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LGT Capital Management Ltd. European SRI Transparency Code

European SRI Transparency Code

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Disclaimer

This document aims at fulfilling reporting requirements under the European SRI Transparency Guidelines. It does not constitute a public offering or public advertisement of any financial instruments mentioned herein. This document is not directed at recipients in any jurisdictions where the receipt of the information contained herein would be unlawful. The receipt of this information is not to be taken as constituting the giving of investment advice. Each person should make its own independent assessment and should take its own professional advise in relation to any investment product mentioned herein. Please be advised that investors should always consult the legal documentation of the investment products mentioned herein. The information contained in this document was obtained from a number of different sources. LGT exercises the greatest care when choosing the sources of information and compiling obtained information. Nevertheless errors or omissions in information obtained from different sources cannot be excluded. LGT does not assume any liability for any direct or indirect damage or loss resulting from the use of this document. This document and the information contained herein may be reproduced only with the prior written consent of LGT. To the extent that past performance of investment products is mentioned in this document please note that past performance is not an appropriate indicator for future performance.


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European SRI Transparency Code Version 3.0

The European SRI Transparency Code (the Code) focuses on SRI funds distributed publicly in Europe and has been designed to cover a range of assets classes, such as equity and fixed income. All information pertaining to the European SRI Transparency Code can be found at the following website: www.eurosif.org. The code comes with a Guidance Manual for fund managers on how to best use and respond to the Transparency Code. The present version of the Code has been approved by the Board of Eurosif on October 3, 2012. TWO KEY MOTIVATIONS UNDERPIN THIS CODE

1. The opportunity for retail SRI funds to clarify their SRI approach to investors and other stakeholders in an easily accessible and comparable format.

2. Proactively strengthen a self‐regulation that contributes to the development and promotion of SRI funds by setting up a common framework for transparency best practices.

GUIDING PRINCIPLE Signatories to the Code should be open, honest and disclose accurate, adequate and timely information to enable stakeholders, in particular consumers, to understand the ESG1 policies and practices of the fund. COMMITMENTS FROM SIGNATORIES The order and exact wording of the questions shall be respected; Responses should be informative and clear, and the resources and methodologies deployed should

be described with as much detail and precision as possible; Funds should report data in the currency that they use for other reporting purposes; Reasons preventing the fund from providing all or part of the information to a given question

should be clearly stated and, in such a case, signatories should state when they will be able to answer the question;

Responses shall be updated at least on an annual basis and should have a precise publication date; Responses to the Code should be easily accessible from the fund’s and/or fund manager’s website.

In any case, signatories should make it clear where to find the information required by the Code; Signatories are solely responsible for the answers to the questions, and should state this in their

response.

1 ESG stands for Environmental, Social and Governance.


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To clarify these commitments, signatories should include at the beginning of the response document the following two statements: Statement of Commitment Sustainable and Responsible Investing is an essential part of the strategic positioning and behaviour of LGT Capital Management. We have been involved in SRI since 2008 and welcome the European SRI Transparency Code. This is our fourth statement of commitment and covers the period 07.06.2013 to 06.06.2014. Our full response to the European SRI Transparency Code can be accessed below and is available in the annual report of the retail funds and on our web site. Compliance with the Transparency Code LGT Capital Management Ltd is committed to transparency and we believe that we are as transparent as possible given the regulatory and competitive environments that exist in the countries in which we operate. LGT Capital Management Ltd meets the full recommendations of the European SRI Transparency Code. 06.06.2013


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Code categories

Section 1. Basic Details 1 The Fund Management Company 1a Provide the name of the fund management company managing the fund(s) to which this code apply. LGT Capital Management Ltd. manages the funds to which this code apply. Contact information Address: Schützenstrasse 6 CH‐8808 Pfäffikon, Switzerland Telephone: +41 55 415 92 11 Web: www.lgt.com Marie‐Christine Mikl, MAS/FIS ESG Officer marie‐[email protected] Provide general information about The Fund Management Company managing the fund(s) to which this code apply (eg. name, address, website…). LGT Capital Management Ltd. manages the funds to which this code apply. We are the investment centre of the LGT Group for traditional asset classes and strategy solutions as well as the family office of the Princely House of Liechtenstein. 1b Describe the general approach of the fund management company with regards to how it takes environmental, social and governance (ESG) criteria into consideration. Mankind is facing major social, ecological and economic challenges, such as climate change and scarcity of resources. However, challenges also harbour opportunities, which is where our sustainability funds come into the picture. The strategic initiative «Sustainable Investing» has broad support in the LGT Group. The initiative is based on our corporate values such as long‐term value creation, independence, stability and quality. The Princely Family of Liechtenstein – owner of LGT Group – strongly backs the initiative, and has made a strategic investment in the LGT Sustainability Funds. This results in the high level alignment of investment interests between our clients, owner and staff – the like of which is unique in the banking sector. We invest in companies, organisations and countries, that stand out in terms of sustainability criteria and ensure long‐term financial value creation. We actively select themes that contribute to increasing sustainable human well‐being. We focus on three areas of sustainability «ESG”: 1) Environment – primarily comprises the consequences of climate change


