German advisory and asset management firm Feri Trust has realigned its asset allocation strategy and portfolios with the new European Sustainable Finance Disclosure Regulation (SFDR).
The firm extended the rules in article 8 of the SFDR on transparency relating to environmental or social aspects of financial products in pre‐contractual disclosures to its investment funds.
The draft of the Regulatory Technical Standards (RTS), published by European Supervisory Authorities (ESAs) and to apply from 1 January 2022, if the European Commission approves it, also specified the data to include in the presentation of pre-contractual information for financial products.
Information may refer to whether a financial product intends to make sustainable investment, or only to promote environmental or social characteristics, among other requirements.
As a result of endorsing sustainable policies, Feri has increased the amount of direct investments and its investments in equities follow ESG standards. For fixed income, it gives priority to government bonds from issuers that stick to democratic principles.
“Portfolio managers include all relevant financial sustainability risks in investment decisions as part of the investment process and evaluate them on an on-going basis,” said Feri Trust’s managing director Carsten Hermann.
The goal of the analysis is to identify risks early to reduce their impact, Hermann added.
Antje Biber, head of the SDG at Feri, said the firm obverses “a steady increase in demand from both institutional and private clients who want to pursue a clear sustainability strategy, often with a focus on SDGs”.
Feri has integrated ESG standards with the United Nation’s (UN) Sustainable Development Goals (SDG) in the investment process. It sources data through external providers and rating companies including MSCI ESG.
The firm has recently signed a partnership with ESG Screen 17, a data provider combining ESG data with the UN’s SDGs.
“The data from ESG Screen 17 not only offers us a supplement with regard to the SDGs, but also a corrective to other databases, ratings and analyses,” said Biber.