Abstract
Goldmarie Investment Strategies invest in companies according to strict and consistent environmental and social criteria. To this end, the Goldmarie equity universes are defined through the application of exclusion criteria. In addition, Goldmarie's investment strategies are designed to ensure that investments contribute to environmental and social goals. To this end, the Goldmarie algorithm optimizes sustainable selection criteria with financial indicators such as return, diversification and risk.
In order to match the individual risk profile of the clients, a bond component is added to the portfolios. In the case of this bond component of Goldmarie Investment Strategies, the aim is to also meet the strict and consistent environmental and social criteria of the investment strategy by investing in so-called "green bonds". Goldmarie's investment strategies promote environmental or social characteristics, but only partially aim for sustainable investments. Environmental and social goals to which Goldmarie's investment strategies make a positive contribution are, on the one hand, the United Nations Sustainable Development Goals (SDGs) and, on the other hand, environmental goals according to Article 9 of the Taxonomy Regulation. In the case of the sustainable investments of Goldmarie investment strategies, the use of strict exclusion criteria ensures that no other environmental or social sustainable investment objective is harmed.
Investors have the option of choosing between the Goldmarie Essential and the Goldmarie Impact investment strategy. Both investment strategies meet our consistent sustainability criteria. In some cases, the Goldmarie Essential investment strategy also invests in companies that do not directly make a positive contribution to an environmental or social goal. As a result, the Goldmarie Essential investment strategy is more broadly diversified across different industries. The Goldmarie Impact investment strategy, on the other hand, ensures that each company makes a positive contribution to at least one environmental or social goal. At least 28% of the Goldmarie Essential investment strategy and at least 41% of the Goldmarie Impact investment strategy are sustainable investments. Goldmarie Finanzen aims to keep the share of sustainable investments as large as possible at all times. The pledged shares of sustainable investments are limited by data gaps that currently still exist. We expect that due to extended reporting requirements and the expansion of valuations by imug rating GmbH, larger proportions can be classified as sustainable in the future.
When selecting securities under Goldmarie's investment strategies, it is assumed that the issuers of these securities apply good corporate governance practices. To this end, exclusion criteria are defined that are based on the ten principles of the United Nations Global Compact.
The exclusion criteria of Goldmarie's investment strategies include, on the one hand, controversial business practices, such as the trade in firearms or high greenhouse gas emissions, and, on the other hand, a standards-based screening, where it is checked whether the companies violate the UN Global Compact. Companies that violate any of our exclusion criteria will be immediately removed from the Goldmarie equity universes and no investment will be made in these companies.
As positive selection criteria for evaluating companies, we are guided by the SDGs of the United Nations. The business activities of companies are evaluated in terms of their environmental and ethical-social impacts. Companies that generate a share of their revenues from business activities that contribute positively to at least one of the SDGs will be given preference by our Goldmarie algorithm.
Our sustainability assessment is mainly based on data sets from the renowned sustainability rating agency imug. In addition, we conduct internal research based on publicly available information, both on the part of the companies (such as annual and/or sustainability reports) and on the part of third parties, such as authorities, NGOs or the media. For our research, we mainly use sources of information that have already been audited by third parties or have a certain reputation, i.e. reputable media reports or established NGOs. In order to take into account the partially incomplete data situation, we consistently exclude companies for which we do not have complete sustainability data from the Goldmarie equity universes.
Goldmarie Finanzen offers direct investments in shares, thus turning investors into active shareholders. The aim is to achieve an applied participatory policy.
No sustainable investment goal
For Goldmarie investment strategies, we are currently unable to ensure that all investments meet the regulatory requirements for sustainable investments, as the coverage of the sustainability data available to us is not yet sufficient. For this reason, this financial product promotes environmental or social characteristics, but does not seek sustainable investments.
However, some of the Goldmarie investment strategies aim to make sustainable investments. According to Article 2(17) of the Disclosure Regulation (EU 2019/2088), a sustainable investment is an investment in an economic activity that contributes to the achievement of an environmental objective and/or a social objective. The sustainable goals of the Goldmarie Impact Strategy are, on the one hand, the environmental goals listed in Article 9 of the Taxonomy Regulation:
- Mitigating climate change,
- Adaptation to climate change.
