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Values and risks

As an asset manager and investor, DJE focuses on the needs of its investors. We are convinced that taking sustainability criteria into account must be an elementary part of our actions, as failure to consider ecological ("E" for environmental) and social factors ("S" for social) as well as good corporate governance ("G" for governance) can entail significant risks.

DJE has therefore long followed its own exclusion criteria, has been a signatory to the United Nations "Principles for Responsible Investment" since 2018, works with MSCI ESG Research, takes selected sustainable development goals into account, avoids or reduces adverse sustainability impacts, engages in over 500 discussions with corporate decision-makers per year and makes use of the opportunities offered by managed voting rights.

Sustainability criteria integrated into the investment process

Exclusion criteria

As a first step, when selecting individual stocks for client portfolios, we exclude various business areas and avoid companies that violate certain principles. These include companies that ...

• Violate the UN Global Compact.
  This is a global agreement between the United Nations and companies to respect human rights, labour standards, environmental principles and to fight corruption.
• Produce biological and chemical weapons, landmines, nuclear weapons, cluster bombs or uranium munitions.
• Generate >5% turnover with conventional weapons.
• Generate >30% turnover from thermal coal.
• Generate >5% turnover from tobacco.
• Violate environmental criteria or cause controversy according to MSCI ESG Research.
  
  

In addition, we exclude government bonds whose issuers have a poor rating in the Freedom House Index or according to World Bank indicators. These include the degree of democracy and freedom, the right of citizens to have a say, political stability, and the accountability and performance of governments.

Solid data basis

In order to have the broadest possible data basis for investment decisions, we use our own analyses and also the results of MSCI ESG Research, a leading provider of analyses and ratings with a view to the environment, social issues and corporate governance. Companies are screened for, among other things, CO₂ emissions relative to sales, land and raw material consumption, water quality, biodiversity, ESG potential, strengths and weaknesses, controversies and corruption. MSCI ESG Ratings are available for more than 600,000 securities worldwide.

Principal adverse ampacts

An essential part of the sustainable yield analysis consists of measuring a group of currently 18 indicators: the so-called PAIs ("Principal Adverse Impacts"), also referred to as "adverse sustainability impacts". 16 of the PAIs concern companies and two PAIs concern government bonds. They can be divided into the following thematic groups:

• Greenhouse gas emissions
• Biodiversity
• Water
• Waste
• Social issues and employment
  
  

Sustainable development goals

In addition, we focus on four selected Sustainable Development Goals (SDGs) of the United Nations. Here we examine the extent to which a company contributes positively to one of the following goals and at the same time does not harm any of the other goals:

• Gender Equality
• Decent work and economic growth
• Sustainable consumption and production
• Climate action
  
  

Engagement and voting rights

On average, we have over 500 conversations with corporate decision-makers each year. This "engagement" is also about sustainability opportunities and risks - the latter are critically addressed. In addition, as a direct investor, i.e. as the fund company DJE Investment S.A., we exercise our voting rights with regard to ESG. We work together with IVOX Glass Lewis for this purpose. This partner advises us on how to exercise our voting rights as responsibly as possible.

Fund selection

We apply our high standards with regard to sustainability criteria directly to direct investments. In order to ensure broad diversification in our portfolios, we may also use funds[1] from DJE and third-party providers or ETC[2] in our asset management activities. 

We cannot influence the selection of individual securities in the funds of third-party providers. Nevertheless, we strive to adhere to minimum standards in fund selection as well:

• Funds with an MSCI ESG rating of at least BB 
• At least 51% of the target investments are Art. 8 or Art. 9 funds (in accordance with the Disclosure Regulation) and take into account PAIs
• Consideration of certain exclusions for all target investments if these account for more than 0.49% (tolerance limit) for the respective exclusion criterion in the portfolio of the target investment

[1] Funds include actively as well as passively managed, exchange-traded funds

[2] ETC = exchange-traded commodity