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and resource scarcity; 2) Social – comprises labor and society; 3) Governance – addresses corporate management and transparency. LGT Group also engages in philanthropy. For many people – as well as for the Princely Family of Liechtenstein – using part of their assets for a good cause is a matter of genuine importance. LGT Venture Philanthropy provides the opportunity to invest capital in such a way as to achieve the greatest and most enduring social and environmental benefits. Our Venture Philanthropy experts are constantly examining suitable organizations worldwide and help investors choose and carry out their philanthropic commitment. Is the fund management company approach towards ESG criteria aligned or inspired by its corporate social responsibility approach? Yes/No. If yes, insert a link to the company’s CSR policy. If not, explain why not. Yes it is, we focus on human wellbeing and environmentally responsible behaviour both at an investment and a corporate level: http://www.lgt.com/en/lgt‐group/sustainability/ Has the fund management company signed the Principles for Responsible Investment? If yes, please insert the link to the answer to the PRI questionnaire. If not, explain why not. Yes, LGT Capital Management is a signatory of UNPRI, last year there was no questionnaire due so no link can be provided to it. Is the fund Manager a signatory or a member of other international and/or national initiatives supporting SRI practices? Please answer if you deem this information to be useful. LGT Capital Management is a member of Forum Nachhaltige Geldanlagen (FNG) and LGT Group has signed the Global Compact Has the fund management company established an ESG engagement policy? If yes, describe the policy by outlining its objectives and its methodology and/or, if it is public, insert a link to the policy. If not, explain why not. LGT Capital Management currently does not have a formal engagement policy, but portfolio managers have been practicing engagement on specific themes like child‐labour by communicating directly with the company concerned. Has the fund management company established a voting policy? If yes, describe the policy by outlining its objectives and its methodology and/or, if it is public, insert a link to the policy. If not, explain why not. Yes, LGT Capital Management takes this responsibility towards its investors seriously and votes on behalf of them, according to clearly defined criteria. Please find further details under: http://www.lgt‐cm.com/shared/.content/publikationen/$verwaltung_publikationen/voting_rights_en.pdf


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Describe how the fund management company or the group contributes to the promotion and the development of SRI. LGT Capital Management is a member of FNG and actively participates in its events, providing panelists and input. LGT Capital Management also has links to more local SRI focused groups, eg GreenBuzz to create awareness and discuss topical issues. LGT Capital Management also participates at international conferences. At a group level we provide internal courses to further the understanding of our relationship managers and investment advisors on sustainability topics. The aims are technical competence: gaining broad knowledge and in‐depth understanding of the specific fundamentals of sustainable capital investments and advisory competence: being able to confidently communicate subject‐relevant sales arguments LGT Capital Management is a signatory of UNPRI, through which it also develops and promotes SRI. 1c Describe/List your SRI products and the specific resources allocated to your SRI activities. Briefly describe the SRI fund range (number, assets under management, strategies, ...) Our SRI fund range consists of 6 different products with three equity, two bond and one multi asset class solution. In addition we manage equity and bond mandates for institutional clients. Total AuM: CHF 1.1 bn

Describe/Detail the resources allocated by the fund management company (organisation, ESG research internal/external, dedicated portfolio management team,…) and indicate where this information is available. We have developed dedicated resources in the sustainability segment with specific expertise. In doing so, we have set up a specific sustainable investment process, featuring negative exclusion criteria and positive criteria. The exclusion criteria are rigidly adhered to using a proprietary sustainability filter based on data from Asset4 for companies and Inrate for countries, supranationals and non publicly traded companies. Inrate covers a universe of approximate 50 countries and more than 100 non‐publicly traded companies or supranationals. We receive and evaluated Asste4 data for more than 4000 publicly listed companies.


