Commitment to Responsible Investing
At Avaron we believe that environmental, social and corporate governance (ESG) issues and stewardship activities are material to delivering strong risk-adjusted investment returns over the long-term. This is why we have integrated ESG analysis including sustainability risks assessment into the investment process of our Emerging Europe equity funds. Our responsible investment approach is outlined in Responsible Investment Policy. ESG analysis of companies we invest in is carried out using proprietary ESG rating methodology incorporating 17 environmental indicators, 37 social and supply chain indicators and 42 governance indicators. We also plan to integrate mandatory principle adverse impact (PAI) indicators outlined in the Sustainable Finance Disclosure Regulation (SFDR) into our ESG rating methodology to be in compliance with the SFDR according to the timeline laid out in the regulation.
Responsible Investment Policy
Responsible Investment Report 2021
UN PRI Transparency Report
Avaron Emerging Europe Fund (UCITS) – Article 8 product (light green) under SFDR
Our light green funds promote environmental and social characteristics, but do not have a sustainable investment as their main objective. All investments are made in accordance to our Responsible Investment Policy. We have integrated the consideration and management of ESG issues into the investment process by undertaking ESG due diligence on all prospective and existing investments. Our ESG integration includes on top of negative screening an in-depth ESG analysis of issuers to ensure that relevant issues are consistently taken into account when making investment decisions. Negative screening is applied based on exclusion principles laid out in the Responsible Investment Policy to avoid financing companies that are engaged in activities with clear adverse impact on people and environment. Detailed ESG analysis including assessment of sustainability risks is carried out using proprietary ESG rating methodology incorporating 17 environmental indicators, 37 social and supply chain indicators, and 42 governance indicators. It enables to assess the ESG performance of issuers providing a basis for exclusion of poor performers, and engagement needs and opportunities. Issuers with a rating below 2.0 in 1.0 to 5.0 scale are excluded.
Climate change is one of the biggest threats facing society today. This was recognized in 2015, when 195 countries signed the Paris Climate Agreement, committing countries to transition to a lower carbon economy and limit the global average temperature rise to well below 2 degrees Celsius (°C) above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 °C. At Avaron, we are strong supporters of the Paris Agreement and the disclosure recommendations of the Financial Stability Board’s Task Force on TCFD.
As responsible stewards on behalf of our clients, we expect companies’ business plans to reflect the long-term climate-related risks and opportunities they face, thus we have integrated climate-related risks and opportunities into our Investment process. In line with our commitment to the Paris Agreement we have limited our investments in coal extraction and coal-fired power generation (for further detail please refer to our RI Policy).
We commit to actively exercise our rights as a shareholder via voting at shareholder meetings and engaging – having an active dialogue – with investee companies. We maintain direct contact with companies we invest in on ESG issues and push for constant improvement. Exercise of voting rights is central to our practice of responsible investment as it enables to maintain shareholder oversight of the issuers’ policies and management. Voting activities are carried out in accordance to our Voting Policy. Since 2019 we publish detailed voting records of all our funds.
2019-2021 Voting Records of Avaron Funds
2022 Q1 Voting Records of Avaron Funds
We report on responsible investment activities annually within our Sustainability Report that besides responsible investment issues provides a broad disclosure of sustainability in Avaron. See latest Avaron Sustainability Report, UN PRI Transparency Report and Assessment Report.
Since 2011 Avaron has been the signatory of UN Principles for Responsible Investment (PRI) that are designed to encourage the integration and analysis of ESG characteristics into investment practice. On annual basis we disclose via the UNPRI Reporting Framework. Transparency Reports, publicly available also on the PRI website, show signatory responses to all of the mandatory indicators as well as responses to voluntary indicators that the signatory has agreed to make public. Assessment Reports demonstrate how a signatory has progressed in its implementation of the principles year-on-year and enable to benchmark against its peers. We have decided to make our Assessment Reports public to offer better transparency on our responsible investment efforts.