Sustainability is an integral part of the 1741 group’s corporate culture.

As an independent group of companies, our understanding of sustainability is to take decisions with regard to society and social economy which are in line with the expectations from society, our partners, the financial centre and, last but certainly not least, the investors.

However, sustainability also means to choose carefully and to reject short-term economic success in order to ensure growth in the long term.

The stakes could not be higher, given that the environmental, social and societal future of all is at risk.

  • For you as our partners.
  • For our investors.
  • For all of us.

In order to have success in the long run, we have integrated sustainability into different fields:

  • The implementation of internal processes,
  • With regard to third parties, in particular with regard to the selection of our business partners, and
  • With regard to clients and their needs for sustainable products and services.

With flexibility and a clear focus on service, we continue to develop and grow at all levels for you!

 

Know-how

It is part of the 1741 group’s corporate culture that we rise to the regulatory and corporate challenges ahead of us and that we strive to transform these challenges into opportunities. As regards the new EU/EEA provisions on sustainability and ESG issues, we recognise the associated challenges and any issues in terms of their implementation. At the same time, however, we regard them as an opportunity to rise to and meet these challenges together with our current and future partners. We firmly believe that sustainability can provide added value for funds and, in doing so, a hitherto undefined and partly misleading term can obtain a clear meaning. If this happens, sustainable investment will be so much more than just a marketing term.

Reporting

We are convinced that the interesting topic of sustainability will continue to undergo a dynamic development in the next few years. Currently, we are meticulously preparing for this future and are looking forward to developing solutions for the needs and wishes of our partners and their investors. These may relate either to the provision of required data for their own regulatory reporting requirements or to the provision of sustainability solutions tailored to the needs of each client. As your partner, we will always be at your service.

Proxy voting

With regard to proxy voting, our active commitment as your AIFM and/or your UCITS management company is our primary goal. Even if, compared with the large providers in the funds sector, we regard ourselves as a small and independent niche provider for the time being, the voting rights exercised by our partners and/or their investors at various companies and/or funds are in some cases extensive. In this connection, the consideration of sustainability criteria is becoming ever more important. We therefore believe that one of our most important duties is to assist you in the process of collecting information with regard to the question as to whether the portfolio companies comply with generally accepted social responsible investment (SRI) or ESG policies and whether these companies adhere to responsible business conduct.

 

Transparency information pursuant to the Disclosure Regulation (Regulation [EU] 2019/2088)

 

(1)  SFDR Disclosure Regulation

REGULATION (EU) 2019/2088 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November 2019 on sustainability-related disclosures in the financial services sector:
SFDR Disclosure Regulation.pdf

The Sustainable Finance Disclosure Regulation (SFDR) serves as foundation for the harmonisation, across the EU/EEA, of information to end investors on the integration of sustainability risks, on the consideration of adverse sustainability impacts and sustainable investment objectives or on the promotion of environmental or social characteristics in investment decisions (and in the advisory processes). It requires financial service providers to disclose their management and integration of sustainability risks in investment decisions on their websites and in information on financial products/funds, such as in prospectuses and in annual reports.

The Regulation has already entered into force in the European Union. It thus already has impacts on Liechtenstein funds which are sold across the EU. In Liechtenstein, the EEA incorporation process in respect of the Sustainable Finance Disclosure Regulation has not yet been completed, which is why it is not yet directly applicable (it being an EU Regulation, no transposition in Liechtenstein is required, and after its incorporation, it will be directly applicable).

(2)  Taxonomy Regulation

REGULATION (EU) 2020/852 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 18 June 2020 on the establishment of a framework to facilitate sustainable investment:
Taxonomy Regulation.pdf

The Taxonomy Regulation constitutes the actual framework and, in particular, includes targets in the field of sustainability objectives. It thus serves as foundation for the significant actual challenge for market participants which is the classification of sustainable conduct and/or investment and their translation into concrete information.

(3)  Level II Draft (the actual implementing provisions)

Final report on draft Regulatory Technical Standards with regard to the SFDR Disclosure Regulation:
Final Report Transposition Provisions.pdf

The Level II Standards elaborate the provisions set forth in the SFDR Disclosure Regulation in detail. This elaboration is likely to have the most significant effect on the concrete implementation by the market participants in the future, given that the disclosure requirements and the standards for the assessment of significant adverse impacts are very specific.

