This document fulfils the disclosure requirements under Articles 3, 4 and 5 of Regulation (EU) 2019/2088 on Sustainable Finance Disclosure Regulation (“SFDR”) for W&W Investment Managers DAC (“W&W Investment Managers” / “the Firm”) as a financial market participant and financial advisor within the meaning of this Regulation.
In accordance with Article 3 of the SFDR, financial market participants and financial advisors are required to publish information on their strategies for integrating sustainability risks in their investment decision-making processes or investment advisory activities on their websites.
In accordance with Article 4 (1) of the SFDR, financial market participants shall make a statement on due diligence strategies related to the main adverse sustainability impacts of investment decisions on sustainability factors, provided that they take them into account in investment decisions.
Financial advisors shall, in accordance with Article 4 (5) of the SFDR, prepare an explanation of how it takes into account the main adverse effects on sustainability factors in their investment advice.
The Firm considers the most important adverse sustainability effects in both areas of activity and prepares this summary statement for this purpose.
Furthermore, in accordance with Article 5 (1) 1 of the SFDR, W&W Investment Managers have included in their remuneration policy information how those policies are consistent with the integration of sustainability risks and have published this policy on their website.
2. Company Background
W&W Investment Managers has been operating from Ireland for 30 years and was the second ever Firm into the IFSC, the initial hub of the funds industry within Ireland.
W&W Investment Managers is a wholly owned subsidiary of W&W Asset Management GmbH one of Germany’s largest asset managers that manage €40bn of assets on behalf of its parent, Wüstenrot & Württembergische. Wüstenrot & Württembergische is one of Germany’s oldest and largest financial services and insurance groups, employing 13,000 people with headquarters in Stuttgart Germany and listed on the German stock exchange. The W&W Group came into existence in 1999 as a result of the merger of the two long-standing companies Wüstenrot and Württembergische. Today, the group develops and provides the four components of modern financial planning: financial security, housing property, risk protection and savings and investment.
3. Investment services and activities
W&W Investment Managers DAC is authorised to provide Portfolio Management, Reception & Transmission of Orders, Execution of Orders on behalf of Clients, and Investment Advisory services under MiFID to both Undertakings for the Collective Investment in Transferable Securities (“UCITS“) and Alternative Investment Funds (“AIF“).
W&W Investment Managers also provides Investment Advisory services to LBBW Asset Management Investmentgesellschaft mbH (“LBBW”), a large German investment management firm with €73.2b of assets under management and a subsidiary of LandesbankBaden-Württembergand bank.
4. W&W Group Strategies for Sustainability and Environmental, Social, and Corporate Governance (“ESG”)
The W&W Group conducts its business in an environmentally compatible, socially responsible, and economically successful manner in consideration of the interests of current and future generations, for whom the W&W Group considers it is responsible. As financial planning specialist in the areas of financial coverage, residential property, risk protection and savings and investment, the W&W group generates sustainable growth that retains value. Not only is this a core part of the W&W Group business strategy, but it has also been explicitly made binding in the sustainability policy of the W&W Group. These policies cover such areas as resource use and procurement, employees, products and services and compliance with legal requirements as elements of the concept of sustainability.
In May 2020, Wüstenrot & Württembergische signed the UN Principles for Responsible Investment (“UNPRI “), thereby undertaking to incorporate ESG issues into its analysis and decision-making processes in the investment area. The UN Principles for Responsible Investment is an international organization that works to promote the incorporation of environmental, social, and corporate governance factors (ESG) into investment decision-making. Launched in April 2006, with support from the United Nations (UN), the UNPRI has over 3,000 participating financial institutions, as of January 2021. These institutions participate by becoming signatories to the UNPRI’s six key principles and then filing regular reports on their progress. The six key principles to which signatory companies must agree to commit themselves are:
- We will incorporate ESG issues into investment analysis and decision-making processes.
- We will be active owners and incorporate ESG issues into our ownership policies and practices.
- We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry.
- We will work together to enhance our effectiveness in implementing the Principles.
- We will each report on our activities and progress towards implementing the Principles.