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Our core analysis tool is called “ESG‐cockpit” that is an elaborated database that can be filled with various data regarding ESG‐issues. It adjusts for biases like the regional origin of the companies. Therefore we put our trust in the expertise of internal and external investment experts with many years of experience in the sustainability sector. Furthermore we have also set up an ESG Committee with associated sub‐committees which reviews the process and the strategy behind our sustainable investments. A designated ESG officer promotes and coordinates best practice within the firm, partner‐level champion provides strategic direction for the firm's ESG initiatives and represents this strategy on the executive management team. The seven‐member ESG committee coordinates the development of policies/procedures across investment management, reporting and client service. This committee meets quarterly/semi‐annually and reports to the executive management team. The ESG subcommittees for each business unit ensure that detailed topics are discussed among the relevant participants and decisions, eg on single security issues, can be taken rapidly

ESG Committee

Sub CommitteePrivate Markets

Sub CommitteeLiquid Alternatives

Sub CommitteeMAS/FI

Alternative InvestmentCommittee (AIC)

Executive ManagementTeam (EMT)

Tasks Members

ESG Committee Decision taking or delegation to EMT

Coordination of ESG activities within new CP

Securing information flow between sub committees and upstream to EMT

Communication & reporting

Secure support for client service

Meets quarterly / as needed

Tycho Sneyers (Chairman)

Werner von Baum (ESG officer LA, risk management)

Cem Meric (PE, investment management)

Jim Kosters (ESG officer, BUD)

Robert Schlachter (PE investment controlling)

Marie‐Christine Mikl (ESG officer, MAS/FI)

Susanne Kundert (MAS/FI)

Guests (ad hoc): external experts, relevant LGT members e.g. Ursula Finsterwald, Oliver Karius

Sub Committee MAS/FI

Decision taking (e.g. approval of out‐of‐coverage titles and exclusions) or delegation to ESG committee

Coordination of ESG activities within sub committee

Information flow upstream to ESG committee

Development of policies/procedures/tools

Meets quarterly / as needed

Marie‐Christine Mikl (ESG officer, MAS/FI)

Marcel Dillier (KAM)

Andrea Ferch (fund selection)

Marc Gonzales (MAS)

Susanne Kundert (FI)

Christian Scherrer (equities)

Please note that these committees presented here are the structures which are currently operational, after the announcement of the future merger of LGT Capital Management into LGT Capital Partners. The legal merger has not been completed yet, but operationally the changes have taken effect. The dedicated ESG portfolio management team is as listed below:


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Name

Susanne Kundert

Philippe Ebinger

Daniela Fischli

Christian Scherrer

Ralf Piersig

Marc Gonzales

Manfred Hofer

Investment experience

12 years

5 years

6 years

10 years

7 years

7 years

16 years

Function

Head Sustainability Fixed Income

Investment Analyst Fixed Income

Portfolio Manager Sustainability Fixed Income

Portfolio Manager Sustainability Equity

Portfolio Manager Sustainability Equity

Portfolio Manager Sustainability Equity & Multi‐Asset Class

Senior Investment Analyst Multi Asset Class & Equities

With LGT since

August 2009

June 2008

November 2010

May 2007

May 2006

October 2007

December 2004

1d Describe the content, frequency and resources allocated/used by the fund management company to inform investors about the ESG criteria taken into account. Factsheet Snapshot Full prospectus Simplified prospectus

- Annual report (only available in German) - Semi‐annual report (only available in German) - Monthly fund factsheets

- In our quarterly reporting we compare the ESG portfolio quality (corporates) with the benchmark in

order to have an indication on the impact on society and environment (see example below with data as of 30 September 2012). ESG data is based on our proprietary ESG framework and sourced from Asset4. On all three pillars ESG performance is well above the benchmark.


