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SFDR

Sustainable Finance Disclosure Regulation

Already in 2017, OLZ decided to comprehensively consider ESG (environmental, social, governance) criteria and thus the issue of sustainability in the investment process, i.e. the same methodology is implemented in all OLZ investment strategies and funds (Swiss and Luxembourg funds).

With the Sustainable Finance Disclosure Regulation (SFDR), the regulation on sustainability-related disclosure obligations in the financial services sector, specific regulations on financial service providers regarding disclosure of the sustainability criteria they apply are now imposed in the European Union. These affect OLZ funds under Luxembourg law in particular, which is why they are explained below.

The SFDR obliges providers of financial products to disclose the extent to which they take sustainability risks (or ESG criteria) into account, on the one hand in their company in general, and on the other hand specifically in their individual funds. In addition, the funds are divided into various sustainability categories. Among other things, this is intended to promote sustainable investments and increased transparency towards customers.

What are sustainability risks?

SFDR defines sustainability risks as environmental, social or governance events or conditions that, if they occur, could have a significant adverse effect on investments. Accordingly, these risks not only threaten people and the environment, but also the value of the investments. By taking sustainability risks into account, investors should thus also benefit, since their assets are better protected.

How does OLZ integrate sustainability risks into its investment decision-making processes?

We have integrated sustainability in two steps. In the first step, we use exclusion criteria and do not invest in companies that violate key ESG criteria. In the subsequent portfolio optimization, we favor companies that tend to have better sustainability ratings. OLZ has published details here.

What are "principal adverse impacts"?

Investments can also have adverse impacts on sustainability factors. These adverse effects of investment decisions on sustainability factors are referred to as «adverse impacts», the most important ones as «principal adverse impacts». These can occur in various sustainability areas: for example, in connection with environmental, social and labor issues, human rights or anti-corruption. However, such adverse impacts do not necessarily represent a risk to the value of the investments.

Does OLZ take principal adverse impacts into account?

OLZ does not currently take such impacts into account because, as things stand at present, there exist significant uncertainties regarding the legal requirements (in particular, implementation of the regulatory measures is still pending). Nevertheless, OLZ remains SFDR-compliant, and it does not change the fact that our investment policy seeks to create sustainable added value for people and the environment.

Is OLZ's compensation policy consistent with the inclusion of sustainability risks?

OLZ stands for asset management free of conflicts of interest. That is also reflected in our compensation policy. All OLZ employees receive a fixed salary, which makes up a very large part of their compensation. In addition, if OLZ's financial situation permits, employees may be paid a bonus after the close of each business year. This voluntary, variable special compensation represents only a small portion of the total salary. The amount of the individual bonus payment depends almost exclusively on the company's business performance (operating profit before taxes).

It is true that the inclusion of sustainability risks is not explicitly taken into account. However, as described above, sustainability risks are always included in the investment decision-making processes. The compensation policy neither contradict this approach, nor does it promote any negative effects with respect to sustainability factors. In particular, OLZ does not provide any incentives to accept high sustainability risks.

Into which categories are the funds divided?

SFDR divides the funds into four categories:

  • At the lowest sustainability level are the funds that do not consider sustainability risks at all ("products out of scope").
  • The products that "only" take sustainability risks into account are the so-called "standard products".
  • Higher ranked are the two sustainable or "green" categories that take even greater account of ESG criteria: "light green" and "dark green".
  • Funds that qualify as "light green" not only take sustainability risks into account, but also advertise or promote environmental and/or social features. In addition, the companies in which investments are made must have good corporate governance (Art. 8 SFDR).
  • The "dark green" level includes financial products that seek to achieve a measurable social or environmental sustainability goal. Sustainability is thus the purpose of these funds. To belong to this highest category, no other sustainability criteria must be severely threatened by the investments. In addition, the companies in which investments are made must have good corporate governance (Art. 9 SFDR).

How are the OLZ funds classified?

The two OLZ funds under Luxembourg law, "OLZ Equity World Optimized ESG" and "OLZ Equity Emerging Market Optimized ESG", are currently assigned to the "light green" category. The other funds managed by OLZ are treated according to the same procedure with regard to ESG criteria and therefore also correspond materially to the "light green" category. However, since these are investment funds under Swiss law, it is not yet possible to classify them accordingly.

Further documents

Sustainability-related disclosures: 

-      OLZ Equity World Optimized ESG

-      OLZ Equity Emerging Market Optimized ESG


Fund prospectus:

-       White Fleet

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