sustainability-related disclosures - european real estate fund

Summary

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

As a fund of funds, this financial product invests in investment funds controlled by other investment managers. This financial product promotes environmental and social characteristics, via the following:

In the selection of the investment managers themselves (measured by the ESG scorecard) and the investment strategies they implement (measured by the ESG scorecard and the IMP scorecard); and
By engaging with these investment managers on the implementation of ESG practices in their investment and management decisions.

This financial product aims to deliver a long-term target return equal to or higher than the INREV ODCE Consultation Index.
This financial product invests at least 80% of its assets in investment funds of which the investment managers have been assessed on ESG and which have an ESG rating of "Professional" or "Leader".
This financial product invests at least 50% of its assets in investment funds assessed with an “A”, “B” or “C” IMP label.
This financial product only invests in investment funds that have signed with the GRESB or have provided a clear commitment to participate. The GRESB initiative enables investment managers to show yearly progress on the most important ESG metrics and provides a strong basis for engagement.
These binding elements only apply to the investments of this financial product to which Anthos' ESG/IMP framework applies. This ESG/IMP framework does not apply to instruments that this financial product invests in for hedging or liquidity purposes.

This financial product does not invest directly in investee companies. This financial product invests indirectly in real estate assets, through its direct investments in external investment funds. Anthos expects the investment managers of those investment funds to assess good governance practices and Anthos monitors whether those investment funds have a policy on governance issues through the GRESB reporting, and the GRESB scores on process to implement governance policies and governance risk assessment.

This financial product does not seek but may invest a part of its assets in external investment funds that qualify as sustainable investments with environmental or social objectives. This financial product aims to invest a minimum of 80% of its assets in external investment funds that are aligned with environmental or social characteristics but that do not - necessarily - qualify as sustainable investments. Examples of investments of this financial product that are included under "Other" are external investment funds whose investment managers have received an ESG rating of "Novice", investment funds with an IMP label "M/D" and investment funds that are classified as an article 6 SFDR financial product. Furthermore, this financial product may from time to time hold cash and money market instruments for liquidity management purposes and derivatives for hedging and efficient portfolio management purposes.

For each of the investment funds that this financial product invests in, the investment managers’ environmental, social and governance practices are evaluated in a scorecard developed by Anthos, based on the UN-backed Principles for Responsible Investment Due Diligence Questionnaires (PRI DDQ), the OECD Guidelines for Institutional Investors and the GRESB framework for Real Estate. The outcome of the scorecard consists of an IMP assessment and an ESG rating, that Anthos uses to measure the attainment of the E/S characteristics promoted for this financial product. The ESG and IMP composition of this financial product is monitored and reported to investors on a quarterly basis. As a safeguard of this financial product’s ambition, Anthos also monitors the SFDR financial product classification of the investment funds that this financial product is invested in.

The ESG rating and IMP label is the result of an internal assessment performed by the Anthos portfolio managers and their analysts, based on the relevant information shared by the external investment managers themselves during the RFP phase or during engagement conversations that take place at least on a yearly basis.

The Anthos portfolio managers have to provide a write up on an investment fund's responsible investment practices prior to making the decision to have this financial product invest in such investment fund.

As a fund of fund manager, Anthos invests in segregated mandates and investment funds managed by external investment managers, and it relies on these external investment managers for engagement and voting in connection to the investee companies. However, Anthos believes it also needs to address active ownership through additional engagement activities, either via a service provider or, where possible, directly. This enhances investor stewardship and the pursuit of responsible investment.

1. No sustainable investment objective

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

2. Environmental or social characteristics of the financial product

What does promoting environmental & social characteristics mean for funds of funds?
As a fund of funds, this financial product invests in investment funds controlled by other investment managers. This financial product promotes environmental and social characteristics, via the following:

In the selection of the investment managers themselves (measured by the ESG scorecard) and the investment strategies they implement (measured by the ESG scorecard and the IMP scorecard); and
By engaging with these investment managers on the implementation of ESG practices in their investment and management decisions.

This financial product promotes both environmental and social characteristics by aiming to invest in investment funds with investment managers that have excellent Environmental, Social and Governance (ESG) practices integrated in their investment process with well-developed or developing engagement or stewardship approaches.

3. Investment strategy

This financial product aims to deliver a long-term target return equal to or higher than the INREV ODCE Consultation Index. This financial product will invest indirectly in real estate, by participating in unlisted and listed real estate investment funds. This financial product invests predominantly in unlisted real estate investment funds and will adopt a core+ investment theme. It will seek to achieve target returns through strategic allocation based on market analysis and manager selection. Core funds are the basis of the strategy, supplemented by very selected value-add and opportunistic strategies and listed real estate investment funds.

