Legal entity identifier: 635400BKVMQWNWITJJ27

This financial product promotes environmental characteristics and qualifies as a financial product in accordance with article 8(1) of Regulation (EU) 2019/2088.

Capitalised terms used in this document shall have the same meaning ascribed to them in the latest version of the prospectus of the Company (the “Prospectus”), unless the context otherwise requires.
 

Summary

The AMX UCITS CCF – DWS - Global Low Carbon Stewardship (the “Sub-Fund”) has been categorised as meeting the provisions set out in Article 8 of the SFDR in relation to products that promote environmental and social characteristics. The below sets out the key information with regards to the environmental characteristics promoted by the Sub-Fund and the approach taken.

No sustainable investment objective

This financial product promotes environmental characteristics, but does not have as its objective sustainable investment. 

The financial product does not intend to make investments in sustainable economic activities that contribute to an environmental and/or social objective, in accordance with Article 2(17) of SFDR. Nethertheless, the Index of the financial product (as defined below) includes criteria to reduce exposure to or to exclude securities which are negatively aligned with certain principal adverse indicators, as defined in the pre-contractual disclosure for the financial product. Additionally, any securities violating the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights are excluded by the financial product’s Index.

Environmental characteristics of the financial product

The financial product promotes environmental characteristics and qualifies as a financial product subject to Article 8(1) SFDR by tracking the Index which includes environmental considerations. The financial product holds a portfolio of equity securities that comprises all, or a substantial number of, the securities comprised in the Index.  The Index is designed to reflect the performance of large and medium capitalisation companies across global markets which are selected and weighted with the aim of seeking alignment with EU Paris-aligned Benchmark (EU PAB) standards and certain net zero frameworks. The Index uses ESG data from Institutional Shareholder Services Inc. (ISS), which provides expertise across a variety of sustainable and responsible investment issues. The Index first removes companies from the Parent Index (as defined below) which do not meet certain ESG criteria, including those involved in industries with a high potential for negative ESG impacts, companies which have been involved in severe ESG related controversies, companies below a certain ESG rating or without an ESG rating, those that have a significant negative impact on certain United Nations Sustainable Development Goals (SDGs), and finally those without sufficient sustainability data available. Stocks passing these exclusions are then scored and weighted based on three pillars (Tilted Weights) (i) Science-based targets relating to reducing carbon emissions (ii) Climate disclosure standards, and (iii) Green revenue relating to SDG 13. Tilted Weights are then further adjusted to ensure alignment with EU PAB requirements, with weights subject to capping and individual and sector weight deviation limits compared to the Parent Index also applied.

Investment strategy

The investment objective of the financial product is to track the performance before fees and expenses of the “Index”, which is the Solactive ISS ESG Global Markets Net Zero Pathway Custom Index, which is designed to reflect the performance of large and medium capitalisation companies across global markets which are selected and weighted with the aim of seeking alignment with EU Paris-aligned Benchmark (“EU PAB”) standards and certain net zero frameworks. The Index is based on the Solactive GBS Global Markets Large & Mid Cap USD Index (the “Parent Index”). The Index incorporates the ESG characteristics outlined above and described in more detail in the Prospectus. 

To assess good governance practices of investee companies, the Index excludes companies with verified failure to respect established norms as well as severe or very severe controversies (including governance controversies) using the ISS Norm-Based Research, and companies that have an ISS ESG Rating (which assesses, amongst other things, how well companies manage governance risks and opportunities) below a certain threshold or do not have an ISS ESG Rating.

Proportion of investments

This financial product invests at least 90% of its net assets in investments that are aligned with the promoted environmental characteristics. Within this category, at least 0% of the financial product’s assets qualify as sustainable investments in the sense of article 2(17) SFDR. Up to 10% of the investments are not aligned with these environmental characteristics. A more detailed description of the specific asset allocation of this financial product can be found in the Prospectus. Financial derivative instruments may be used for efficient portfolio management purposes as ancillary investments.

