Sustainability-Related Disclosures
Date of Publication: 29 December 2022
To comply with the Sustainable Finance Disclosure Regulation (Regulation EU/2019/2088) as amended (“SFDR”), Fisher Investments Luxembourg, Sàrl (“FIL”) has provided the below sustainability-related disclosures. FIL is authorised to provide portfolio management services and, in select jurisdictions, insurance intermediation services. FIL provides such services to high net worth private clients (“private clients”).
Information on Sustainability Risk Policies
Portfolio Management Services:
Because FIL delegates its portfolio management services to its parent company, Fisher Asset Management, LLC, trading as Fisher Investments (“FI”), subject to FIL’s oversight, such policies and strategies are implemented by FI, but apply to FIL’s portfolio management services provided to FIL’s private clients.
FI generally evaluates and integrates Sustainability Risks and environmental, social and governance (“ESG”) factors at multiple stages throughout the investment process. “Sustainability Risk” is defined by SFDR as an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of the investment.
Top-Down Investment Process
Sustainability Risks and ESG factors are among the many drivers considered by FI’s Capital Markets Analysts and FI’s Investment Policy Committee (“IPC”) when developing country, sector and thematic preferences. Environmental regulation, social policy, economic and market reforms, labour, and human rights are among the ESG factors assessed when determining country and sector/industry allocations and shaping an initial prospect list of portfolio positions.
FI’s IPC, with the assistance of FI’s Securities and Capital Markets Analysts, determines the materiality of the ESG considerations based on the exposure among publicly-traded companies in these categories. Higher materiality could imply larger ESG-related risks or opportunities, and may influence sector and country weight preferences as well as individual stock selection. The investment strategy and positioning reflects FI’s outlook over a 12-18 month horizon.
Bottom-Up Investment Process
FI’s Securities Analysts perform fundamental research on prospective investments to identify securities with strategic attributes consistent with FI’s top-down views and competitive advantages relative to their defined peer group. The fundamental research process involves reviewing and evaluating a comprehensive set of qualitative and quantitative data, including ESG factors, prior to purchasing a security. Factors considered in portfolios include, but are not limited to: shareholder concentration, corporate stewardship, environmental opportunities & liabilities, and human or labour rights controversies. FI would choose not to invest in companies when, in its opinion, security level ESG issues: (i) violate a client mandated ESG policy, (ii) present an inordinate risk to a company’s operational or financial performance or (iii) appear to present undue headline risk to share price performance.
Insurance Intermediation Services:
FIL does not consider Sustainability Risk as part of its insurance advice. FIL recommends only insurance contracts, provided by its partner insurers, that include an invested mandate, as per FIL and its partner insurers agreement, managed by FIL’s asset management division. While ESG factors, including Sustainability Risk, are considered throughout the investment process for each invested mandate available in the insurance contracts (similarly to how Sustainability Risk is considered for FIL’s portfolio management services), the assessed degree of Sustainability Risk for each such invested mandate is currently the same, making the assessment of Sustainability Risk between potential insurance contracts meaningless.
Information on Integration of Sustainability Risk in FIL’s Remuneration Policy
Portfolio Management Services:
Given that FIL outsources the portfolio management function to FI, it is not envisaged that there will be scenarios where the consideration of Sustainability Risks is relevant to the functions performed by FIL staff. Accordingly, FIL does not anticipate factoring consideration of Sustainability Risks into the assessment of FIL’s staff members’ variable remuneration.
Insurance Intermediation Services:
Due to FIL not considering Sustainability Risk as part of its insurance advice, FIL does not anticipate factoring consideration of Sustainability Risk into the assessment of FIL’s staff members’ variable remuneration.
Disclosure of the Consideration of Adverse Impacts on Sustainability Factors
Portfolio Management Services:
No Consideration of Adverse Impacts of Investment Decisions on Sustainability Factors
Notwithstanding that the consideration of Sustainability Risks is integrated into FI’s investment decision-making process, by virtue of FIL’s size, FIL is not required and currently elects not to consider the adverse impacts of its investment decisions on environmental, social or employee matters, respect for human rights, or anti-corruption or anti-bribery matters (“Sustainability Factors”) in respect of all portfolios it manages. However, with respect to strategies that promote environmental or social characteristics or have a sustainable investment objective (an “ESG Strategy”), the sustainability-related disclosures provided below for each ESG Strategy describes how principal adverse impacts on Sustainability Factors are considered by FI, including to what extent the indicators listed in Table 1 of Annex I of the Commission Delegated Regulation (EU) 2022/1288 (the “SFDR RTS”) are taken into consideration by FI. Furthermore, for private clients who have one or more ESG Strategies implemented in their investment portfolio, such private clients will also receive pre-contractual disclosures related to their investment portfolio that will describe how principal adverse impacts on Sustainability Factors are considered by FI in their investment portfolio.
Insurance Intermediation Services:
No Consideration of Adverse Impacts of Insurance Advice on Sustainability Factors
When providing insurance intermediation services, FIL works exclusively with only certain insurance companies and recommends only insurance contracts that include an invested mandate managed by the asset management division of FIL. Because the invested mandates included in the insurance contracts recommended by FIL currently do not consider any adverse impacts on Sustainability Factors, FIL does not consider any adverse impacts such insurance contract may have on Sustainability Factors when providing insurance advice. Should the invested mandates available in the insurance contracts recommended by FIL expand to include those that consider adverse impacts on Sustainability Factors, FIL may begin to consider adverse impacts on Sustainability Factors in its insurance advice.
Sustainability-Related Disclosures
Portfolio Management Services:
FIL makes available to its private clients certain ESG Strategies that can be implemented in a private client’s investment portfolio. By implementing an ESG Strategy in a private client’s investment portfolio, such portfolio is considered to be an Article 8 financial product under SFDR, which requires certain portfolio-specific disclosures to be provided on FIL’s website. However, FIL considers the management of its private client’s investment portfolio to be confidential, and will not publish portfolio-specific sustainability disclosures on its website. Instead, FIL publishes the below information about the ESG Strategies at the model level, which will include SFDR periodic reporting on the performance of such ESG Strategies from a sustainability perspective.
Global Sustainable Equity Impact ESG
Insurance Intermediation Services:
For any private clients who are interested in FIL’s insurance intermediation services, such private clients should go to the insurance contract provider’s website for any sustainability-related disclosures related to the insurance contracts FIL may recommend as part of its insurance advice.
Amendments to this Disclosure
Should any changes be made to this disclosure in the future, a clear explanation of such changes will be published here.
Implemented Changes
In January 2022, this disclosure was updated to reflect:
- the postponement of the SFDR RTS effective date to January 2023;
- SFDR Article 11 disclosures provided for the ESG Strategies;
- adding disclosures regarding the Taxonomy Regulation; and
- a change in FIL’s SFDR categorization methodology for private client portfolios.
In December 2022, this disclosure was updated to:
- update the sustainability-related disclosures for the ESG Strategies to comply with the SFDR RTS;
- remove the principal adverse impact statement that was originally posted to comply with SFDR on a high level, principles basis;
- remove disclosures not required under SFDR or the Taxonomy Regulation (Regulation EU/2020/852); and
- add disclosures for FIL’s insurance intermediation services.