Sustainability information

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This financial product promotes both ecological and social characteristics, but does not have a sustainable investment objective.

Voor vastrentende waarden wordt een onderscheid gemaakt tussen overheden en ondernemingen als uitgevende instelling ten aanzien van de promotie van ecologische en sociale kenmerken.

Governments
Ecological features are promoted by by only investing in governments which meet a certain minimum score on the Yale Environmental Performance Index (EPI index). The EPI index looks at 40 indicators including climate policy, biodiversity and air and water quality. More specifically, it promotes climate mitigation, the sustainable use and protection of water and marine resources, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems.

Social characteristics are promoted by basically not investing in governments that fall under hybrid and authoritarian regimes on the Economist’s democracy index. Countries must also meet a certain minimum score on the Corruption Perception Index.

Government bonds of countries subject to UN Security Council and/or European Union sanctions are excluded.

Companies
Ecological characteristics and social characteristics are promoted by excluding companies that grossly violate the UN Global Compact Principles and certain exclusions.

It also examines whether selected companies make a substantial effort on the climate and ecosystem challenge. More specifically, this involves promoting climate mitigation, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems. For social characteristics, it more specifically promotes human rights, labour rights, good health and good financial health.

DD Income Fund is a bond fund that invests globally in government (guaranteed) bonds of developed and emerging countries, corporate bonds (investment grade and high yield) and in microfinance and other stable-income financial instruments.

DoubleDividend Management B.V. (the Asset Manager) carries out ESG analysis. ESG stands for Environmental, Social and Governance. The ESG analysis includes a large number of indicators that map a company’s environmental and social characteristics. These include information on CO₂ emissions, biodiversity, water use and recycling, waste flows and diversity (of the board) and, if relevant, remuneration policy and shareholder rights.

As a result of ESG analysis, DD Income Fund invests in companies that play into opportunities, offer solutions and have a positive impact with their production process, products and/or services on one of the challenges identified by DoubleDividend Management B.V. (the Fund Manager): climate, ecosystems and welfare.

Governments in which investments are made must meet a certain minimum score on the Yale Environmental Performance Index (EPI index). In addition, in principle, no investments are made in governments that fall under hybrid and authoritarian regimes on the Economist’s Democracy Index. Countries are also assessed for corruption, which can lead to a certain country not being included in the universe. For this purpose, Transparency International’s Corruption Perception Index is examined and a certain minimum score is used that must be met.

The ESG analysis is updated every year for each company with the latest data and other details. This monitors whether the respective company in the investment portfolio meets the environmental and social characteristics. The company is continuously monitored for news reports. In case of a gross violation of, for example, the UN Global Compact Principles, a decision can be made to sell the position.

Governments are also monitored every year on the relevant indices and a decision can be made to sell the position in case of a (sharp) decline on the relevant index(es).

The exclusions list is updated at least quarterly, or if necessary e.g. due to implemented sanctions or a gross violation of the UN Global Compact Principles.

The proportion of investments aligned with environmental and social characteristics is 98%. Other investments consist of the average liquidity position in DD Income Fund. The ESG analysis uses the same definitions as in applicable laws and regulations. This allows DD Income Fund to measure whether the promoted environmental and social characteristics are achieved.

Bloomberg and companies’ annual and sustainability reports and websites are used as data sources for the ESG analysis. In addition, for fixed income securities issued by governments, the Yale Environmental Performance Index, the Economist’s Democracy Index and the Corruption Perception Index are used as data sources.

The main limitation of the data sources used is that certain data is not (yet) given by the companies/governments.

The Manager has a Stewardship Policy (Policy on Engaged Shareholding). The DD Income Fund invests mainly in fixed income securities. Unlike equities, fixed income securities do not give voting rights. Nevertheless, DD Income Fund will act as an engaged investor. The Manager will exercise its rights whenever possible and if necessary, DD Income Fund will challenge the management of a company to implement and improve their corporate governance, social or environmental policies.