Monitoring of environmental characteristics

The Index applies the ESG criteria outlined above. The Portfolio Manager performs a regular independent verification of the ESG credentials of the Index, incorporating two key elements: (i) that the composition of the financial product’s portfolio is closely aligned with the ESG standards of the Index, and (ii) that the Index is correctly applying the stated ESG criteria.

Investors should note that whilst the financial product and the Index seek to ensure compliance with such criteria at each rebalance or review date, between these reviews or rebalances, securities which no longer meet these criteria may remain included in (i) the Index until they are removed at the subsequent rebalance or review or, (ii) the portfolio of the financial product until it is possible and practicable to divest such positions.

Methodologies

The attainment of the environmental characteristics promoted by the financial product is measured using the following sustainability indicator:

• Greenhouse Gas Intensity 

More details on the sustainability indicator is available in the Prospectus.

Data sources and processing

The Index uses ESG data from Institutional Shareholder Services Inc. (“ISS”). 

Limitations to methodologies and data

The Index’s ESG standards limit the number of securities eligible for inclusion in the Index. As a result, the Index, and as such the financial product, may be more concentrated and underperform the market as a whole or underperform other funds screened for environmental, social and governance standards, or which do not screen for such standards. 

The Index solely relies on analysis from the Index Administrator or other data providers (as applicable) in relation to sustainability considerations. Neither the Company, nor any of its service providers, makes any representation with respect to the accuracy, reliability, correctness of the sustainability related data or the way that these are implemented. 

Due diligence

The Manager carries out due diligence on the index provider and engages with them on an ongoing basis with regard their index methodology. This includes, but is not limited to, alignment with EU Paris-aligned Benchmark (“EU PAB”) standards, assessment of sustainability risks and integration of ISS data with respect to climate change, sustainable development goals, human rights, labour standards, corruption and controversial weapons.

Engagement policies

The financial product seeks to provide investors with features that generally support informed stewardship. This includes, but is not limited to, providing an ESG-oriented asset allocation based on the composition of the Index; the ability of the investor(s) to select a voting policy as an “Expression of Wish” of voting and a specialised and targeted engagement strategy aligned with the investment strategy of the financial product. The services of Minerva Analytics (the “Stewardship Service Provider”) (https://www.minerva.info) have been procured in order for the Stewardship Service Provider to act as an agent of the financial product. Voting policies are applied on a “reasonable efforts” basis and deemed an Expression of Wish on the part of the investor.

Designated reference benchmark

1. The financial product has designated the Solactive ISS ESG Global Markets Net Zero Pathway Custom Index as the reference benchmark.
2. Additional information on the Index can be found on www.solactive.com.

No sustainable investment objective

This financial product promotes environmental characteristics, but does not have as its objective sustainable investment. 

The financial product does not intend to make sustainable investments. It is not expected that the financial product will be invested in sustainable economic activities that contribute to an environmental and/or social objective, in accordance with Article 2(17) of SFDR:

DNSH Assessment

N/A - Given the financial product does not intend to make sustainable investments, it is not expected that the financial product will be invested in sustainable economic activities that contribute to an environmental and/or social objective, in accordance with Article 2(17) of SFDR.

Integration of adverse impacts on sustainability factors

N/A - Given the financial product does not intend to make sustainable investments, indicators for adverse impacts on sustainability factors have not been taken into account for the purposes of determining sustainable economic activities that contribute to an environmental and/or social objective, in accordance with Article 2(17) of SFDR.

Nevertheless, the financial product considers the following principle adverse impacts on sustainability factors from Annex I of the draft Commission Delegated Regulation supplementing the SFDR (C(2022) 1931 final):

• Carbon footprint (no. 2);
• GHG intensity of investee companies (no. 3);
• Exposure to companies active in the fossil fuel sector (no. 4); 
• Share of non-renewable energy consumption and production (no. 5);
• Activities negatively affecting biodiversity-sensitive areas (no. 7);
• Violation of UN Global Compact principles and OECD Guidelines for multinational enterprises (no. 10); and
• Exposure to controversial weapons (no. 14). 

Alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights

N/A - Given the financial product does not intend to make sustainable investments, indicators for adverse impacts on sustainability factors have not been taken into account for the purposes of determining sustainable economic activities that contribute to an environmental and/or social objective, in accordance with Article 2(17) of SFDR.

Nevertheless, any securities violating the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights are excluded by the financial product’s Index.

Environmental characteristics of the financial product

The financial product promotes environmental characteristics and qualifies as a financial product subject to Article 8(1) SFDR by tracking the Index which includes environmental and considerations. The financial product holds a portfolio of equity securities that comprises all, or a substantial number of, the securities comprised in the Index. The Index is designed to reflect the performance of large and medium capitalisation companies across global markets which are selected and weighted with the aim of seeking alignment with EU Paris-aligned Benchmark (“EU PAB”) standards and certain net zero frameworks. The Index is based on the Parent Index (as defined below). 

The Index aims to comply with the regulations laid out for EU PAB in the PAB Regulation. The Index also seeks to implement recommendations published by the Institutional Investors Group on Climate Change on their Net Zero Investment Framework which can be found on https://www.iigcc.org and https://parisalignedinvestment.org. 

The Index utilises ESG data from Institutional Shareholder Services Inc. (“ISS”). ISS provides expertise across a variety of sustainable and responsible investment issues, including climate change, sustainable development goal ("SDG") linked impacts, human rights, labour standards, corruption and controversial weapons.

Securities are removed from the Parent Index that do not meet certain ESG criteria, including those that are:

• Involved in severe and very severe controversies relating to the environment, human rights, corruption or labour rights;
• Have any involvement in controversial weapons, nuclear weapons, civilian firearm production or tobacco cultivation and production;
• Have involvement over a specific threshold in industries (as set out in the minimum standards for EU PAB) or in certain industries as determined by the Index Administrator to be industries with a high potential for negative environmental, health and/or social impact. These include, but are not limited to:
  • Coal mining and power generation;
  • Fossil fuel production, servicing, exploration, distribution, or power generation;
  • Oil sands production;
  • Civilian firearms distribution;
  • Tobacco related products; and
  • Military weapons;
• Are assigned an ISS ESG rating of D- or below; and
• Have a significant negative impact on United Nations SDG 12 (Responsible Consumption & Production), SDG 13 (Climate Action), SDG 14 (Life Below Water), SDG 15 (Life on Land).

Please note that companies which cannot be evaluated on these criteria due to missing or insufficient data are also excluded.

Securities from the Parent Index that meet these ESG criteria are then assigned an initial weight in the Index based on their market capitalisation, with each constituent’s initial weight tilted based on a scoring process for each of the three pillars listed below (the “Tilted Weights”):

• Science-based targets relating to reducing carbon emissions;
• Climate disclosure standards; and
• Green revenue relating to SDG 13.

Additionally, constituent weights are further adjusted to align with the objectives of the EU PAB (including reducing the carbon intensity of the Index). The carbon intensity of the Index is capped at the minimum of the carbon intensity of the decarbonization trajectory on the selection day and 50% of the carbon intensity of the Parent Index on the selection day. The decarbonization trajectory is defined by an annual minimum carbon intensity reduction of 7% compared to the carbon intensity of the Index on the base day in a geometric progression. Under this process, weightings are subject to capping of up to 5%, with individual weight deviations and sector weight deviation limits applied to the Tilted Weights to minimise, to the extent possible, the deviations against the Parent Index.

Investment strategy

The investment objective of the financial product is to track the performance before fees and expenses of the “Index”, which is the Solactive ISS ESG Global Markets Net Zero Pathway Custom Index, which is designed to reflect the performance of large and medium capitalisation companies across global developed and emerging markets which are selected and weighted with the aim of seeking alignment with EU Paris-aligned Benchmark (“EU PAB”) standards and certain net zero frameworks. The Index is based on the Solactive GBS Global Markets Large & Mid Cap USD Index (the “Parent Index”). The Parent Index includes large and medium capitalisation companies across global developed and emerging markets, selected according to the Solactive country classification framework. Details on the classification of countries is available at http://www.solactive.com. 

