Explanation on Managing Sustainability Risks
EURAMCO provides access to high-quality real asset investments and manages them over the long term. The incorporation of ESG criteria (Environmental, Social, and Governance) into our risk and portfolio management processes creates social and economic value, while simultaneously mitigating reputational, financial, and operational risks.

The consideration of sustainability risks, which refers to an event or condition in the areas of Environmental, Social, or Governance (ESG) that could have a potentially significant negative impact on the value of the investment, is an important part of our investment strategy. For each potential product offering of EURAMCO, the consideration of sustainability risks is integrated as a fixed element in the investment process.

In the detailed pre-contractual analysis and due diligence process, both internal and external experts gather insights into potential sustainability risks in the areas of Environmental, Social, and Governance. These insights are factored into the investment decision. The due diligence areas include, among other things, the tenant structure of a building, technical reports, and, if necessary, additional environmental assessments. Legal and tax aspects of a transaction are also considered, as well as the auditing process for an investment object, whether it is acquired as an asset or through a share deal.

Sustainability risks are not examined separately but are reflected in the dimensions monitored in risk management. Examples include: counterparty default risk, market (price) risk, liquidity risk, operational risk, insurance risk, strategic risk, reputational risk, and more. These risks are analysed in terms of their impact on the potential project return and the potential return range.

The analysis results enable EURAMCO Invest GmbH to make a fact- and data-based decision for each project. In doing so, the asset management company EURAMCO Invest takes sustainability risks into account in its investment analyses, for example, the energy efficiency of a building, and discloses these risks in its offerings to investors.

Sustainability risks are not specifically regulated in the remuneration policy of EURAMCO Invest GmbH. Any success-related bonuses for individual employees are always tied to the achievement of personal goals and other company objectives. Therefore, employees have an incentive to avoid sustainability risks, as their occurrence could potentially worsen the economic outcomes of individual projects and thus hinder the achievement of goals.

Explanation on the Consideration of Negative Impacts of Investment Decisions on Sustainability Indicators

EURAMCO’s goal is to minimise the negative impacts of our investment decisions as much as possible. Early in the due diligence process, energy efficiency certificates and reports are requested for all potential properties, for example, in order to create the most comprehensive data base as a basis for decision-making. For new builds, compliance with all relevant regulatory requirements concerning construction and energy matters is verified. For older existing properties, processes are also initiated to identify renovation potential aimed at reducing negative sustainability impacts. If such potential exists, it is assessed from a financial perspective and, if possible, realised. This way, we create sustainable value for our investors
and all stakeholders of our fund properties.

The construction of real estate is a highly energy-intensive process. Additionally, new buildings on previously unused land result in the sealing of soil surfaces, which can have a negative impact on the water cycle and ecosystems. The negative ecological impacts of buildings cannot be fully prevented in the construction industry, but we see it as our responsibility to minimise these effects as much as possible. Therefore, the focus of our sustainability policy is on the efficient use of properties and taking measures that promote such efficiency.

To support this process, the measures to be taken are individually evaluated and coordinated for each fund property. The key areas of control for EURAMCO are: water consumption, energy consumption/efficiency, waste management, and CO2 emissions. Furthermore, it is our goal to certify the managed properties with a meaningful label in the respective country (e.g. DGNB in Germany, LEED in the USA, or NABERS in Australia) to gain certainty about their current status.

Especially for existing properties, EURAMCO cannot influence the sustainability efforts of previous owners and other third parties and relies on information from these business partners for its own sustainability reporting. In some cases, EURAMCO holds shares in property companies. However, in these cases, no co-determination rights are exercised in accordance with Regulation 2007/36, as the investee companies are not listed public limited companies.

Investing in renewable energy facilities (wind and solar energy) is aimed at contributing to the protection of the climate and environment and achieving the Paris Climate Agreement goals. Through investments in renewable energy facilities, we positively contribute to a sustainable economy by accelerating the transition away from fossil fuel-based energy production.

Despite the considerable positive aspects of renewable energy, negative impacts on sustainability indicators could also arise with such investments. To minimise these as much as possible, key aspects have been identified that must be considered and managed within the scope of an investment. In principle, no investments are made in offshore facilities in order to prevent any impact on marine ecosystems. In the field of solar energy, the main focus is on the land used. So far, we have successfully managed to use only conversion areas from former military use for the operation of the facilities. While the use of such areas will still be pursued in the future, it may not be possible from an economic or technical perspective. For both wind and photovoltaic installations, a thorough review of all technical and environmental permits and reports is firmly integrated into the due diligence process. These reports include assessments of landscape, bird, and water protection areas, as well as reports on noise development and shadow casting.

EURAMCO Invest ensures compliance with internationally recognised standards for proper corporate governance. These include the OECD Guidelines for Multinational Enterprises, the UN Guidelines for Business and Human Rights, as well as the core principles of the International Labour Organization. EURAMCO is committed to fulfilling its due diligence obligations regarding sustainability-related information in all due diligence and reporting processes.

In addition to the internationally recognised standards for social issues and good corporate governance, EURAMCO has implemented internal measures to ensure the effective implementation of proper corporate governance. Implementation plans for key regulatory frameworks (e.g., the Capital Investment Act, AIFM Level 2 Regulation, KAMaRisk, KAIT) have been developed to provide employees and executives with a means to constantly check their actions for legal compliance. Furthermore, all employees and executives are regularly trained in compliance by designated staff. The compliance training covers, in addition to anti-money laundering prevention, the handling of sensitive (investor-related) data and conflicts of interest, the prevention of personal transactions, and the dedicated whistleblower process, which guarantees anonymous and secure handling.

Beyond the regulatory requirements, other essential aspects are outlined in our company vision. We maintain a leadership style that fosters professional and personal development through an open feedback culture. By providing employees with the freedom to act, we create new perspectives that are crucial for ensuring long-term corporate success. Mutual respect, along with consistent, authentic, and reliable actions, ensures that our investors and business partners can rely on us.

• PAI Statement 2023
• Strategie zur Berücksichtigung von PAI