- Poverty alleviation,
- Health care,
- Access to education and information,
- Access to clean water and sanitation,
- Sustainable consumption and production.
Investing with the Goldmarie investment strategy contributes to the objectives mentioned here by investing in companies that make a positive contribution to the achievement of these goals through their economic activities.
The requirements of the shares do not apply to investments in bond funds. Here, we select investment funds that invest in bonds that have been labeled green by the Climate Bonds Initiative or that have been awarded the FNG seal for high sustainability standards. In addition, invested bond funds should correspond to one of the two sustainability categories according to the Disclosure Regulation (EU 2019/2088 Articles 8 or 9).
The sustainable investments of Goldmarie investment strategies ensure that no other environmental or social sustainable investment objective is harmed. On the one hand, this is done by applying the strict exclusion criteria (see Methods). On the other hand, the Principle Adverse Impact (PAI) Statements of the companies are consulted in order to exclude harmful companies.
For those companies that contribute to the environmental goals described in Article 9 of the Taxonomy Regulation, we also rely on the analysis of the sustainability agency imug rating GmbH. For all companies with taxonomy-compliant economic activities, it examines the extent to which other environmental objectives are significantly impaired. Goldmarie Investment Strategies' minimum standards also include compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. Companies that violate these are not part of the Goldmarie universes. For third-party funds included in the portfolio management products, compliance with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights is part of the selection process.
Environmental or social characteristics of the financial product
Goldmarie investment strategies invest in companies according to strict and consistent environmental and social criteria. To this end, the Goldmarie Essential and Impact universes are defined through the application of exclusion criteria. In addition, Goldmarie's investment strategies are designed to ensure that investments contribute to environmental and social goals. To this end, the Goldmarie algorithm optimizes sustainable selection criteria with financial indicators such as return, diversification and risk. The exclusion criteria used for the Goldmarie universes are:
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Chemicals of Concern |
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Abuse of Animals |
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Civilian Firearms |
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Coal |
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Nuclear Power |
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Fossil Fuels Industry |
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Military |
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Pornography |
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Gambling |
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Unconventional Oil and Gas Involvement |
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Tobacco |
- Violation of human and labour rights
- Corruption
- High CO2 footprint
The envisaged environmental and social goals are
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Energy & Climate Change |
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Protection of Ecosystems |
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Water & Sanitation |
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Infrastructure |
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Responsible Finance |
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Food & Nutrition |
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Health |
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Capacity Building |
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Access to Information |
In the case of the bond portion of Goldmarie investment strategies, the aim is to also meet the strict and consistent ecological and social criteria of the investment strategy by investing in so-called "green bonds".
Investment strategy
What is the investment strategy used to meet the environmental or social characteristics advertised by the financial product?
The Goldmarie Essential and Impact portfolios consist of an equity and a bond component. In addition, a small amount of liquidity can be kept available. The allocation between the equity and bond components depends on the individual risk profile of the investor. The risk profile is determined from the information in the investment profile. The equity component is made up of 8 – 30 companies selected from the Goldmarie Essential or Impact universe by the Goldmarie algorithm. Companies in the Goldmarie universes meet the exclusion criteria for sustainability described above. In addition, companies must meet financial and tradability requirements, such as minimum values for average daily trading volume and market capitalization.
With the help of the Goldmarie algorithm, we combine and weight the different companies of the Goldmarie universes using state-of-the-art mathematical optimization methods and artificial intelligence based on the criteria of return, risk, diversification and sustainability. The selection criterion for sustainability is the economic activities of the companies that make a positive contribution to the achievement of an SDG of the UN or an environmental goal of the EU Taxonomy Regulation.
In some cases, the Goldmarie Essential investment strategy also invests in companies that do not directly make a positive contribution to an environmental or social goal. As a result, Goldmarie Essential's investment strategy is more broadly diversified across different industries. The Goldmarie Impact investment strategy, on the other hand, ensures that each company makes a positive contribution to at least one environmental or social goal. The bond component of Goldmarie's investment strategies is made up of green government and corporate bonds. All bonds have been marked as green by the Climate Bonds Initiative. An ETF (Exchange Traded Fund) is used to diversify the bond component. It makes it possible to combine many different issuers and maturities of the bonds at low cost. Once a quarter, we review the optimal composition of the Goldmarie portfolios and adjust them.