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The SRI Fund(s) 1e Provide the name of the fund(s) to which this Code applies and its (their) main characteristics. Describe the main characteristics of the fund(s): geographical focus, asset class, SRI strategy used (use the classification provided by Eurosif/EFAMA). LGT Sustainable Impact Multi‐Asset Class Fund (EUR) / (CHF) ISIN: LI0106893162 / LI0106893212 Portfolio Manager: Marc Gonzales, BSc The LGT Sustainable Impact Multi‐Asset Class Fund (CHF) is an actively managed portfolio, which invests in a broadly diversified range of money market instruments, bonds and equities around the world. The investments cover a range of different currencies and a balanced mix of fixed‐income investments and equities is strived for. The broad diversification aims at achieving an optimised long‐term risk‐return ratio. The fund's strategic asset allocation also contains sustainable asset classes including micro finance and green real estate. All investments are selected for their sustainable value creation and improvement to human well‐being. 1f What is (are) this (these) fund(s) trying to achieve through taking into account ESG criteria? For instance, financing a specific sector, reducing risks, support better CSR practices, develop new value creation opportunities, other objectives. If part of the fund(s) assets is invested in unlisted organisations with high social, community or impact investing relevance, please specify. ESG information (Environment, Social, and Governance) helps us understand our investments more holistically and identify issues and related risks and opportunities arising from the sustainability megatrend: Environment: emission reduction, energy efficiency, waste disposal, lack of resources, biodiversity etc. Social: health and education, population growth and an ageing population, consumer behaviour etc. Corporate Governance: Transparency and supervision, responsibility and liability etc. These topics will feature in politics and the economy in equal measure over the coming years. Many companies have been involved with the topic “sustainability” for several years. They have recognised this will improve the long‐term competitiveness in the future and competitive advantages can be achieved. Only companies, countries and regions that apply sustainable principles will survive in the market over the long run. In addition to these fundamental considerations, numerous academic studies show a positive relationship between sustainability and profitability. In over 50% of the cases, the concept of sustainability had a positive effect on performance. The reasons for this positive effect are factors like a holistic risk management, lower costs, more transparent corporate governance, better reputation, greater innovation potential and a better quality of the management.


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Positive Neutral‐Positive

Neutral Neutral‐Negative

Negative0%

10%

20%

30%

40%

50%

60%

Relation between sustainability and performance (summary of 36 studies, source: Mercer 2009)

We are convinced that sustainable management will continue to gain in importance. Due to this development there are new investment opportunities in the global financial markets which we want to make use of with our sustainable funds. Part of our funds are invested in Microfinance funds. Microfinance aims to provide small loans to individuals and small businesses in developing countries to enable entrepreneurial activity.


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Section 2. Approach to ESG Evaluation of Companies 2a What fundamental principles underlie the ESG research methodology? Describe the principles, standards or norms on which the ESG analysis is based for each of the environmental, social/societal and governance dimensions. Include brief comments about how stakeholders are consulted, as appropriate. With our “Sustainable Investing” approach, we invest in companies, countries and supranationals that stand out in regard to our sustainability criteria, and that ensure long‐term value creation from the financial perspective. We focus partially on themes that contribute to improving human well‐being. According to our definition, we want to contribute to equitable social development as well as preserving natural resources. For companies we focus on the three dimensions “Environment”, “Social” and “Corporate Governance”.

For countries, we focus on the institutional framework (human rights, democracy, governance of law and corruption) and equally weigh the two dimensions “Environment” (preservation of the resource base) and “Social” (equitable social development).

For supranationals, the most important criteria is the effective impact of the projects financed by the institution. Financing controversial industries and projects are assessed.

Economic performance goes hand‐in‐hand with sustainable responsibility

+

Contribute to increasing sustainable human well‐being

Invest to ensure long‐term financial value creation

Exclusion of ethically controversial activities

Selection of securities regarding ESG scores

Integrate sustainable value drivers (ESG‐KPIs)

Focus on securities with attractive valuation & growth momentum

Invest for the long‐termINTEGRATION

SELECTION

Cornerstones of “LGT Sustainable Investing” approach

2b What internal and external resources are used to carry out this research? Describe the general information used to carry out the ESG research: internal analysis, ESG rating agencies, other external sources of information. We delegate most of the research to an external specialist provider. We maintain an intense corporation with “Asset4” (http://www.asset4.com/). Asset4 was founded in Zug (Switzerland) in 2003, currently employs 180 employees, and has evolved into one of the leading sustainable data providers. The company has a clear focus on environmental, social and governance issues (ESG) and provides the most comprehensive set of comparable and up‐to‐date information. Asset4 provides us with software