It promotes environmental and social characteristics:

In the selection of the investment managers themselves (measured by the ESG scorecard) and the investment strategies they implement (measured by the ESG scorecard and the IMP scorecard); and
By engaging with these investment managers on the implementation of ESG practices in their investment and management decisions.

As a fund of funds, this financial product invests in investment funds controlled by other investment managers. Promotion of environmental and social characteristics is achieved by selecting investment managers that have excellent Environmental, Social and Governance (ESG) practices integrated in their investment process with well-developed or developing engagement or stewardship approaches. The Anthos Responsible Investment policy, Anthos Positions and Exclusions policy and Anthos Stewardship policy apply to this financial product.

This financial product invests at least 80% of its assets in investment funds of which the investment managers have been assessed on ESG and which have an ESG rating of "Professional" or "Leader".

This financial product invests at least 50% of its assets in investment funds assessed with an “A”, “B” or “C” IMP label.

This financial product only invests in investment funds that have signed with the GRESB or have provided a clear commitment to participate. The GRESB initiative enables investment managers to show yearly progress on the most important ESG metrics and provides a strong basis for engagement.

These binding elements only apply to the investments of this financial product to which Anthos' ESG/IMP framework applies. This ESG/IMP framework does not apply to instruments that this financial product invests in for hedging or liquidity purposes.

4. Proportion of investments

This financial product does not seek but may invest a part of its assets in external investment funds that qualify as sustainable investments with environmental or social objectives. These external investment funds are considered as sustainable investments when the following criteria are met:
1. SFDR classification: the external investment fund is classified as an article 9 SFDR financial product; or/and
2.a. Objective: the external investment fund has a sustainable objective;
2.b. ESG rating: the investment manager of the external investment fund is rated either as a "Professional" or a "Leader";
2.c. IMP label: the external investment fund has an IMP label of "B" or "C";
2.d. DNSH: the underlying investments of the external investment fund do not significantly harm (DNSH) its sustainable investment objectives. The investment manager of the external investment fund must demonstrate to Anthos, by using one or more of the PAI indicators stated in Annex I of the SFDR regulatory technical standards, that the underlying investments do not significantly harm the sustainable investment objective. DNSH is also implicitly included in the ESG scorecard assessment, under Exclusions and Negative impact questions, as well as the IMP scorecard assessment, under B and C score guide.

This financial product aims to invest a minimum of 80% of its assets in external investment funds that are aligned with environmental or social characteristics but that do not - necessarily - qualify as sustainable investments.
These external investments funds are considered as investments aligned with environmental or social characteristics that do not qualify as sustainable investments when all of the following criteria are met:

SFDR classification: the external investment fund is classified as an article 8 SFDR financial product. In case the external investment fund itself does not report on its SFDR classification, it receives an SFDR classification by Anthos;
ESG rating: the investment manager of the external investment fund is rated either as a "Professional" or a "Leader"; and
IMP label: the external investment fund has an IMP label of "A", "B" or "C".

Examples of investments of this financial product that are included under "Other" are external investment funds whose investment managers have received an ESG rating of "Novice", investment funds with an IMP label "M/D" and investment funds that are classified as an article 6 SFDR financial product. Their purpose is to contribute to the investment objective of this financial product.
Furthermore, this financial product may from time to time hold cash and money market instruments for liquidity management purposes and derivatives for hedging and efficient portfolio management purposes.

As a minimum environmental/social safeguard, this financial product only invests in external investment funds that have signed with the GRESB or have provided a clear commitment to participate. The GRESB initiative enables external investment managers to show yearly progress on the most important ESG metrics and provides a strong basis for engagement.

5. Monitoring of environmental or social characteristics

Anthos assesses all investment funds that are considered for this financial product on responsible investment practices and key ESG characteristics prior to investing, using its proprietary tools (ESG and IMP scorecard). This financial product seeks to invest primarily in investment funds with investment managers that have an ESG rating as "Professional" or "Leader" and with an IMP label "A" (Act to avoid harm), "B" (Benefit stakeholders) or "C" (Contribute to solutions). The ESG and IMP composition of this financial product is monitored and reported to investors on a quarterly basis.