What is the policy for assessing the good governance practices of investee companies?
When selecting securities as part of Goldmarie's investment strategies, it is checked that the issuers of these securities apply good corporate governance practices. To this end, exclusion criteria are defined that are based on the ten principles of the United Nations Global Compact. The ten principles of the Global Compact include guidelines on how to deal with human rights, labour rights, corruption and environmental violations. This ensures that companies respect the protection of international human rights and are not complicit in human rights violations. The principles of the Global Compact include the elimination of child labour and all forms of forced labour, as well as the elimination of discrimination in employment and employment. It also aims to accelerate the development and dissemination of environmentally friendly technologies, to promote environmental awareness and to follow the precautionary principle in dealing with environmental problems. All forms of corruption, including extortion and bribery, contradict the principles of the Global Compact. In addition, issuers are required to adhere to good corporate governance standards with regard to shareholder rights, composition and remuneration of the Management Board and Supervisory Board, corporate actions, auditors and transparency, among other things.
Allocation of investments
What is the planned asset allocation for this financial product?
An overview of the planned allocation of the Goldmarie Essential and Impact investment strategies can be seen in the following diagram. At least 70% of the investments in the Goldmarie Essential investment strategy are geared towards the advertised environmental characteristics. Of these, at least 28% of the Goldmarie Essential investment strategy and at least 41% of the Goldmarie Impact investment strategy are sustainable investments. These sustainable investments are divided into taxonomy-compliant environmental goals, social goals, and environmental goals resulting from the United Nations SDGs. The remaining investments, which are targeted at other environmental and social characteristics, are not sustainable investments as they do not directly contribute to an environmental or social objective. Nevertheless, these investments meet all sustainable exclusion criteria and contribute positively to other sustainability indicators and thus to the sustainable objective of the investment strategies.
The equities in the Goldmarie Essential and Impact portfolios are divided into the three subcategories of sustainable investments according to a holistic approach and taking into account the other financial parameters (risk, return, diversification). As a result, there may be fluctuations in the relative weightings of the three sub-categories of sustainable investments. The percentages given here therefore represent lower limits that we ensure for all portfolios of Goldmarie investment strategies. Goldmarie Finanzen aims to keep the share of sustainable investments as large as possible at all times. The pledged shares of sustainable investments are limited by data gaps that currently still exist. We expect that due to extended reporting requirements and the expansion of valuations by imug rating GmbH, larger proportions can be classified as sustainable in the future.
Allocation scheme in the strategy Goldmarie Essential
Allocation scheme in the strategy Goldmarie Impact
What is the minimum level of compliance with the EU taxonomy for sustainable investments with an environmental objective?
The Goldmarie Essential Investment Strategy invests at least 5% and the Goldmarie Impact Investment Strategy invests at least 11% in companies that engage in economic activities that contribute positively to an environmental objective of the EU Taxonomy Regulation. The two environmental objectives currently under consideration are climate change mitigation and adaptation. The other environmental objectives of the EU Taxonomy Regulation will also be considered as soon as they have been defined by regulation. The calculation is based on the percentage sales revenues of the companies and is based on data collected by the sustainability rating agency imug rating GmbH. This data was not checked by an auditor.
Taxonomy compliance of investments in the strategy Goldmarie Essential
Goldmarie Essential including government bonds
Goldmarie Essential excluding government bonds
Taxonomy compliance of investments in the strategy Goldmarie Impact
Goldmarie Impact including government bonds
Goldmarie Impact excluding government bonds
For the purposes of these diagrams, the term "sovereign bonds" includes all exposures to sovereigns.
What is the minimum share of investment in transitional and enabling activities?
0%Which investments fall under "#2 Other investments", what is the investment purpose of them and is there a minimum environmental or social protection?
All investments in the Goldmarie Portfolios are aimed at achieving the sustainable investment objective, with the exception of cash and other assets held for liquidity purposes. These specific assets are held to a limited extent to support the Fund's liquidity and currency risk management and thus do not consistently interfere with the achievement of the sustainable investment objective. In addition, they may be financial instruments for which there is not enough data to be placed in the sustainable categories.