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programmes, which deliver extensive analysis possibilities, support us in our securities and themes selection and ensure compliance with our sustainability criteria. Since the end of 2012 we do also maintain a partnership with Inrate, especially for our Sustainable Fixed Income products. In a final step, however, the portfolio manager and the SRI analysts are responsible for the active portfolio management within the sustainable investment universe provided by Asset4. 2c Which ESG analysis criteria are used? Indicate what the main criteria for each of the environmental, social/societal and governance dimensions are. Specify if these criteria differ according to sectors, the geographical zones, the type of company, … If appropriate, provide an example. Our applied set of ESG indicators is designed to objectively and transparently compare companies’ ESG performances in each area identified as relevant by thorough in‐house research. Here we focus our analysis on measures that are material and for which information is sufficiently widely reported to allow meaningful comparison, while not being so widely harmonized and homogenous that it provides no proper differentiation between companies. Where possible we apply a combination of such indicators that

(a) provide useful and effective means of measuring results already achieved by a company in ESG (eg. energy consumption)

(b) are more forward looking with focus on ESG policies, processes and their implementation (e.g. adoption of new standards).

We believe in focusing on fewer, but better, indicators and being flexible in adjusting to emerging trends while screening out already widely accepted norms that do not leave much room for differentiation and added value. The design of our ESG indicators, which is an ongoing process, comprises the following main steps: ‐ identify the key ESG issues that companies face ‐ differentiate between common and sector‐specific ESG issues ‐ identify objective, available data that provide a basis to evaluate companies performance on these issues ‐ combine data that are covering the same ESG issues while complementing each other by defining ‐ objective, transparent rules to construct corresponding ESG indicators (KPIs – key performance indicators)

Waste reduction / recycling

Product Innovation / CO2

Footprint

Emission reduction / greenhouse gas emissions

Training and development / training hours

Health and safety / lost days

Employment quality / salary gap

Board structure / CEO‐Chairman separation

Board functions / Audit committee

Board structure / non‐executive board members

EXAMPLES

Environment Social Governance


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We use approximately 40 KPIs per company across the pillars indicated above. The majority of these KPI are the same across all companies, but some are sector specific. The KPIs which are the same across all sectors are denoted A indicators and those which are variable among sectors are (only in the environment and the social pillars) are denoted B indicators. Some examples of A indicators are given in the figure above. There are in total 7 A and 6 potential B indicators, 11 A and 5 potential B indicators, and 11 A indicators for Environment, Social and Governance respectively. An example of a B indicator for the information technology sector would be “R&D investment in eco‐designed products and services”. A scoring algorithm is applied to each ESG indicator in order to assign a score between 0% and 100% to all relevant companies. The score is a measure of companies level of ESG achievement on the respective ESG issue, always relative to all other (relevant) companies. The ESG indicator scores are then aggregated into pillar scores for CG, EN and SO and finally on into ESG scores which again range between 0% and 100% for each company measuring their relative ESG performance. The management of ESG factors by companies strongly depends on their corporate size and their regional origin and is in turn dependent on the type of ESG issue under consideration. Therefore the scoring algorithm actively takes regional and size aspects into account with the objective to mitigate existing ‘biases’ while preserving the original information content in the underlying data. 2d What is your ESG analysis and evaluation methodology (how the investment universe is built, rating system, …)? Describe the ESG evaluation/rating system and how it is built by explaining how the various ESG criteria are articulated. If appropriate, provide an example. The investment universe is restricted over a number of stages to ensure that only those companies that add value over the long term and contribute to improving human well‐being find their way into the portfolio.

Liquidity screeningProcess of elimination by negative criteria

a) Fundamental analysis

Sustainable value drivers selection

b) ESG performancecontribution and risks

Portfolio construction

Portfolio

Global investment universe

Focus on positive investment opportunities Selection

Integration

Sustainable investment universeE S

G

E S

G

From the global investment universe to the sustainable portfolio

For the first step in the definition of the universe of eligible investments please refer to question 3a In the remaining universe, which is still extensive, we focus on positive investment opportunities in the sustainability sector. We see such opportunities in companies that actively pursue strategies to reduce


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emissions, to improve energy efficiency, to adhere to good employment conditions and providing training and to have transparent corporate governance. In assessing a company based on sustainability criteria, we developed a proprietary ESG Rating based on Asset4 data.