ESG Assessment

The investment objective of the financial product is to track the performance before fees and expenses of the Index, which incorporates the ESG characteristics outlined above.

Policy to assess Good Governance

The investment objective of the financial product is to track the performance before fees and expenses of the Index which excludes companies with verified failure to respect established norms as well as severe or very severe controversies (including governance controversies) using the ISS Norm-Based Research, and companies that have an ISS ESG Rating (which assesses, amongst other things, how well companies manage governance risks and opportunities) below a certain threshold or do not have an ISS ESG Rating. 

Proportion of investments

This financial product invests at least 90% of its net assets in investments that are aligned with the promoted environmental characteristics. Within this category, at least 0% of the financial product’s assets qualify as sustainable investments in the sense of article 2(17) SFDR. Up to 10% of the investments are not aligned with these environmental characteristics. A more detailed description of the specific asset allocation of this financial product can be found in the Prospectus.

Financial derivative instruments (“FDIs”) may be used for efficient portfolio management purposes. It is not intended to use FDIs for the attainment of the financial product's objective but rather as ancillary investments to, for example, invest cash balances pending rebalance or investment in constituents of the Index. Any exposures obtained through the use of FDIs for these ancillary purposes will be aligned with the investment objective of the financial product and would conform to ESG standards substantially similar to those of the Index, or would fall within the quoted percentage of the investments that are not aligned with the promoted environmental characteristics.

Monitoring of environmental characteristics

The Index applies the ESG criteria outlined above. The Portfolio Manager performs a regular assessment of the ESG alignment of the financial product, incorporating two key elements:

1. That the composition of the financial product’s portfolio is closely aligned with the ESG standards of the Index (although some deviations may be observable due, amongst other factors, to: efficient portfolio management, portfolio optimisation, cash balances, and/or recent rebalances); and
2. That the Index is correctly applying the stated ESG criteria through an independent verification of the constituents of the Index against an appropriate ESG data source.

Methodologies

The attainment of the promoted environmental characteristics promoted by the financial product is measured using the following sustainability indicator:

• Greenhouse Gas Intensity : The financial product’s portfolio’s weighted average of its holding issuers' GHG Intensity (Scope 1, Scope 2 and estimated Scope 3 GHG emissions/EUR million revenue) , as determined by either MSCI or ISS. Details on the provider used are available upon request.

Data sources and processing

1. The Index utilises ESG data from Institutional Shareholder Services Inc. (“ISS”). ISS provides expertise across a variety of sustainable and responsible investment issues, including climate change, SDG linked impacts, human rights, labour standards, corruption and controversial weapons.

Limitations to methodologies and data

The Index’s environmental, social and governance standards limit the number of securities eligible for inclusion in the Index. As a result, the Index, and as such the financial product, may be more heavily weighted in securities, industry sectors or countries that underperform the market as a whole or underperform other funds screened for environmental, social and governance standards, or which do not screen for such standards. 

Investors should note that the determination that the financial product is subject to the disclosure requirements of a financial product under Article 8(1) of SFDR is made solely on the basis that the Index promotes environmental characteristics. The Company is relying on the activities conducted by and information provided by the Index Administrator or other data providers to make this determination. Neither the Company, nor any of its service providers, makes any representation or otherwise as to the suitability of the Index and the financial product in meeting an investor’s criteria on minimum ESG standards or otherwise. Investors are advised to carry out their own review as to whether the Index and the financial product accords with their own ESG criteria. Information on how the Index is consistent with environmental, social and governance characteristics is contained in the Prospectus of the financial product.