No sustainable investment objective

This financial product promotes ecological or social characteristics, but does not have a sustainable investment objective.

Ecological or social features of the financial product

DD Income Fund promotes both ecological and social characteristics.

For fixed income securities, a distinction is made between governments and corporations as issuers with regard to the promotion of ecological and social characteristics.

Governments
Ecological characteristics are promoted by  only investing in  governments which meet a certain minimum score on the Yale Environmental Performance Index (EPI index). The EPI index is compiled annually by Yale University in collaboration with Columbia University. It measures 40 indicators including climate policy, biodiversity and air and water quality. Based on these factors, a score is given and 180 different countries are ranked. More specifically, climate mitigation, the sustainable use and protection of water and marine resources, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems are promoted.

Social characteristics are promoted by not investing in governments that fall under hybrid and authoritarian regimes on the Economist’s democracy index. fall under hybrid and authoritarian regimes. Countries are also assessed for corruption which may result in a particular country not being included. This is done by looking at Transparency International’s Corruption Perception Index and using a certain minimum score that must be met.

Companies
Ecological characteristics are promoted by not investing in  companies that grossly violate the UN Global Compact Principles and certain exclusions. In addition, it is examined whether investee companies make a substantial effort on the climate and ecosystem challenge. More specifically, this promotes climate mitigation, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems.

Social characteristics are promoted by not investing in companies that grossly violate the UN Global Compact Principles and certain exclusions. More specifically, the social attributes: human rights, labour rights, good health and good financial health are promoted.

DD Income Fund is a bond fund that invests globally in government (guaranteed) bonds of developed and emerging countries, corporate bonds (investment grade and high yield) and in microfinance and other stable-income financial instruments.

The Asset Manager carries out ESG analysis. ESG stands for Environmental, Social and Governance. The ESG analysis includes a large number of indicators that map a company’s environmental and social characteristics. These may include information on CO₂ emissions, biodiversity, water use and reuse, waste streams and diversity. In addition, companies may not grossly violate the UN Global Compact Principles or be on the Fund Manager’s exclusion list.

The Asset Manager excludes the following companies:

• Companies involved in the production of cluster munitions, anti-personnel mines, biological and chemical weapons, product of nuclear weapons.
  
• Companies generating more than 5% of turnover from gambling.
  
• Companies generating more than 5% turnover from the exploitation of pornography.
  
• Companies generating more than 5% turnover from the production of tobacco.

As a result of the ESG analysis, DD Income Fund invests in companies that play into opportunities, offer solutions and have a positive impact with their production process, products and/or services on one of the challenges identified by the Fund Manager: climate, ecosystems and welfare. This ESG test (based on the three named challenges) uses, among others, sector-specific reports from (civil society) organizations, the company information on sustainability in annual reports and on websites and Bloomberg. In addition, discussions are held with companies if further information and/or explanations are required.

Governments in which investments are made must meet a certain minimum score on the Yale Environmental Performance Index (EPI index). In addition, in principle, no investments are made in governments that fall under hybrid and authoritarian regimes on the Economist’s Democracy Index. Countries are also assessed for corruption, which can lead to a certain country not being included in the universe. This is done by looking at the Corruption Perception Index of Transparency International and applying a certain minimum score that must be met. The Asset Manager excludes government bonds of countries subject to UN Security Council and/or European Union sanctions.

The product promotes E/S features but will not make sustainable investments. DD Income Fund is a global equity fund that invests in
a diversified portfolio of high-quality companies that operate at the
forefront of sustainability.

#1 Aligned to E/S characteristics includes the investments of the financial product used to meet the environmental or social characteristics promoted by the financial product.

#2 Other includes the financial product’s other investments that are not aligned with the environmental or social characteristics and also do not qualify as sustainable investments.

Monitoring environmental or social characteristics

The ESG analysis is updated every year for each company with the latest data and other details. This processmonitors whether the respective company in the investment portfolio meets the ecological and social characteristics. The company is continuously monitored for news reports. In case of a gross violation of, for example, the UN Global Compact Principles, a decision can be made to sell the position.