Monitoring of environmental or social characteristics
How are the environmental or social characteristics advertised by the financial product and the sustainability indicators used to measure the fulfilment of those environmental or social characteristics monitored throughout the life cycle of the financial product?
When admitted to the Goldmarie Essential or Impact universes, compliance with all exclusion criteria is checked on the basis of the current sustainability data set. When new data is received, compliance with the exclusion criteria is continuously checked. If a company in which it has been invested now violates one of the exclusion criteria, it will be sold immediately. In addition, we follow relevant developments about the companies via newsletters and media, including social media.
What are the internal or external control mechanisms involved?
We regularly receive data deliveries from the renowned rating agency imug rating GmbH with detailed data on the environmental and social characteristics of all companies included in our universe. In addition, we regularly exchange information with NGOs, independent rating companies and research institutes in the field of sustainable finance. For example, we include exclusion lists of established NGOs in our equity universe. Our data analysts collect this information for each company invested in as part of Goldmarie's investment strategies. Based on this information, our portfolio managers consult each other and exclude unsuitable companies. In the future, we plan to establish a permanent investment board for the further development of our sustainability criteria.
Methods
What methods are used to measure the fulfilment of the environmental or social characteristics advertised by the financial product?
Our evaluation of sustainability has two components:
- Negative exclusion criteria
- Positive selection criteria
The methods of our sustainability assessment were developed together with the renowned sustainability rating agency imug rating GmbH and are continuously being further developed. An up-to-date list of explanations can be found at any time on the Goldmarie homepage (exclusion criteria and selection criteria).
Some exclusion criteria are based on the turnover of the companies. In other words, it checks what proportion of a company's total turnover certain business practices make. If the share exceeds a defined limit or if the activity is completely rejected by us, the company will be excluded from the Goldmarie share universe. The negative criteria are as follows:
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Chemicals of Concern |
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Abuse of Animals |
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Civilian Firearms |
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Coal |
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Nuclear Power |
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Fossil Fuels Industry |
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Military |
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Pornography |
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Gambling |
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Unconventional Oil and Gas Involvement |
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Tobacco |
Other exclusion criteria are determined by norm-based screening. This is done to identify violations of the United Nations Global Compact. The following will be checked:
- Respect for human rights
- Compliance with labor law
- Compliance with environmental and supply chain standards
- Anti-corruption
If companies in these areas attract negative attention, this leads to exclusion from our equity universe.
The second component is the positive selection criteria in the evaluation of the companies. These are based on the SDGs of the United Nations. It evaluates the business activities of companies in terms of their environmental and ethical-social impacts. For example, a company's products are rated as harmful, do-no-significant-harm (DNSH) or positive. In the case of positively evaluated enterprises, account is taken of the proportion of the company's turnover generated by economic activities that make a positive contribution to the achievement of these objectives. Positive criteria cover the following areas:
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Energy & Climate Change |
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Protection of Ecosystems |
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Water & Sanitation |
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Infrastructure |
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Responsible Finance |
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Food & Nutrition |
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Health |
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Capacity Building |
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Access to Information |
We also include companies' ESG scores and key adverse impacts on sustainability factors (PAIs) in our assessments.
Data sources and processing
What data sources are used to achieve the environmental or social characteristics advertised by the financial product?
We obtain our data on ecological and social characteristics mainly from the renowned sustainability rating agency imug rating GmbH. In addition, we conduct our own research based on publicly available information, both from companies (such as annual and/or sustainability reports) and from third parties, such as authorities, NGOs or the media.
What measures are taken to ensure data quality?
For our research, we mainly use sources of information that have already been audited by third parties, e.g. annual reports, or have a certain reputation, i.e. reputable media reports or established NGOs. By using more than one external data provider, we consider the data quality to be sufficiently assured.
How is data processed?
The various data are stored in our internal database and then read out to create the exclusion and selection criteria for each company. Goldmarie stock universes are created with all companies that meet all exclusion criteria. The sustainability data of the Goldmarie portfolios are aggregated for each individual company as well as at the entire portfolio level and continuously monitored by our portfolio managers.