Waste reduction / recycling

Product Innovation / CO2

Footprint

Emission reduction / greenhouse gas emissions

Training and development / training hours

Health and safety / lost days

Employment quality / salary gap

Board structure / CEO‐Chairman separation

Board functions / Audit committee

Board structure / non‐executive board members

EXAMPLES

Sustainable Investing



Environment Social Governance

Focus on investment opportunities – positive screening for companies (illustrative examples)

When analyzing a company, it is important to have a strong emphasis on ESG topics. They should contribute to the optimisation of the financial figures. With the ESG Cockpit, it is possible to combine general and sector specific ESG data. The result is a ranking based on the criteria. The worst 25% of the companies are recommended for exclusion and the focus is on companies that improve relatively over time. Overall the portfolio has to have an ESG score above benchmark.

The precise aggregation methodology is described further in 2c.

2e How frequently is the ESG evaluation reviewed? Please briefly explain the methodology update process and who is involved. If appropriate, explain if the methodology has changed in the past 12 months and the nature of the key changes. We update the tools at least on a monthly basis. In addition, we have regular reviews in place to improve the process step by step.


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Section 3. Fund Management Process 3a How do you take into account ESG criteria when defining the universe of eligible investments ? If appropriate, describe the eligibility threshold and the resulting level of selectivity. The investment universe is restricted over a number of stages to ensure that only those companies that add value over the long term and contribute to improving human well‐being find their way into the portfolio. Companies that generate income from tobacco, gambling, weapons, pornography or have child labour controversies are excluded (negative screening) from the global universe of around 4100 companies we have sustainability data from. A 5% revenue quota is applied for tobacco, gambling, pornography and arms.




Companies*

Tobacco

Gambling

Arms

Pornography

Child Labor

Elimination of firms by negative screening

3b How do you take ESG criteria into account into the portfolio construction? Describe how you link ESG selection with the financial analysis or with portfolio management. More precisely, describe how the results of the analysis of each of the dimensions (E, S and G) are integrated into the investment / divestment process. If applicable, state where you provide information on divestments occurred in the past year on the basis of ESG criteria? If appropriate, explain how potential ESG weightings are defined and describe your treatment of companies that are not subjected to an ESG analysis.

The portfolio construction is based on one hand on our sustainability criteria, which are in turn based on the three ESG factors. On the other hand, our sustainability approach takes into account long‐term investment opportunities, thus opening up promising risk/return potential.

* A 5% revenue threshold is applied except for child labor


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E S

G

E S

G

E S

G

E S

G

The sustainability approach allows an additional consideration of long term risk/returninvestment opportunities – as a more comprehensive approach,

its return prospects appear very promising.

Sustainability analysisClassical financial analysis

Combination of classic financial and sustainability analysis

After the reduction of the universe on the basis of sustainability criteria as described in 3a) the next step is an analysis of the companies’ financial data. For this purpose, we analyse the companies in detail. Our fundamental analysis is based on the bottom‐up approach.

We check each company regarding the following criteria:




Balance sheet strengthProfitability and credit quality

Earnings dynamics & management quality

Dividend fully covered by FCF*

CAPEX above depreciation

Altman Z‐Score

Create positive shareholder value

Return on equity above peers

Sound financial leverage

Positive FCF yield on 5 years rolling

Earnings stability on 5 years rolling

Piotroski Score

Fundamental Screening

Companies, that fulfil our fundamental requirements, are analysed. This analysis is based on a model that draws conclusions on the development and drivers of the business. It includes an in depth “Due Diligence” process. At this stage, we look at the price targets in different scenarios. These price targets have a substantial impact on the portfolio construction. Companies that show the largest discount regarding their intrinsic value get the highest weighting within the portfolio.


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Discounted cash flow based modeling

Dividend discount modeling

Return on equity Justifies price/book

Exceptions for deep value plays

For easy to understand and easy to model

companies

For different kinds of “utility businesses”,

heavily regulated sectors with stable dividend

For more volatile businesses, which have “asset base” operations

market cap < net cash

“Tobin’s Q” < 1

market value < break‐up value

Identification of the intrinsic value to share price gap

Each company that has successfully passed through the investment process fulfils our sustainable‐ and evaluating criteria’s. Hence, it guarantees that we only invest in sustainable and value‐creating companies, meaning that we do not invest in companies that only show high ESG scores, but degrade shareholder value.

We do not invest in companies without an ESG rating. If no rating is provided by Asset 4 a questionnaire is sent to the unrated company in order to get their data to our KPI based questions. The quality of the input is then assessed by the ESG subcommittee and a decision made whether the company will be included in the investable universe or not.