In addition to this, Anthos engages on a regular basis with the external investment managers on the components of the ESG scorecard to:
a) ensure the ESG rating correctly reflects the responsible investments practices of the investment manager; and
b) signal the importance of responsible investing, highlight Anthos' expectations about key ESG characteristics (for example, Climate Change, DEI and Human rights) and monitor the progress made against Anthos' expectations.

The ESG+IMP scorecard is updated at least once a year to reflect the outcome of the engagement conversations between Anthos and the external investment managers.

6. Methodologies

What do we use to measure the attainment of the environmental or social characteristics promoted for this financial product?
For each of the investment funds that this financial product invests in, the investment managers’ environmental, social and governance practices are evaluated in a scorecard developed by Anthos, based on the UN-backed Principles for Responsible Investment Due Diligence Questionnaires (PRI DDQ), the OECD Guidelines for Institutional Investors and the GRESB framework for Real Estate. The outcome of the scorecard consists of an IMP assessment and an ESG rating, that Anthos uses to measure the attainment of the E/S characteristics promoted for this financial product. As a safeguard of this financial product’s ambition, Anthos also monitors the SFDR financial product classification of the investment funds that this financial product is invested in.

Anthos is assessing how to incorporate PAI indicators (for example carbon footprint, exclusion exposures, controversies exposures) in its investment decision making process, for example by obtaining “look-through” PAI indicator data from the external investment fund’s underlying investments. In the future, such data may be used to measure the attainment of the environmental or social characteristics of this financial product, for example by comparing how the PAI indicators that are considered for this financial product evolve over time. In 2022, Anthos started investigating which PAI indicator data can be obtained from external data providers and/or from external investment managers.

Impact Management Project (IMP) assessment:
This assessment shows the impact intention of the investment funds that this financial product invests in and the investor influence that the investment manager of that investment fund exercises. An investment fund can have one of the following IMP labels:

Avoid Harm (IMP label A): the investment fund seeks to improve its impact and avoid the potential negative impact it may cause or have caused.
Benefit stakeholders (IMP label B): the investment fund seeks to maintain the well-being of one or more group of people and/or the condition of the natural environment within the sustainable range.
Contribute to solutions (IMP label C): the investment fund seeks to address a social or environmental challenge not caused by the organization by improving the well-being of one or more group people and/or the condition of the natural environment so that it is within the sustainable range.
May/Does cause harm (IMP label M/D): If the investment fund does not have an impact intention, it is classified as ‘May/Does cause harm'.

This financial product seeks to invest primarily in investment funds assessed with an “A”, “B” or “C” IMP classification.

ESG rating:
This rating shows the quality of the integration of environmental, social and governance assessments in the investment process at the investment manager. Anthos specifically looks at the following criteria:

Criteria	Explanation	Relevant Anthos Policy
Purpose & values & Industry leadership	Anthos assesses the values and purpose of the external investment manager. Anthos also assesses the industry memberships, the public commitments and the active participation or advocacy of the external investment manager.	ESG Positions
RI Policy, resources & governances allocated to RI	Anthos assesses the external investment manager’s ESG policy, targets and commitments, methodologies, due diligence process, stewardship policy, ESG tooling, RI team, etcetera.	RI Policy
Integration of ESG in investment process	Anthos assesses the ESG integration in the investment process of the fund, and more specifically which ESG topics are considered, which data are used, how ESG topics are considered in portfolio construction. Anthos also reviews the ESG monitoring process of the fund and which decisions are made.	RI Policy
Principal Adverse Impact/ Negative impact	Anthos assesses how the external investment manager evaluates, monitors, managers or remediates the impact of its investment fund’s portfolio on the world and the tools and methodologies to perform its assessment.	RI Policy
Principal Adverse Impact/ Negative impact		Anthos PAI statement
Exclusions	Anthos assesses the exclusions policy applied for the external manager's fund and to which extent it aligns with Anthos’ preferred exclusions.	Exclusion Policy
Engagement	Anthos assesses whether or not the external manager engages with the companies and or countries in the fund but also the engagement methods used, the objective defined and the metrics tracked.	Engagement Policy
Voting policies	When applicable, Anthos assesses the voting policy of the external investment manager, how it is applied to the external manager's fund and to which extent it aligns with Anthos’ ESG position.	Engagement Policy
Reporting	Anthos assesses whether the external investment manager reports on ESG factors for the fund, using qualitative and/or quantitative metrics, in alignment with relevant standards.	RI policy
Manager’s approach on DEI	Anthos assesses whether the external investment manager incorporates diversity, equity and inclusions (DEI) considerations for itself as well as in its investment funds. Anthos reviews the DEI programs, targets and commitments, engagement on DEI and reporting available.	ESG positions
Manager’s approach on climate change	Anthos assesses whether the external investment manager incorporates climate change considerations for itself as well as in its investment funds. Anthos reviews the climate positions, the commitments and reduction targets, the associated strategy, the assessments of the climate risks, the engagement initiatives on climate, data transparency and the reporting available.	Climate Position Paper
Impact Intention	Anthos assesses whether the external investment manager has the intention to avoid to cause harm, or to benefits stakeholders or contribute to solutions in its investments practices.	Anthos Positive and Impact Investment
Impact Influence	Anthos assesses the strategies used by an investor as a set of tactics to support investee’s impact management and performance improvement.	Anthos Positive and Impact Investment