What proportion of the data is estimated?
We try to estimate as little data as possible. Companies for which there is not yet sufficient data will be excluded from the Goldmarie universes. imug rating GmbH sometimes uses estimates when it cannot avoid them. Such estimates are made according to a uniform methodology.
Limitations on methods and data
Are there any limitations on methods and data sources?
In terms of sustainability, the current problem is that the reporting obligations for companies have not been in place for very long, i.e. the current sustainability data is currently incomplete. In addition, young, smaller companies are not required to report. Our software is designed to circumvent the incompleteness of sustainability data and get the most out of existing data. Errors in the data cannot be ruled out and are filtered out in the best possible way through plausibility tests.
Why do these restrictions not affect how the environmental or social characteristics advertised by the financial product are met?
Companies for which there is too little data are currently not included in the Goldmarie equity universe.
Duty of care
What are the procedures used to maintain due diligence in relation to the underlying assets?
The sustainability rating agency imug rating GmbH regularly provides up-to-date sustainability data for all companies in our universe. These are read into our database by an automated process. This process is carefully reviewed by our development team to ensure that it works properly. Based on this, our equity universe will be updated and, if necessary, the portfolios will be reallocated accordingly.
What are the internal and external controls of this due diligence?
We keep our software tool and database up-to-date and check for errors with every change. In addition, we regularly carry out plausibility checks and spot checks. In addition, we are in constant exchange with imug rating GmbH.
Participation policy
What is the participation policy applied?
Goldmarie Finanzen offers direct investments in shares, thus turning investors into active shareholders. In this way, an applied participation policy (active ownership) with the following modes of action is sought: The direct mode of action includes the direct supply of capital to the company classified as sustainable (e.g. through a capital increase) and the dialogue/influence on the corporate management. The latter can be achieved by the investors themselves by exercising their voting rights. Indirectly, investing in sustainable companies has an impact on the share price: divestment has been shown to lead to price losses and a reduction in the CO2 emissions of the companies concerned. Another indirect mode of action is reputational influence. By investing in certain companies yourself, it can be assumed that investors will follow media reports regarding these companies more closely. We will also report publicly on companies and transparently show our clients which companies are currently in their portfolios or will be removed and for what reasons. Companies must therefore pay more attention to transparency and good communication in order to prevent damage to their image.
What are any management practices with regard to sustainability-related controversies in the companies in which investments are made?
Investments in companies with controversial business areas and business practices should be avoided. This is ensured by our exclusion criteria. We include the data in our equity universes at regular intervals. In addition, the norm-based screening carried out by imug detects and evaluates controversies/negative press releases concerning certain companies. Violations of the United Nations Global Compact are identified. This data is updated on an ongoing basis. If companies attract negative attention in the areas of human and labor law, the environment, or corruption, this leads to exclusion from our equity universe. In the next redeployment, the companies in question will be removed from all Goldmarie portfolios.
Achieving the sustainable investment goal
We use the iShares MSCI World ESG Enhanced UCITS ETF as a benchmark for quality when compiling our investments. This stock index:
- reflects the financial performance, financial risks and rewards of approximately 1,500 equities from 23 developed countries, representing approximately 85% of the free float market capitalization of each of these countries;
- is designed to maximise positive ESG factors and reduce greenhouse gas emissions and fossil fuels by 30%;
- is intended to comply with the minimum technical requirements of the EU Climate Transition Benchmarks in the EU Delegate Acts.
- the ESG score should be greater than the ESG score of the benchmark in absolute terms,
- greenhouse gas emissions in CO2 equivalents per EUR invested are to be reduced by 10% compared to the benchmark;
- the issuer-based EU taxonomy compliance should be 10 percentage points higher than the benchmark's taxonomy compliance;
- SDG involvement is required to be 20 percentage points higher than the benchmark.
- the ESG score should be greater than the ESG score of the benchmark in absolute terms,
- the issuer-based EU taxonomy compliance should be 20 percentage points higher than the benchmark's taxonomy compliance;
- SDG involvement is required to be 30 percentage points higher than the benchmark.
We also evaluate (after portfolio composition) what proportion of the benchmark meets our exclusion criteria.