To limit sustainability risks in the Inyova portfolios we manage for our investors, we try to identify and, if possible, exclude investments in those companies or bonds that have an increased risk potential. With specific exclusion criteria, we see ourselves in a position to align investment decisions with environmental, social or governance values. For this purpose, we generally use methods recognised in the market. Companies are only included in the Inyova universe and available for investment if they meet our exclusion criteria (no or very low sales of weapons, nuclear power, coal, uranium, oil sands, tobacco or no relevant violations of the UN Global Compact). For many of the stocks in the Inyova universe, we also obtain an ESG rating from a recognised rating agency and check whether this is above average. Regarding the bonds within the Inyova universe, we invest via investment funds whose investment policy uses a suitable and recognised sustainability filter to reduce sustainability risks.
We expect that the remaining sustainability risks will have only a minor adverse impact on the return of Inyova portfolios and will not deviate significantly from the general market risk. However, sustainability risks that are not yet apparent to us may have a significantly greater impact on returns.
How Inyova considers adverse impacts of investment decisions on sustainability factors (Articles 4 and 7 SFDR).
Investment decisions may have adverse impacts on the environment (e.g. climate, water, biodiversity), on social and labour concerns, and may also be detrimental to the fight against corruption and bribery. Consideration of such adverse impacts under the SFDR requires a formalised process based on certain data. Due to our size, we are free to decide whether to implement this process under the SFDR.
Due to a lack of sufficient data and experience in the market as well as open legal questions, we have decided not to implement this process at present. Therefore, Inyova currently does not consider any adverse impact of investment decisions on sustainability factors according to the SFDR. This applies to all of our investment decisions and relates to Inyova’s business as a whole as well as to the individual Inyova portfolios we manage for investors.
If Inyova portfolio investors choose to include certain footprint issues or individual exclusion criteria (as described in our whitepaper), this may result in the reduction of adverse impacts in the selected topic areas for their Inyova portfolio. In addition, Inyova will continually assess whether the process required by the SFDR can be implemented at a later date.
How Inyova’s remuneration policy is consistent with the integration of sustainability risks in investment decisions (Article 5 SFDR).
Inyova’s policies for the integration of sustainability risks into investment decisions are also incorporated into the company’s internal organisational guidelines. Adherence to these policies is instrumental in evaluating the job performance of our employees. Our compensation policy does not incentivise employees to take sustainability risks, as our compensation system does not include any performance-related variable components. In this respect, the compensation policy is consistent with the strategies for the integration of sustainability risks.
Which environmental or social characteristics does Inyova promote with the Inyova portfolio according to the SFDR (Article 10 SFDR).
The Inyova portfolio is a financial product mentioned in Article 8 of the SFDR. Inyova classifies companies according to their “handprint” (impact of a company’s business model, i.e. its products and services) and their “footprint” (impact of a company’s operations) to different, mostly environmental or social thematic areas (for example renewable energy, clean water, circular economy, access to medicines, better education, fair wages and human rights).
Only companies that are champions in at least one environmental or social thematic area, or that do not contribute to any such thematic area but have at least an above-average sustainability rating from a recognised ESG rating agency, are included in the Inyova universe and are available for investment. By applying our exclusion criteria when including companies in the Inyova universe, we ensure that these companies follow good governance practices.
Investors can select which of the handprint and/or footprint topics to track within their Inyova portfolio. We then use the companies in the Inyova universe to build an Inyova portfolio that matches the selected topics as closely as possible while being sufficiently diversified and financially viable. In addition, investors can decide to apply certain exclusion criteria (for example, no coal or gas, no nuclear, no meat, no weapons, no animal testing) to the companies in their Inyova portfolio. When investing in bonds through investment funds, the handprint, footprint, and exclusion criteria requirements of the investors do not apply. Here, we generally select investment funds that correspond to the highest sustainability category according to the SFDR.
The whitepaper explains in detail how we define each of the handprints, footprints, and exclusion criteria, how we assign these themes to companies within the Inyova universe, and how these dimensions are combined with financial criteria to create a personalised investment portfolio.
Inyova does not use a reference benchmark (e.g. index) to achieve the environmental and social characteristics promoted with the Inyova portfolio.
Which sustainability indicators and data sources Inyova uses for the environmental and social characteristics of the Inyova portfolio (Article 10 SFDR).
For each of the handprint, footprint, and exclusion criteria topics, we have defined specific sustainability indicators that we use to measure whether a company is a champion in that topic area or falls under the exclusion criteria. These sustainability indicators are described in more detail in the whitepaper. We also use sustainability ratings from recognised ESG rating agencies to assess the overall sustainability performance of companies.
We review corporate sustainability indicators based on various data sources, such as companies’ annual and sustainability reports, data from data providers such as Refinitiv, dedicated directories or indices, and certifications. For more information on using ESG data, see the whitepaper.
When investing in bonds through investment funds, these funds draw on their own sustainability indicators and data sources.
Whether the Inyova portfolio contains taxonomy compliant investments (Article 6 Taxonomy Regulation).
The companies in the Inyova universe are not classified as sustainable investments as defined in the SFDR or as environmentally sustainable investments as defined in Regulation (EU) 2020/852 (Taxonomy Regulation). Accordingly, the Inyova portfolio does not pursue an environmental objective as defined in the Taxonomy Regulation and the proportion of investments in environmentally sustainable economic activities as defined in the Taxonomy Regulation (so-called “taxonomy compliant investments”) is 0%.
The Taxonomy Regulation establishes a specific principle of “do no significant harm” based on EU criteria, which applies only to taxonomy-compliant investments. In this regard, Inyova states the following: “The principle of ‘do no significant harm’ applies only to those investments underlying the financial product that take into account the EU criteria for environmentally sustainable economic activities.” The investments underlying the remaining part of this financial product do not take into account the EU criteria for environmentally sustainable economic activities.