No applicable national provisions such as guidelines have been enacted in Liechtenstein to date, because even the Liechtenstein FMA is waiting for further details from the EU Commission at Level II.

 

ESG communication with our partners

In light of the fact that the current ESG provisions concern not only us in our capacity as an AIFM and UCITS management company but, specifically, also all financial market participants who, by delegation, make investment decisions for the funds under our management, we have decided to engage in very open and cooperative communication. We want to share our ESG know-how both with our current partners and with our future partners and, for this purpose, we have drawn up and sent an initial information letter. In doing so, we want to engage in a continuous dialogue on how to deal with the new ESG provisions.

1741_EU-Sustainability-Provisions.pdf
1741_ESG-Policy.pdf

Consideration of sustainability risks in investment decisions pursuant to article 3 of the SFDR Disclosure Regulation

One of our prime principles as an AIFM and/or UCITS management company is to assume the responsibility to always act in the best interests of the investors and in compliance with the legal provisions, while ensuring the integrity of the market. We are convinced that the integration of sustainability risks in the investment process generally constitutes a contribution to creating long-term values for investors. Against this background, we can report with great pride and conviction that all of our funds, and in particular those under the management of our partners as external managers, have always integrated sustainable success as a core principle of the investment strategy.

Sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment. As a general rule, sustainability risks are not deemed to be an independent type of risk. Rather, they represent a certain aspect of known types of risks, such as market risks, credit and counterparty risks, liquidity risks, legal risks, reputational risks and operational risks. A lack of regard to or an inadequate integration of ESG criteria by issuers of assets can have a particularly adverse impact on the assets and finances, the creditworthiness, the reputation and the business model of the issuer. This can result in a significant deterioration of the financial profile, liquidity, profitability or the reputation of investments concerned and thus have an adverse impact on the rate or the return of the relevant investment. Even a total loss can occur. Sustainability risks can thus also have a negative impact on the performance of funds. As an AIFM and as a UCITS management company, we have made sure that the asset managers for the investment decisions of the funds under their management and our company for those funds for which the 1741 group itself makes the investment decisions have always taken into consideration sustainability risks in investment decisions to the extent required by the law and in the respective investment processes.

In close cooperation with our partners we will now analyse the new ESG provisions with regard to their implementation and will add the relevant indicators. For any investment decisions in the future, the focus will be increasingly on companies which meet their responsibility to disclose the relevant ESG indicators. This applies both to companies with more than 500 employees which are required to disclose certain criteria and to small-sized and medium-sized companies with investments in private equity.

Integration of sustainability risks at the corporate level of the 1741 group

Due to the business model of the company as an AIFM and as a UCITS management company which delegates the investment decisions most of the times to asset managers authorised for this purpose, principal adverse impacts of investment decisions on sustainability factors can be considered in various ways. Lots of our asset managers are currently working on concepts dealing with the consideration of adverse sustainability impacts. One of the decisive factors is to what extent data on issuers which are required to determine and weigh the adverse sustainability impacts are available on the market to a sufficient extent and in the required quality. In some cases, adverse sustainability impacts have currently already been integrated into the portfolios of external asset managers due to their processes. We will have to consult with external asset managers outside the scope of the Regulation, most of whom are based in Switzerland, how they will implement article 4 of the Disclosure Regulation. We are currently consulting with our respective partners in this regard.

Integration of sustainability criteria in the remuneration policy of the 1741 group

We have incorporated the integration of sustainability risks into our policy and processes, and their compliance is part of our remuneration policy. In close cooperation with our board of directors we will implement further details on the management of sustainability risks in our remuneration policy for the year 2021.

ESG policy and ESG impact products pursuant to articles 8 and 9 of the SFDR Disclosure Regulation

As an AIFM and a UCITS management company we are currently managing collective investment undertakings with different investment strategies and investment objectives.

(Sub) funds where ESG factors (at least in part) are an integral and predominant part of the investment process, i.e. ESG policy products, are called article 8 products.

(Sub) funds which have sustainable investment as their objective, i.e. which make a contribution to achieving certain environmental or social objectives, which contribution is measured by means of sustainability indicators, i.e. ESG impact products, are called article 9 products. These funds are under intensified disclosure and reporting requirements.

The 1741 group will be happy to advise and assist you in the launch of one of the article 8 or article 9 funds mentioned above which may be promoted as sustainability funds with the relevant promotion material.