Encavis Portfolio Management

Explanation about how major negative effects on sustainability factors are taken into account in our investment advice

According to ‘Regulation (EU) 2019/2088 of the European Parliament [...] on sustainability‐related disclosures in the financial services sector’, Encavis Portfolio Management GmbH is required as an investment adviser to disclose the manner in which adverse impacts of sustainability risks are integrated into our investment advice. Sustainability factors are environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters. [...]  

Taking the adverse impact indicators of an investment decision into account is known as taking the ‘inside-out’ perspective. Here, the issue at stake is whether and how a sustainability risk that originates from inside the investment object can adversely impact sustainability factors (e.g. by emitting greenhouse gases, polluting water, generating hazardous waste, infringing human rights, etc.).

When offering investment advice for renewable energy projects and financial derivatives, Encavis Portfolio Management GmbH always takes adverse sustainability impacts into consideration. The scope of our observations and the specific indicators on which the adverse sustainability impacts are based will depend largely on the wishes of the respective client. Encavis Portfolio Management GmbH offers investment advice on renewable energy projects and financial derivatives, and not on classic financial instruments such as funds, certificates and the like. As a result, Encavis Portfolio Management GmbH is not able to assess potential adverse sustainability impacts using the standardised data that is published by those who issue financial instruments. Instead, the possible adverse sustainability impacts of a financial instrument are assessed in the course of the due diligence process. This is completed by external experts before the investment advice is given.

European legislation prescribes various indicators that are to be taken into account when assessing the adverse sustainability impacts of an investment. However, not all of these indicators can be applied meaningfully to renewable energy projects and financial derivatives. When assessing environmental concerns, relevant indicators for Encavis Portfolio Management GmbH include energy consumption and the corresponding carbon emissions, and biodiversity. In practice, Encavis Portfolio Management GmbH will discuss each new mandate with its clients to determine which indicators should be factored into the investment advice.

As a general rule, there is rarely more than one renewable energy project under discussion as a recommended investment at any one time. As a result, Encavis Portfolio Management GmbH is unable to rank projects or categorically exclude them on the basis of thresholds for sustainability indicators. This is why, in the case of each new mandate, Encavis Portfolio Management GmbH proactively discusses with the client which indicators to assess. We then present the results of these assessments so that the customer can take all the relevant aspects for the renewable energy project into account before deciding whether or not to invest.