Investors should note that whilst the financial product and the Index seek to ensure compliance with the ESG criteria at each rebalance or review date, between these reviews or rebalances, securities which no longer meet these criteria may remain included in (i) the Index until they are removed at the subsequent rebalance or review or, (ii) the portfolio of the Fund until it is possible and practicable to divest such positions.

Investors should note that the Index solely relies on analysis from the Index Administrator or other data providers (as applicable) in relation to sustainability considerations. Neither the Company, nor any of its service providers, makes any representation with respect to the accuracy, reliability, correctness of the sustainability related data or the way that these are implemented. 

It should also be noted that analysis of companies’ ESG performance may be based on models, estimates and assumptions. This analysis should not be taken as an indication or guarantee of current or future performance.

ESG information from third-party data providers may be incomplete, inaccurate or unavailable. As a result, there is a risk that the Index Administrator or other data providers (as applicable) may incorrectly assess a security or issuer, resulting in the incorrect inclusion or exclusion of a security in the Index and therefore the portfolio of the financial product.

Due diligence

The Manager carries out due diligence on the index provider, Solactive AG, and engages with them on an ongoing basis with regard their index methodology. This includes, but is not limited to, alignment with EU Paris-aligned Benchmark (“EU PAB”) standards, assessment of sustainability risks and integration of ISS data with respect to climate change, sustainable development goals, human rights, labour standards, corruption and controversial weapons.

Engagement policies

The financial product seeks to provide investors with features that generally support informed stewardship. This includes, but is not limited to, providing an ESG-oriented asset allocation based on the composition of the Index; the ability of the investor(s) to select a voting policy as an “Expression of Wish” of voting and a specialised and targeted engagement strategy aligned with the investment strategy of the financial product.

The services of Minerva Analytics (the “Stewardship Service Provider”) (https://www.minerva.info) have been procured in order for the Stewardship Service Provider to act as an agent of the financial product. The Stewardship Service Provider is responsible for developing the stewardship policy of the financial product, comprising voting policies and administering votes in line with investor best practice principles, coupled with an integrated and focussed engagement strategy. Voting policies are applied on a “reasonable efforts” basis and deemed an Expression of Wish on the part of the investor. The Stewardship Service Provider will provide multiple policies that seek to address certain stewardship philosophies.

In the context of voluntary corporate actions (annual general meetings, ordinary general meetings, extraordinary general meetings) with respect to underlying assets held by financial product, investors will be permitted to engage and share their stewardship philosophies, particularly in relation to ESG and climate change preferences. In turn, it is the expectation that these preferences will be shared with the Stewardship Service Provider, so that the voting policy with respect to any such events will be informed by this Unitholder engagement.

Should some investors have conflicting philosophies on stewardship topics which do not have an economic impact on the financial product’s assets, it is the intention to split the votes within the financial product in a pro rata manner as represented by the Unitholders who hold competing philosophies. Unitholders should note that expressing a particular stewardship philosophy does not necessarily result in that preference being followed and executed with respect to the relevant corporate action. Additionally, Unitholders should be aware that in certain markets it may not be possible to split votes in accordance with their expressed preferences.

Designated reference benchmark

The financial product has designated the Solactive ISS ESG Global Markets Net Zero Pathway Custom Index as the reference benchmark.

Alignment with environmental characteristics

The Index promotes environmental characteristics by selecting and weighting the constituents with the aim of seeking alignment with EU Paris-aligned Benchmark (“EU PAB”) standards and certain net zero frameworks and removing securities from the Parent Index that do not meet certain ESG criteria as outlined above, as of each Index rebalance. 

Alignment of the methodology with the Investment Strategy

In order to seek to achieve the investment objective, financial product shall primarily invest in long-only securities which form part of or will become part of the Index and will seek to keep its Tracking Error less than 1% per annum (as further described in the “Investment Policy” section of the Supplement.

Methodology used for calculation of the designated index

Additional information on the Index, its composition, calculation and rules for periodical review and rebalancing and on the general methodology behind the Index can be found on www.solactive.com.