and the sustainability preferences according to the Delegated Regulation (EU) 2021/1253 with respect to individual funds and groups of funds that have uniform ESG characteristics. Amongst others, attached disclosure reports include product specific information such as descriptions of environmental and social characteristics, investment strategies, monitoring of ESG characteristics, data sources and applied methodologies. In addition, the minimum proportion of "sustainable investments" required by MiFID II and its implementation are specified in detail.
For an investment to qualify as a “sustainable investment”, Bellevue Asset Management applies the 17 UN Sustainable Development Goals (SDGs). These goals are general, universal goals for all UN member states, adopted in September 2015 as the successor to the Millennium Goals. In essence, the 17 Sustainable Development Goals aim to end poverty and hunger and fight inequalities, strengthen people's self-determination, ensure gender equality and a good and healthy life for all, promote prosperity for all and make lifestyles globally sustainable. In the implementation process at product level, the so-called UN SDG Alignment Score methodology of MSCI ESG is currently applied. The scale for the SDG Alignment Score ranges from -10.0 to +10.0 whereby the underlying scores are subdivided in five categories: score > 5.0: strongly aligned, score >=2.0: aligned, 2.0 > score > -2.0: neutral, score <= -2.0: misaligned, score equal to -10: strongly misaligned. Whenever there is a positive contribution to at least one of the 17 SDGs ("aligned" or "strongly aligned"), and one or more other SDGs are not negatively impacted at the same time ("misaligned" or "strongly misaligned"), Bellevue Asset Management AG assumes a positive alignment with a sustainable objective, i.e. these companies are added to the quota of "Sustainable Investments" according to the “pass/fail”-method (i.e. the company is considered with its full weight in the quota).
Investments are assigned to the “sustainable investment”-quota if, on the one hand, they exhibit a positive target contribution and, on the other hand, they meet the “sustainable investment characteristics” described under chapter I of the Bellevue Funds EU SFDR Fund Disclosure Report (including UN Global Compact compliance), which also ensures that good governance practices are applied.
As a responsible institutional investor, we have always been bound to act in the best interests of our stakeholders over the long run. In this role, we believe that environmental, social and corporate governance (ESG) topics will have a growing impact on the risk-return profiles of investment portfolios and on their performance. We acknowledge that adherence to these basic ESG principles will lead to a better alignment between investor interests and the broader aims and interests of society.
As a signatory to the UN PRI, we continuously adapt our investment processes to the latest industry findings regarding sustainability aspects and are in constant dialog with our investment specialists regarding the integration of ESG. In addition, our experts actively share their experience and convictions in this regard at international sustainability conferences.