SFDR Disclosures EN
Introduction
As a portfolio manager of funds domiciled in the EU, DCP Client Partner AG (DCP) is obliged to implement the applicable EU laws and regulations on sustainability in the financial sector, including Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019 on sustainability-related disclosures in the financial services sector.
This EU Sustainable Finance Disclosure Regulation (SFDR) is a regulation to increase transparency and promote sustainable investments. The SFDR requires companies to disclose information about sustainability risks and impacts across products and services, as well as their policies and processes for managing these risks. The SFDR also creates a framework for the classification of sustainable investments and requires that products marketed as sustainable meet certain criteria.
1. Unser Engagement auf Unternehmensebene
What does the sustainability concept of DCP Client Partner AG look like?
DCP pursues an integrative ESG approach, taking sustainability risks into account, which is based on the principle of responsible investing and the principles of the UN Global Compact Program. The United Nations Global Compact Program is the world's largest corporate initiative for sustainability. DCP is one of the very few Swiss financial companies that has already joined this program as an active member.
With its approach at company level, DCP strives to achieve improvements in the areas of environmental issues such as climate change and water usage, social issues like diversity and occupational health and safety, as well as governance topics such as shareholder rights and corruption.
In order to constantly spur itself on, DCP publishes an annual progress report on the website of the UN Global Compact program: https://unglobalcompact.org
2. How DCP fulfills its responsibility of adverse impacts of investment decisions at product level
2.1. General consideration
In order to limit sustainability risks, DCP attempts to identify and, where possible, exclude investments in companies that have an increased risk potential. With specific exclusion criteria or considering best-in-class ESG ratings, DCP is able to align investment decisions with environmental, social or company-related values. For this purpose, DCP generally uses valuation methods recognized in the market. The identification of suitable investments to limit sustainability risks involves utilizing data from recognized rating agencies for investment decisions or applying actual exclusion criteria. DCP’s engagement policy is characterized by the absence of shareholder rights being exercised, no participation in corporate governance, and no related publications on the fulfillment of engagement duties.
Article 6 of the SFDR requires the disclosure of information regarding the sustainability risks and impacts of products and services, as well as the policies and processes for managing these risks. This includes information on how the products contribute to environmental or social objectives and what negative impacts they may have.
Article 8 aims to ensure that financial products and services offered to investors are consistent with the sustainability objectives of the SFDR and are marketed in a way that is transparent and accurate for investors. ESMA adopts corresponding guidelines and recommendations for the application and compliance with the SFDR.
2.2. Consideration in the context of the investment decisions of the DCP Fund with its underlying sub-funds DCP - Hybrid Income and DCP - Equity Income
2.2.1. DCP – Hybrid Income
The sub-fund DCP - Hybrid Income is designed as a sustainable bond fund that invests primarily in subordinated bonds. This means that the sub-fund invests, among other things, in bonds issued globally by non-governmental issuers, with a focus on European issuers and aiming for broad industry diversification. The sub-fund focuses on subordinated bonds from issuers with strong balance sheets, the sustainability of which is taken into account when making investment decisions. When assessing sustainability risks, the fund management follows a standards-based upstream ESG exclusion process. Issuers that violate the UN Global Compact criteria are excluded. Additionally, the fund management considers the ESG ratings from rating agencies and applies further strict exclusion criteria anchored in the investment policy. The investment objective of the sub-fund is to generate a higher lang-term return than what would be expected from a purely senior bond portfolio. The sub-fund is particularly suitable for investors who focus on sustainable investments, seek a high-yield addition to their bond portfolio, and are willing to bear the associated risks.
More information on the strategy and allocation process of DCP - Hybrid Income can be found here:
https://www.dcp-am.ch/fonds/1-dcp-hybrid-income-fund
The sub-fund considers the following Principal Adverse Impacts (PAIs):
· CO2 footprint
· Greenhouse gas intensity of investee companies
· Activities that have a negative impact on areas with sensitive biodiversity
· Violations of the principles of the UN Global Compact and the OECD Guidelines for Multinational Enterprises
· Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons)
The sub-fund applies the following exclusion criteria:
· Companies that generate more than 5% of their revenue from the manufacture of tobacco products.
· Companies that generate more than 30% of their revenue from the production and distribution of thermal coal.
· Companies that generate more than 10% of their revenue from the manufacture or sale of military equipment.
· The manufacture or sale of weapons banned under international law is completely excluded.
· Companies that generate more than 5% of their revenue from the production or distribution of pornographic material.
· Companies that generate more than 5% of their revenue from the operation of gambling establishments.
· Direct and indirect investments in companies that seriously violate the UN Global Compact criteria are excluded.
The fund management company classifies the DCP - Hybrid Income fund as a fund within the meaning of Art. 8 of the Disclosure Regulation (EU) 2019/2088. The sub-fund therefore advertises environmental or social characteristics but does not aim to make sustainable investments.
2.2.2. DCP – Equity Income
The DCP - Equity Income is designed as an equity fund. To achieve its investment objective, the sub-fund aims to invest in individual equities, equity indices (via ETFs and/or index options) from the USA, Europe (including Switzerland), money market instruments and derivatives. Income can be generated in particular from dividends and option premiums. Option premiums collected through writing options are a key pillar of the sub-fund’s income strategy. In conjunction with dividend payments, the aim is to generate regular, price-independent sources of income for the sub-fund's investors. As an actively managed equity fund, these income sources are intended to be supplemented by price gains. In addition to direct investments and options on individual shares, options on common indices such as the S&P500, the EuroStoxx50 or the SMI can also provide regular premium income. Index options (call and put options) can also be purchased if the portfolio manager believes this is conducive to the sub-fund's objective.
The sub-fund takes sustainability risks into account when making investment decisions in accordance with Article 6 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector.
Disclosure pursuant to Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (“Taxonomy Regulation”): The investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.
As this sub-fund does not make sustainable investments in accordance with Regulation (EU) 2019/2088 and does not promote environmental or social characteristics, no adverse impact on sustainability factors within the meaning of Article 7 (1) a) of Regulation (EU) 2019/2088 is taken into account.
More information on the strategy and allocation process of DCP - Equity Income can be found here:
3. Information on the remuneration policy for the consideration of sustainability risks
DCP's strategies for incorporating sustainability risks are also incorporated into the company's internal organizational guidelines. DCP's remuneration policy is currently influenced by the inclusion of sustainability risks as follows.
DCP encourages employees to demonstrate their own sustainable behavior. The following measures are examples of this:
· The remuneration system is designed in such a way that employees are not incentivized
- to take disproportionately high risks or
- to ignore sustainability risks.
· The remuneration instruments used also take into account the sustainable development of the company's value.
· Flexible working time models, teleworking and home office solutions.
4. Memberships
DCP is a member of the following organization:
DCP Client Partner AG, Zurich in September 2024