In August 2020, Wüstenrot & Württembergische signed the United Nations Principles for Sustainable Insurance (“PSI “) further embedding environmental, social, and governance-related aspects (ESG) in its insurance business. With its signature, Wüstenrot & Württembergische expressed its intent to enhance the company's economic, ecological, and social responsibility and its commitment to the following four Principles for Sustainable Insurance:
- We will embed in our decision-making environmental, social and governance issues relevant to our insurance business.
- We will work together with our clients and business partners to raise awareness of environmental, social and governance issues, manage risk and develop solutions.
- We will work together with governments, regulators, and other key stakeholders to promote widespread action across society on environmental, social and governance issues.
- We will demonstrate accountability and transparency by regularly disclosing publicly our progress in implementing the Principles.
Please see the attached links for further information:
- Link to the W&W Group ESG Policy - https://www.ww-ag.com/en/about-us/Sustainability
- Link to UNPRI - https://www.unpri.org/signatory-directory/wandw-gruppe/5775.article
- Link to PSI - https://www.unepfi.org/psi/ww-group/
5. Strategies for Integration of Sustainability Risks
Sustainability risks are environmental, social, or corporate governance events or conditions that could have a real or potentially significant negative impact on the value of investments. Sustainability risks are often referred to as ESG risks.
W&W Investment Managers, as part of the W&W group, is committed to following the W&W Group’s commitments on sustainability and ESG policies and strategies. Funds under management/advisory exclude certain investments, specifically investments prohibited under the Ottawa treaty.
The Firm integrates ESG issues into its decision-making processes both pre- and post-investment. This both contributes to a prudent risk management and investment analysis, and over the longer term can positively impact both the value and sustainability of the underlying investments.
The risks considered depends on the risk profile of the respective investment assets for each fund. The risk profile of each fund can be found in the respective fund prospectus.
The Firm does not provide investment services in respect of funds which “promotes, among other characteristics, environment or social characteristics of a combination of those characteristics” (Article 8 funds) or funds which “have sustainable investment as its objective and an index that has been designated as a reference benchmark“(Article 9 funds).
5.1 Portfolio management – UCITS
The Firm currently provides portfolio management services on behalf of W&W Asset Management Dublin DAC, a member of W&W Group. The nature of the UCITS investments is in public markets investing in equity, derivatives, fixed income, and FX. The investors in these funds are members of the W&W Group of companies. As part of its investment decision-making processes the Firm considers:
- Adverse sustainability impacts resulting from the violations of human rights (socially detrimental issues including; anti-personnel mines & cluster munitions, other weapons, child & forced labour, and speculation on agricultural land & food) and the emergence of greenhouse gas emissions (ecologically adverse). The Firm performs pre- and post-investment screening to exclude securities that are identified as not meeting the W&W groups sustainability policies.
- The fund prospectus and security exclusion list detail securities that are prohibited under international conventions on cluster munitions and anti-personnel mines in accordance with the Ottawa Treaty (1997) and the Convention on Cluster Munitions (2008), which prohibit the use, stockpiling, production and transfer of anti-personnel mines and cluster munitions respectively. As required under the prospectus the Firm employ security filtering systems and methodologies to screen proposed investments and monitor existing investments to ensure compliance with this policy. Where any exposure to such securities is identified, the Firm will take corrective action.
5.2 Portfolio management – AIF
The Firm provides portfolio management services to the W&W Global Income Fund ICAV and its two sub-funds and to the Global Horizons ICAV and its sub-fund on behalf of W&W Asset Management Dublin DAC, a member of W&W Group. W&W Investment Mangers DAC offer portfolio management in private markets investing in equity, debt, infrastructure, and renewables. The current investors in these funds are members of the W&W Group of companies. As part of its investment decision-making processes the Firm considers:
- The nature of AIF investments requires a substantial amount of due diligence pre investment. The Firm and its advisors review such investments to ensure they consider the impact the investment has on sustainability in the location of the investment and the investment structure. Only investments that meet the W&W Group‘s sustainability criteria are made.
