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Sparinvest S.A.

PRI reporting framework 2017

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Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.4. Indicate what norms you have used to develop your investment policy that covers your responsible investment approach.

other (1) description

          Paris Agreement on Climate Change
        

01.6. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

Subject to the limitations imposed by certain strategies, Sparinvest invests its entire fund range responsibly. We see the integration of ESG issues in our investment process, along with an active stewardship programme involving both voting and engagement, as being part of our fiduciary duty.

ALL Sparinvest strategies apply the following overarching exclusions:

  • Banned weapons
  • Securities prohibited by EU Sanction

Below we give a brief indication of the RI approaches used for each of our strategy groups.

More detailed information is available on the RI section of our website:

Http://www.sparinvest.lu/strategies%20and%20solutions/responsible%20investing.aspx

and from our E-book:

http://www.sparinvest.eu/~/media/international/downloads/ebooks/ebook_responsible_investing_english_final.ashx

 

Equity Funds

In our Actively-Managed Fundamental Equity strategies, we aim to be responsible through:

  • Exclusion of banned weapons and securities under EU sanction
  • Screening (non exclusionary, for information purposes)
  • Integration of ESG
  • Stewardship

We work to understand the ESG issues faced by a company, assess the implications for corporate value and whether risks are adequately compensated. We consider how stewardship can be used to nurture corporate value and to encourage improvements in sustainability. Portfolio Managers direct our engagement and voting activities. Engagement can be direct, collaborative and/or via our service providers. Where our service providers engage with portfolio companies, we aim for close supervision. Our policy is to vote on all holdings.

 

In our Actively-Managed Ethical Equity strategies, we aim to be responsible through:

  • Exclusion of banned weapons and securities under EU sanction
  • Norms and Sector based screening (for negative exclusionary purposes)
  • Integration of ESG
  • Stewardship (Engagement and Voting)

Sparinvest’s ethical strategies apply the same responsible investment approach as our core actively managed fundamental equity strategies. However, a growing number of certain clients seek to maintain certain ethical standards and values when they invest. For this reason Sparinvest makes c strategies available with an ethical overlay, adding further exclusionary criteria to our standard exclusionary screening. Our ethical screening criteria are designed to help us to create portfolios that avoid investment in companies in breach of international norms or operating in certain sectors.

Screening for our ethical funds is conducted independently by the external ESG screening services provider ISS-Ethix. Sparinvest has signed the Montreal Carbon Pledge on behalf these funds.
 

In our Quantitatively-Managed Equity strategies, we aim to be responsible through:

  • Exclusion of banned weapons and securities under EU sanction
  • Integration of ESG (at a total portfolio level)
  • Stewardship (Collaborative Engagement and Voting on significant holdings)

In our quantitative strategies, the emphasis is on overall portfolio characteristics rather than on the individual holdings. Accordingly, consideration of ESG-factors is integrated in the investment process at the total portfolio level, with the aim of improving the portfolio’s ESG score over time. On behalf of these funds, we participate in collaborative engagements and vote at companies where our shareholding is valued at EUR 1 million or more.

 

In our Passively-Managed Equity strategies, we aim to be responsible through:

  • Exclusion of banned weapons and securities under EU sanction
  • Stewardship (Voting on significant holdings, and Collaborative Engagement)

In Denmark, Sparinvest  offers a range of passively-managed index funds for which the sole objective is to mimic the returns achieved by a given index. On behalf of these funds, we participate in collaborative engagements and vote at companies where our shareholding is valued at EUR 1 million or more. This enables us to maintain the low charging structure that Danish clients demand of these strategies

 

Fixed Income Funds

In our Actively-Managed Corporate Bond strategies, we aim to be responsible through:

  • Exclusion of banned weapons and securities under EU sanction
  • Screening (non exclusionary, for information purposes)
  • Integration of ESG
  • Stewardship (Engagement – collaborative and direct)

We aim to strengthen portfolios by minimizing exposure to downside risk.  Thus, consideration of environmental, social and governance issues is part of our fundamental credit analysis process. Our customized 'red flags'- investment check list includes ESG metrics alongside traditional financial key metrics. We believe that potential governance problems form the most severe risk to credit investors, and thus it is our clear fiduciary duty to focus on identifying these prior to investment. The majority of engagements for Sparinvest's fixed income funds are conducted, on a collaborative basis, by our engagement services provider.

 

In our Actively-Managed Ethical Corporate Bond strategies, we aim to be responsible through:

  • Exclusion of banned weapons and securities under EU sanction
  • Norms and Sector based screening (for negative exclusionary purposes)
  • Integration of ESG
  • Stewardship (Engagement)

Our Ethical Corporate Bond strategies apply the same responsible investment approach as our core corporate bond strategies described above. However, there is also an additional independent ethical screening conducted independently by the external ESG screening services provider ISS-Ethix. Sparinvest has signed the Montreal Carbon Pledge on behalf of Sparinvest Corporate Value Bonds.

 

In our Actively-Managed Sovereign Bond strategies, we aim to be responsible through:

  • Exclusion of countries under EU sanction
  • Integration of ESG

The formal consideration of governance risk factors is a vital and integral part of - the process of evaluating the credit spread. From a fiduciary perspective, we believe that the G part of ESG analysis is of paramount importance when investing in Sovereigns because a well-governed country is more likely to repay its debts (as well as look after its people and protect the environment). World Governance Indicators are used as input, with adjustments on the basis of other, more forward-looking data.

 

In our Actively-Managed Securitized Bond strategies, we aim to be responsible through:

  • Exclusion of securities or countries under EU sanction
  • Norms-based screening of issuer banks
  • Integration of ESG
  • Stewardship (Engagement)
  • Sparinvest’s investments in covered/securitized bonds is currently restricted to a universe consisting entirely of Nordic covered bonds, as well as government bonds. These issuers are subject to rigorous regulatory requirements and strong governance systems operating in nations with strong environmental and social legislation. The Danish covered bond system is perhaps the most sustainable method for financing property purchase yet invented. In more than two centuries of existence, there has never been a default on a Danish mortgage bond.

 


SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

02.4. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Sparinvest trades in securities and other financial instruments for Danish and international clients. As is required by national legislation, when providing investment and related services, both Sparinvest S.A., Luxembourg branch ID-Sparinvest, Filial af Sparinvest S.A., Luxembourg, are committed to maintaining appropriate arrangements to identify, manage and mitigate actual and potential conflicts of interest with the objective of ensuring that our clients and shareholders are not adversely affected. 

It is our duty to act in the best interests of our shareholders and clients in the conduct of our investment business, including when engaging with investee companies and exercising our rights as shareholders. We maintain a detailed Conflicts of Interest Policy that applies to conflicts of interest that may arise anywhere within Sparinvest Group as a result of any Sparinvest Group entities’ organizational structure, ownership and business activities. The policy document is available in both English and Danish.

Link to English version:

http://www.sparinvest.lu/~/media/international/downloads/appendix_conflict%20of%20interes%20policy_june2016.ashx
 

Link to Danish version:

http://www.sparinvest.dk/~/media/01_dk/dokumenter/jura/politik%20for%20haandtering%20af%20interessekonflikter%20i%20sparinvest_juni2016.ashx
 

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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