The Management Board of FPM AG has developed a sustainability management system to ensure that sustainability aspects are taken into account in all areas of activity. Sustainability guidelines exist both for in-house operations-related environmental protection and for the management of our portfolios. The management of these two areas is to be further developed with regard to the Paris Climate Agreement and the SDGs. At the same time, climate risks, for example, have been firmly integrated into risk management. In addition to successful long-term business development, we are thus pursuing the goal of creating value for our customers, business partners and employees while at the same time meeting our social responsibilities.
In-house operations-related sustainability issues:
Even though our company is a "small" one, we make a positive contribution to reducing CO2 emissions. For this purpose, we recorded the emissions that are directly caused by our activities in the company. These include, for example, emissions from direct energy consumption in buildings (heating, electricity) or from the consumption of materials (paper, printer cartridges, etc.). Likewise, emissions that arise as an indirect consequence of corporate activities from sources that cannot be directly attributed to the company. We currently determine these for air travel, rail travel or car/rental car use by our employees for business trips and analyze the CO2 consumption using a tool by the provider MyClimate.org.
Half of our employees use a bicycle, public transport or walk to get to the office. All employees have been provided with a Bahncard 50. Our travel policy for business trips recommends the preferential use of rail over other modes of transport. Business trips within Germany are not made by air travel. In the table above, it is important to bear in mind that the low km figures for 2020 were pandemic-related and that increased travel activity is expected again in the current and subsequent years.
As a general rule, our electricity needs at the FPM AG office have been covered entirely by green electricity since December 2020. We have issued rules to save energy, in the use of lighting or air conditioning. Employees should always activate the energy-saving mode on electronic devices when they leave their workplace.
We have calculated the CO2 footprint of heating and electricity consumption using the CO2 calculator of the German Federal Environment Agency.
Switching the heating to an eco-rate is currently not possible due to the fact that the office space is rented and there is a central heating supply for the entire building.
New windows have been installed in the offices by the tenant. Even in summer, cooling is provided as best as possible by natural air exchange. The air-conditioning unit in the server cabinet operates in an energy-efficient manner.
IT or other electrical equipment is disposed of to social welfare organizations in the case of equipment in functioning condition, and to IT or equipment recycling providers in the case of defective equipment.
A survey of FPM AG's energy consumption is carried out at least once a year and constitutes for us the basis for a conscious and environmentally friendly use of natural resources. Based on this data, energy efficiency measures are planned and initiated and cost reduction measures are implemented.
We have been working paperless in the entire controlling and accounting processes since 2006. The exchange of data with our tax advisor, our bank, and our external auditors takes place entirely by digital means. In sales, all presentations or customer information are provided electronically. Exceptions are only made for regulatory requirements or explicit customer requests. The same applies to portfolio management and research, where processes are digitized. In the area of trading, there are still physical record-keeping requirements for trading documents. In this area, the amount of paper required cannot yet be reduced any further. As a general rule, our printers are set to black and white and double-sided printing.
The digitization of the office allows us to work more flexibly and productively. Our employees spend less time digging through files and can concentrate on key tasks. They need less space and materials. In addition, the digitization of the office made the migration to home office in 2020, due to the pandemic, faster and easier than in a traditionally organized office.
All employees are free to work from home offices at any time. Instead of traveling, many meetings take place via video call. These two measures also offer great potential for reducing monetary and environmental costs in the future.
In our purchasing, we pay attention to energy label certifications for new equipment. We reduce any small, inefficient orders to a minimum. By choosing main suppliers, we have reduced transport emissions and packaging waste. In addition to office supplies, this also applies to food consumed and cleaning products used in the office. Water usage in the office has also been reduced through efficient appliances and user awareness. In the area of food, emphasis is placed on local products, their resource-saving production and packaging in reusable materials.
According to our evaluations, our business trips and heating consumption produce the highest greenhouse gas emissions. By switching to green electricity, the CO2 footprint for electricity will be reduced by 90% next year. These evaluations serve as the basis for the annual survey of our greenhouse gas emissions.
We are currently reviewing several projects with the intention to compensate our greenhouse gas emissions on an annual basis.
Sustainability concept in portfolio management
Foreword: We provide our services as initiator for and manager of investment funds launched by capital management companies such as the Universal Investment Group. Our sustainability related topics in the products are integrated in the legal sales documents, especially in the sales prospectuses of the funds. Through the capital management companies, binding exclusion criteria, such as controversial weapons or exploitative child labor, were already agreed for the portfolios at the beginning of our cooperation.
Strategies for managing sustainability risks
Negative environmental conditions, social disparities or poor corporate governance can have a negative impact on the value of our customers' investments and assets in several ways. These so-called sustainability risks can have a direct impact on the net assets, financial position and results of operations as well as on the reputation of the investment properties. As such risks cannot ultimately be ruled out completely, we have developed specific strategies for the financial services we offer in order to identify and limit sustainability risks.
To limit sustainability risks, we try to identify and, if possible, to exclude investments in those companies that show an increased risk potential. With specific exclusion criteria, we see ourselves in a position to align investment decisions (or investment recommendations) with environmental, social or corporate values. For this purpose, we generally apply valuation methods that are generally recognized by the market.
In addition to exclusion criteria, the sustainability concept of FPM AG provides for suitable sustainability filters. These are effective both in fundamental research analysis and in personal management discussions with company leaders.
In summary: We select those companies that meet and maintain high standards in terms of corporate, social, ethical and environmental criteria.
The portfolios are reviewed and, if necessary, adjusted on a quarterly basis. The decision to sell securities if their issuer does not or no longer meets the criteria described above is made by the portfolio management of FPM AG within three months, taking into account the interests of the investors, the capital management company, and the investment limits set out in the investment terms and conditions. Deviating decisions must be justified and documented.
Due to the different assessments of ESG rating agencies and the associated shortcomings, we are currently not using solely ESG scores from these providers as a guideline. Current research by ESG rating providers varies widely in their assessments for the same company, which is due to different perspectives of these providers. On average, the ratings are only 61 percent correlated. In contrast, in lending, the assessments of creditworthiness from different providers on a company are 99 percent correlated. Source: Aggregate Confusion; The Divergence of ESG Ratings
In addition, most smaller companies in particular have not been covered at all by ESG database providers in their analyses to date.
Failure to consider adverse impacts on sustainability factors
"We are required by law to make the following disclosures:"
Investment decisions can have adverse impacts on the environment (e.g. climate, water, biodiversity), on social and employee concerns, and can also be detrimental to the fight against corruption and bribery.
As a matter of principle, we have a considerable interest in fulfilling our responsibility as a financial services provider and in helping to avoid such effects in the context of our investment decisions (or investment recommendations). However, given the existing and upcoming administrative framework conditions, the implementation of the legal requirements specified for this purpose is not feasible at the present stage. In addition, major legal issues are still unsolved.
However, we expressly declare that this handling does not change our willingness to contribute to a sustainable, resource-efficient economy with the aim, in particular, of reducing the risks and effects of climate change and other ecological or social grievances.