- Sustainability and ESG factors s part of its ongoing monitoring of investments. The Firm discusses ESG and sustainability with the managers of its AIF investments. Sustainability factors are reviewed to ensure they meet requirements
- The Firm will consider sustainably as required under the prospectus and employs security filtering systems and methodologies to screen proposed investments and monitor existing investments to ensure compliance with this policy.
5.3 Investment advisory
The Firm provides investment advisory services to LBBW Asset Management Investmentgesellschaft mbH (“LBBW”). The investors in these funds are members of the W&W Group of companies and the Firm considers the same risk areas that it considers for portfolio management services. As part of its investment decision-making processes the Firm considers:
- Adverse sustainability impacts resulting from the violations of human rights (socially detrimental issues including; anti-personnel mines & cluster munitions, other weapons, child & forced labour, and speculation on agricultural land & food) and the emergence of greenhouse gas emissions (ecologically adverse).
- The fund prospectus and securities are excluded that are prohibited under international conventions on cluster munitions and anti-personnel mines in accordance with the Ottawa Treaty (1997) and the Convention on Cluster Munitions (2008), which prohibit the use, stockpiling, production and transfer of anti-personnel mines and cluster munitions respectively.
6. Adverse sustainability impacts
The Firm considers the principal adverse impacts of investment decisions on sustainability factors in its provision of portfolio management and investment advisory services.
Description of principal adverse sustainability impacts
The Firm and the W&W Group consider the main adverse sustainability impacts that can result from investment decisions to be the violations of human rights (socially detrimental) and the emergence of greenhouse gas emissions (ecologically adverse).
Violations of human rights may occur, inter alia, as a result of:
- Anti-personnel mines and cluster munitions (controversial weapons)
- Other weapons
- Child and forced labour
- Speculation on agricultural land and food
Anti-personnel mines are internationally outlawed by the Convention on the Prohibition of the Use, Storage, Production and Transfer of Anti-Personnel Mines and on their Destruction (the Ottawa Convention). This international treaty prohibits their use, production, storage, and transfer. The Convention on Cluster Munitions (so-called Cluster Bomb Convention) prohibits the use, manufacture, and transfer of certain types of conventional cluster munitions and is also an international treaty.
Other weapons include objects which can deprive a person of their ability to act and their integrity both psychologically and physically and whose application can also lead to the death of that person. In addition, weapons can restrict the ability of individuals to make decisions and make them act by coercion.
Child labour is work for which children are too young, which are dangerous or exploitative, which damage physical or mental development or discourage children from attending school. It deprives children of their childhood and violates the worldwide rights of children under the Convention on the Rights of the Child (UN Convention on the Rights of the Child). Forced labour is defined as involuntary work or service carried out under the threat of punishment (according to the International Labour Organization (ILO), a United Nations special agency). It is in principle prohibited in the signatory states of the ILO Convention on the Abolition of Forced Labour.
According to the United Nations Universal Declaration of Human Rights, every person has the right to a standard of living that guarantees health and well-being for themselves and their own family, including food (right to welfare). Speculation for profit in agricultural land and food undermines this right.
Investments in economic activities linked to the human rights violations described above therefore have a negative impact on sustainability.
The emission of greenhouse gases of anthropogenic origin, in particular carbon dioxide, increases the natural greenhouse effect and thus contributing to global warming, according to current scientific opinion.
The adverse sustainability effects of investments thus result, inter alia, from investments in economic activities linked to greenhouse gas emissions, such as the production of electricity using carbon-containing raw materials or the management of low-energy-efficient real estate.
Investments that could lead to adverse sustainability effects in the form of human rights violations and the emission of anthropogenic greenhouse gas emissions could potentially arise from the acquisition of financial instruments such as equity instruments or debt instruments of companies whose economic activity is linked to the facts described above. Furthermore, investment in other assets, such as real estate or production facilities, which are used in the above-mentioned economic activities, has a negative impact on sustainability.