An investment manager can have one of the following ESG ratings: "Laggard", "Novice", "Professional" or "Leader". An investment fund with an investment manager that has an ESG rating of "Professional" or "Leader" will have strong governance policies and requirements, will include sustainable risk assessment as a part of the investment process and will have a developed stewardship approach.

This financial product seeks to invest primarily in investment funds with investment managers that have an ESG rating as "Professional" or "Leader".

The SFDR financial product classification of the investment funds:
Anthos monitors whether and how the investment funds in which this financial product invests report their classification under SFDR. An investment fund can classify itself as article 6 (no sustainable investment objective or promotion of E/S characteristics), article 8 (promotion of E/S characteristics) or article 9 (sustainable investment objective) SFDR financial product.

This financial product seeks to invest primarily in investment funds that classify as article 8 or article 9 SFDR financial product, when an SFDR classification is available.

Climate change:
For this financial product, Anthos also monitors the impact on climate change. Anthos uses data from MSCI to assess the carbon footprint and GHG intensity of its portfolios. Anthos has set an ambition to have Net Zero GHG emissions from all operations and portfolios by 2040 and is looking into the best ways to contribute to this by using all levers available to steer financial streams towards decarbonisation.

7. Data sources and processing

This financial product qualifies the external investment funds included in this product with an ESG rating and an IMP label, using Anthos proprietary tools. The ESG rating shows the quality of the integration of environmental, social and governance assessments in the investment process at the investment manager. The IMP assessment shows the impact intention of the investment funds that this financial product invests in and the investor influence that the investment manager of that investment fund exercises.

8. Limitations to methodologies and data

Assessing the information shared by the external investment managers may be influenced by the amount of knowledge of the Anthos staff performing the assessment on ESG practices, ESG topics, market standards, etcetera. Anthos mitigates this limitation by providing regular training to its staff, either on processes or specific topics (for example climate training and human rights workshops). The Anthos ESG & IMP scorecards are accompanied of a scoring guide which indicates which kind of requirements lead to specific ratings/labels.
The assessments are also reviewed by the Anthos Responsible Investments Team on a need basis and the tools are continuously improved to keep up with market standards.

The assessment is also much more focused on policies and processes rather than real ESG outcomes. Anthos aims to incorporate outcomes in its assessment, as external ESG and Impact data becomes more reliable and methodologies more robust.

9. Due diligence

10. Engagement policies

Anthos has high expectations of the external investment managers selected for this financial product and incorporates ESG considerations into the entire external investment manager due diligence and relationship lifecycle. Anthos expects the selected external investment managers to be signatories of the Principles for Responsible Investment (PRI) and to support the Principles of the European Fund and Asset Management Association (EFAMA) Stewardship Code or a similar guidance, which clearly outlines engagement and voting good practices for direct investors.

Internally, engagement is carried out by Anthos’s portfolio managers, who assess the ESG integration capacity and quality of the external investment managers of the investment funds that this financial product invests in. Anthos also engages via an external engagement service provider that engages on behalf of Anthos' clients, even when Anthos does not appear as shareholder at the investee companies in question. In this way Anthos gives its voice to the pool of like-minded investors wanting meaningful change.

In addition to Anthos’ own proprietary engagements, its external engagement provider engages with more than 300 companies on human and labour rights and on environmental and business ethics issues, both on Anthos' behalf and on behalf of other investors.

More information on Anthos' engagement process and objectives can be found in its Stewardship Policy.

11. Designated reference benchmark

Although a benchmark is used for comparing its financial performance, this financial product does not use a specific benchmark to determine whether it is aligned with the environmental or social characteristics that it promotes. Going forward, Anthos will keep on monitoring whether any benchmark could become relevant regarding the promotion of E/S characteristics by this financial product.