ESG Portfolio Management is a German asset manager for sustainable investments funds. We invest in companies with the highest ESG qualities and only select companies with a measurable, positive impact on the Sustainable Development Goals (SDGs). By strictly minimizing carbon emissions, both funds, the multi-asset fund SDG Evolution Flexibel (ISIN: DE000A1W9AZ5) and fixed income fund Mayence Fair Value Bond Fonds (ISIN: DE000A2AQZE9), are aligned with the 1.75 degree goal of the Paris Climate Agreement.
Firstly, ESG criteria are part of the selection process besides the economic and financial quality. We do not invest in companies or countries that violate our extensive exclusion criteria, which can be found at https://www.esg-portfolio-management.com/en/invest-sustainably. The funds aim to have MSCI ESG scores above 9 (currently 9.5 and 9.6 – maximum is 10). We carefully select companies where we see potential for improvement and ESG rating upgrades. Before we buy corporate bonds or equity we perform additional internal analyses. We manage our investment universe using positive lists which filter our exclusion criteria but also help us to avoid issuers with controversies and critical incidents.
Secondly, we strictly follow the United Nations SDG’s, by which we measure the positive impact of our investments. Every investment aims to follow at least one of the seventeen SDG. Furthermore, we invest up to ten percent of the fund’s assets in carefully selected “impact bonds” like Deutsche Lichtmiete, which are less liquid but obtain a high SDG impact. This ensures that our funds achieve SDG impact levels above 30% (Mayence Fair Value Bond Fonds) and 45% (SDG Evolution Flexibel); for reference MSCI ESG regards levels above 10% as “very high impact”. The funds have been classified as compliant with Article 9 of the EU Sustainable Finance Disclosure Regulation (SFDR).
Thirdly, we aim to minimize climate risks. We reduce the funds’ carbon intensity by carefully selecting issuers and assessing climate risks using several tools and data providers. In March 2021, the company “right. based on science” measured our funds and concluded again that until 2050 the funds’ holdings will cause global warming of less than 1.75 degrees. Hence, our funds are already aligned with the Paris Climate Agreement.
Furthermore, we use active engagement and proxy voting to improve the ESG quality, SDG impact and GHG reduction of the companies. Therefore, we enter a constructive dialogue with the management to reduce the investment’s risk and develop performance opportunities.
The funds track its ESG score, SDG impact and carbon intensity over time and compares it to a benchmark. All dimensions are reported in our monthly newsletter, which can be found on our website and LinkedIn: https://www.esg-portfolio-management.com/en/monthly-reports-2021.
The funds have been awarded the FNG Label with three stars, the highest designation for sustainable funds in Germany. We are active signatories of the Principles for Responsible Investment (PRI). PRI has recognized ESG Portfolio Management as one of the global leaders in responsible investing. Including ESG PM in its 2020 Leaders’ Group.
Christoph Klein, Managing Partner and founder of ESG Portfolio Management, teaches ESG Seminars for Moody’s Analystics and is active member of the CFA ESG technical committee and DVFA.