The Tareno Global Water Solutions Fund uses the following three instruments to realize the most sustainable and at the same time most attractive risk-adjusted investments around the value chain of water for its investors.
1. SUSTAINABILITY FILTER
This negative screening helps us to enforce our minimum standards. From a defined investment universe of around 150 companies, all those that do not meet the following criteria are excluded:
Exclusion of companies which do not have an ESG report from MSCI.
Exclusion of companies with exposure to the following business sectors:
Alcohol or Tobacco
Uranium or Coal Mining
Exclusion of companies which do not fulfill the UN Global Compact principles.
Exclusion of companies which are involved in severe controversies (MSCI Red Flag).
2. ESG Valuation Model
ESG stands for «Environment, Social and Governance».
The environmental, social and governance practices of a company can have a significant impact on its financial performance. Integrating ESG criteria into the investment process helps us to identify the underlying risks and opportunities of the company while at the same time achieving a positive impact on society and the environment.
We have developed a proprietary ESG model in collaboration with the Advisory Board to help us assess the ESG performance of all companies in our equity investment universe. In addition to our fundamental and technical analysis, this valuation helps us identify those companies that we believe have good and sustainable business models and the ability to create long-term value for investors.
Our model contains the following valuation criteria:
- ESG Scores
- ESG Momentum Trend
- CDP Water Management
- “Water Policy”
For more information on the individual criteria, please contact our ESG analyst, Katja Ackermann, firstname.lastname@example.org.
3. Portfolio Monitoring
We monitor on three levels:
- As responsible shareholders, we exercise our voting rights and are in regular contact with all companies in which we invest. Voting rights are exercised in accordance with the Sustainability Policy of ISS Governance. The voting report for the past year can be found here.
- We also participate in collaborative engagement activities, which are coordinated by UNPRI, for example. We concentrate on initiatives or shareholder resolutions with a focus on dimensions of sustainability and corporate strategy.
- The ESG performance and controversies of all companies in which the fund invests are continuously monitored using automated alerts. In this way, if necessary, we sell securities that no longer meet our sustainability requirements.