7. Policies to Identify Adverse Sustainability Impacts
The main adverse sustainability impacts are determined by an analysis of the investments for which the Firm provides portfolio management or investment advice. The Firms approach is to analyse investments to consider if they adhere to the Firm’s policies on sustainability and ESG.
Violation of human rights
Disadvantageous sustainability effects in the form of human rights violations are reduced by exclusions in investment decisions. Exclusions usually cover certain issuers and counterparties to financial instruments. The exclusions are applied to direct investments as well as to indirect investments in which the Firm or the W&W Group provide investment services.
Anti-personnel mines and cluster munitions (controversial weapons):
Investments in listed manufacturers where there are reliable indications of the production of anti-personnel mines or cluster bombs are excluded.
In our view, the exclusion of investments in controversial weapons in accordance with the UN Conventions is not sufficient. For this reason, investments in manufacturers and/or dealers of other weapons, which generate 5% or more of their turnover, are also excluded. Debt securities issued by issuers identified are held until maturity; no new and reinvestment are allowed.
Other weapons are:
- Weapons (systems) – not outlawed: Weapons (systems) are weapons that, by their very nature, are used to kill or injure living persons or destroy goods of any kind. These include weapons (e.g. military handguns, missiles), but also weapons systems (e.g. warships, torpedoes, guided missiles, artillery systems) as well as ammunition and explosives, but also aircraft or vehicles that have weapon system character (tanks, fighter jets, air-target drones equipped with weapons).
- Weapons (systems) – outlawed: In addition to the already excluded anti-personnel mines and cluster munitions, the following types of weapons are essentially relevant:
- Nuclear weapons
- Chemical and biological weapons
- Uranium-enriched ammunition
Maintenance and modernisation is considered a prerequisite for the potential use of a nuclear missile (key component in the broader sense) and thus also falls under the prohibited weapons systems. In some cases, companies produce nuclear missiles without producing the nuclear explosives themselves. This case is also considered a violation, as the rocket is a basic condition for potential use. In most cases, these companies are also responsible for maintenance.
- Other armaments: Other armaments include goods or components specially developed for military use (i.e. use for military/military purposes) which are not weapons, e.g. radars, military transporters. Other examples of this are fire control systems of rocket launchers, control systems that are essential for the function of weapons, basic structures for tanks, components of cruise missiles (e.g. engines for controlling the wing fins).
Child and forced labour
Investments in shares and debt securities of companies where there are certain violations of the UN Conventions on Child and Forced Labour are excluded, with the exception of green bonds.
Speculation with agricultural land and food
Great care is being taken to ensure that no investments are made in food and agricultural land that are used for speculation. In the case of the vast majority of indirect investments, such investments are systematically excluded. Direct investments do not include investments in agricultural raw materials.
Origin of greenhouse gas emissions
Adverse sustainability impacts in investment decisions in the form of greenhouse gas emissions are reduced by excluding investments in certain economic activities associated with increased CO2 emissions. Targeted investments are made in selected financial instruments and other assets that have a mitigating effect on CO2 emissions.
Investments in companies where 10% or more of their activities are related to coal are excluded. This includes both producers, recyclables and service providers with a connection to coal. Debt securities issued by issuers identified in the ongoing process are held until maturity; no new investment and reinvestment will take place except for green bonds issued by these companies. The exclusion is applied to direct investments as well as to indirect investments in which the W&W Group companies invest. This achieves a broad coverage of the managed portfolios.
8. Shareholder Engagement
The firm’s Shareholder Engagement Policy and annual required disclosures are published on its website.
9. Remuneration Policy
The Remuneration Policy, including the integration of sustainability risks, is published on the W&W Investment Managers DAC website.
10. Code of Conduct
The employees of W&W Investment Managers are obliged to comply with the W&W Code of Conduct. This Code sets out the minimum standard for the Firm, which regulates the interaction of all members of the company (employees in the field and in the field, executives, members of the board) as well as in relation to customers, competitors, business partners, authorities, and our shareholders. This is not only about the practical implementation of existing laws and regulations, but also about ethically sound behaviour in our daily work.
This disclosure will be updated at least on an annual basis and as required.