Governments are also monitored on the relevant indices every year and a decision can be made to sell the position in case of a (sharp) fall on the relevant index(es).

The exclusions list is updated at least quarterly, or if necessary e.g. due to implemented sanctions or a gross violation of the UN Global Compact Principles.

Methodologies

The ESG analysis uses the same definitions as applicable in laws and regulations. This allows DD Income Fund to measure whether the promoted environmental and social characteristics are achieved.

Bloomberg and companies’ annual and sustainability reports and websites are used as data sources. In addition, for fixed income securities issued by governments, the Yale Environmental Performance Index, the Economist’s Democracy Index and the Corruption Perception Index are used as data sources. Bloomberg data is automatically loaded into the ESG analysis of the respective company. This data is verified with public sources from the company. The data is then analysed and an impact analysis is done. No proprietary estimates are used; external data providers such as Bloomberg may use estimates.

Methodological and data limitations

The main limitation of the data sources used is that certain data is not (yet) given by companies. However, key data such as CO₂ emissions, biodiversity, water use and reuse, waste streams, board diversity, remuneration policy and shareholder rights are reported by an increasing number of companies. This allows DD Income Fund to determine whether promoted environmental and social characteristics are being achieved.

The Asset Manager conducts an ESG analysis. ESG stands for Environmental, Social and Governance (ESG). The ESG analysis includes a large number of indicators that map a company’s environmental and social characteristics. These could include information on CO₂ emissions, biodiversity, water use and recycling, waste streams, board diversity, remuneration policy and shareholder rights.

In addition, companies may not grossly violate the UN Global Compact Principles or be on the Fund Manager’s exclusion list.

The Asset Manager excludes the following companies:

• Companies involved in the production of cluster munitions, anti-personnel mines, biological and chemical weapons, product of nuclear weapons.
  
• Companies generating more than 5% – turnover from gambling.
  
• Companies generating more than 5% – turnover from the exploitation of pornography.
  
• Companies  generating more than 5% – turnover from the production of tobacco.

Governments in which investments are made must meet a certain minimum score on the Yale Environmental Performance Index (EPI index). In addition, in principle, no investments are made in governments that fall under hybrid and authoritarian regimes on the Economist’s Democracy Index. Countries are also assessed for corruption, which can lead to a certain country not being included in the universe. This is done by looking at the Corruption Perception Index of Transparency International and applying a certain minimum score that must be met. The Asset Manager excludes government bonds of countries subject to UN Security Council and/or European Union sanctions.

The Asset Manager has established compliance and risk procedures in order to monitor the implementation of the investment policy. DD Income Fund’s annual report is audited by an external auditor.

The Manager has a Stewardship Policy (Policy on Engaged Shareholding).

The DD Income Fund invests mainly in fixed income securities. Unlike equities, fixed income securities do not provide voting rights. Nevertheless, DD Income Fund will act as an engaged investor. The Asset Manager will exercise its rights whenever possible and, if necessary, DD Income Fund will challenge the management of a company to implement and improve their corporate governance, social or environmental policies.

In the case of entering into a dialogue with a company on environmental, social or governance issues, it will be determined with whom to enter into the dialogue and the most desirable way to do so. This may vary, but often the first step is to discuss the concerns with the directors and/or supervisory directors or to write a letter outlining the concerns. Depending on how the dialogue develops, it is determined what further steps, if any, are desirable, such as holding additional meetings with the directors and/or supervisory directors to discuss the concerns in particular, attending the general meeting and raising concerns at that meeting, including voting against management board proposals and intervening with other institutional investors and shareholders on specific issues.

These further steps are aimed at preserving and enhancing value for clients and should promote sustainable long-term value creation at the listed companies invested in.

In carrying out its engagement activities, the Asset Manager cooperates with other shareholders where appropriate and at its discretion. This cooperation takes place in particular within Eumedion, the platform of institutional investors in the field of corporate governance and sustainability, to which the Fund Manager is affiliated.