Why sustainable finance?

Since inception in 2001, at FARAD Group we have developed a unique approach to business and we have been always driven by a set of solid values defining our identity. From the very start until today, our team has embraced these values under a shared strong belief that finance must take an active part in contributing to the wellbeing of our society. We are convinced that a thoughtful sustainable approach to business is not only a way to act professionally and responsibly, but also an essential competitive advantage in a changing world where ensuring the positive impact of the investment decisions will guarantee the companies’ success on a long-term basis.

This common feeling becomes reality through a proactive integration of the Environmental, Social and Governance (ESG) criteria in all the organisation’s departments and business choices aiming to foster sustainable impact finance initiatives by providing innovative advisory, and management support services.

ESG Considerations

A proprietary ESG investment process has been implemented and integrated within the portfolio management process.

Before investments are performed by the appointed Investment Manager, each single target investment has to be assessed via the ESG Score Card, which takes into account qualitative and quantitative metrics for the ESG segments. Each Target Fund is rated in a range from 5 (the highest) to 0 (the lowest).

The analysed Target Fund is accepted only if its overall score is higher than 3.5 over 5. No exceptions will be granted. Due diligences and active engagements are performed with the relevant fund managers to better understand the data received and access their accuracy / reliability.

Data from all the Target Funds are monitored and reviewed at least once per year, including:

  1. The ESG scores;
    The ESG data received from the relevant fund managers, which are used to assess if the underlying investments are still compliant with the requirements of the Sub-Fund;
  2. The Sustainable Development Goals (SDG) mapping which represents the breakdown of the portfolio showing the percentage of alignment to each SDG. At portfolio level, the ESG scores of each issuer are attributed according to the weight of the issuer in the portfolio. The Investment Manager assesses the overall ESG rating of the portfolio by following the above mentioned ESG calculation methodology and by applying the abovementioned thresholds.

The Investment Manager monitors the ESG score of its investment portfolio, both at single security level and on an aggregate basis. ESG scores on each individual investment are taken into consideration alongside the traditional criteria of analysis and evaluation: this means that the Investment Manager ensures that its financial portfolios are financially efficient and as much sustainable as possible.

The sustainability risks that the Sub-Fund may be subject to are likely to have an immaterial impact on the value of the sub-fund’s investments in the medium to long term.

The Investment Manager is furthermore committed to implement one or more of the following methods within its investment strategies or investment processes, and therefore monitors the extent of the application of these methods in the underlying funds:

  1. Positive selection: the investor actively selects the companies in which to invest. This can be done either by following a defined set of ESG criteria or by the best-in-class method (where a subset of high performing ESG compliant companies is chosen for inclusion in an investment portfolio), or using a norms-based screening that allows investors to assess the degree to which each asset in their portfolio respects ESG criteria by adhering to global norms on environmental protection, human rights, labour standards and anti-corruption.
  2. Engagement and voting: investment funds monitoring the ESG performance of all portfolio companies and leading constructive shareholder engagement dialogues with each company to ensure progress, also through strategic voting by shareholders in support of a particular issue, or to bring about changes in the governance of the company.
  3. Exclusion: the removal of certain sectors or companies from consideration for investment, based on ESG specific criteria.
  4. ESG integration: the inclusion of ESG risks and opportunities into traditional financial analysis of equity and bonds/debt instruments value.
  5. Sustainability themed strategies and impact investing: strategies that include a variety of themes, which allows investors to choose specific areas of investments, typically with a close link to sustainable development. Impact investing concerns strategies focused on assets that have a positive measurable impact on environment or society.

 

Sustainability risk policy
FIA AM vision is being a sustainable investment firm that takes responsibility for its actions and engagements, as a member of society with its own impact on the planet and on people, but also as a provider of financial services with an indirect impact through the activities of its clients and investments. The mission will be achieved by fully incorporating sustainability into the investment firm’s daily business, and by bolstering the investment firm’s sustainability risk management. Download the detail
Principle Adverse impacts
Given the nature of the Sub-Fund as a fund of funds, and the lack of data from underlying vehicles, it is impossible to consider the PAI for the time being. As soon as the underlying vehicles will communicate on their own PAI, FIA AM will collect and consider them as negative effects on sustainability factors
CERTIFIED MEMBERS OF THE B-CORPORATION COMMUNITY
As an acknowledgment of our responsibility and transparency as well as years of work towards high standards of social and environmental performance, we are certified members of the B-Corporation movement and a pioneer in the world of sustainability with regards to the european financial and insurance sector. By meeting the highest standards of verified public transparency, consideration of stakeholder interests and legal accountability, we aspire to use the power of markets to successfully address social and environmental problems.
FINANCIAL SKILLFULNESS IN SERVING A NEW ECONOMY
We believe that, now more than ever, the financial industry cannot possibly only look at short-term benefits and the maximization of profit, without paying attention to the paths that lead to the result. Therefore, we put our deep financial expertise in the areas of assets and funds management and of wealth planning and insurance brokerage at the service of a new economy, enabling social and environmental initiatives to generate sustainable impact
STANDING OUT WITH INNOVATIVE SOLUTIONS
Our ability in keeping with the highest standards of ESG criteria is attested by certifications and international recognitions our innovative solutions continuously achieve in both areas of asset and funds management. Among the first to have been awarded the LuxFlag ESG Label, our pure SRI fund SELECTRA Best of SRI Balanced is amidst the 11 first SRI funds to be displayed in the Luxembourg Green Exchange (LGX) fund window a proof of security and transparency for investors.
BUILDING TRUSTWORTHY RELATIONS
As for us business and sustainability are to be considered as two faces of the same coin, we have developed GreenEthica, a new operational unit dedicated to sustainable and responsible finance. The expertise of the various companies of the Group in the areas of asset and funds management, wealth planning and insurance brokerage is now unified, through GreenEthica, to devise and propose a wide range of cutting-edge financial solutions and instruments that move capital towards a more responsible economy. Different by nature, the entire range of SRI-related services offered by FARAD Group via GreenEthica are all based on the synergy of a solid internal know-how in the field of sustainable finance and characterized by wide flexibility and high levels of customization.