Over the past reporting period we divested from Samsung (held in our global equity portfolio) because of ESG issues. We also reduced positions in Barclays and Standard Chartered, but did not see the need to divest completely. 3c Does (do) the fund(s) have a specific ESG engagement policy? Please explain what you mean by engagement. Describe how you select the companies/themes for engagement activities and the impact on the portfolio management of the fund(s). Who undertakes engagement on behalf of the fund (internal and/or service providers)? There is currently no formal engagement policy in place, but portfolio managers have been practicing engagement on specific themes like child‐labour by communicating directly with the company concerned. 3d Does (do) the fund(s) have a specific voting policy integrating ESG criteria? Yes, our proxy voting policy integrates ESG criteria, please see answer to 1b) 3e Does (do) the fund(s) engage in securities lending activities? Yes, the equity funds engage in securities lending, the multi asset fund and the bond funds do not.


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If yes, (i) is a policy to recall the securities in place in order to exercise the voting rights? (ii) does the counterparty selection process integrate ESG criteria ? 3f Does (do) the fund(s) use derivative instruments? If yes describe, (i) their nature (ii) the objective(s) (iii) the potential limits in terms of exposure (iv) if appropriate, their impact on the SRI quality of the fund In the equity portfolios we use derivatives only for hedging purposes. In the bond portfolios we use derivates for hedging and investment purposes but not for speculative reasons. In all portfolios the limits are according to the UCITS guidelines. 3g Is a share of the fund(s) invested in unlisted entities pursuing strong social goals? The LGT Sustainable Bond Fund and LGT Sustainable Impact Multi‐Asset Class Fund are invested in two ResponsAbility Microfinance funds. Microfinance aims to provide small loans to individuals and small businesses in developing countries to enable entrepreneurial activity.


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Section 4. Controls and ESG Reporting 4a What internal/external control procedures are in place to ensure the compliance of the portfolio with the ESG rules defined in section 3 of this Code? State who is carrying out the controls, their frequency and within which timeframe the fund(s) have to comply should a breach be detected. The comprehensive analysis programmes of Asset4 support the security and theme selection and ensure the adherence with ESG investment criteria. Furthermore, every portfolio manager is responsible for the selected securities in the portfolio. LGT tracks in‐house the match of the portfolio holdings with the ESG database in order to assure that the portfolios are compliant within the given framework. Finally, the independent unit «Group Asset Management Compliance” tracks our negative screening process. In case of a violation, the issue is identified and recorded on an exception list, the portfolio manager will be informed and the relevant security will be sold. Any active breach has to be rectified within 24 hours a passive breach within 5 working days. 4b Please list all public media and documents used to inform investors about the SRI approach to the fund, and include URLs. This should include a link to the detailed, no more than 6 months old, list of holdings of the fund(s). Prospectus (semi‐) Annual report Addendums KIID Fund Fact Sheet Dedicated SRI Web page(s) at company / fund level (if applicable) Fund Fact Sheets http://www.lgt.com/export/shared/downloads‐external/factsheets/LGT_Sustainable_Impact_Multi‐Asset_Class_Fund_xEURx_B_en.pdf

KIID http://www.lgt.com/shared/.content/publikationen/kiids/KIID_LGT_Sustainable_Impact_Multi‐Asset_Class_Fund_xEURx_B_de_CH.pdf

Prospectus http://www.lgt.com/export/shared/downloads‐external/prospekte/Sustainable_Impact_MultiAsset_Class_Fund_full_prospect_en.pdf

Semi‐annual reports http://www.lgt.com/export/shared/downloads‐external/halbjahresberichte/LGT_Funds_SICAV_HJB_31.10.2012_de.pdf http://www.lgt.com/export/shared/downloads‐external/halbjahresberichte/LGT_Funds_II_SICAV_HJB_31.10.2012_de.pdf http://www.lgt.com/export/shared/downloads‐external/halbjahresberichte/LGT_Funds_SICAV_HJB_31.10.2012_de.pdf


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Dedicated sustainability page http://www.lgt.com/en/investment‐solutions/investment‐styles‐topics/sustainable‐investments/

Portfolio Holdings LGT Sustainable Impact Multi Asset Class Fund (EUR)

As of 28.03.2013

2.5 UK 20 (358839)

2.5 UK 24 (358876)

4.0 Australien 20 (543000)

3.5 Sweden 15 (734965)

2.25 France 20 (1770046)

6.7 Panama 36 (2002766)

7.25 Sudafrika 20 (2168338)

1.0 France 17 (2272448)

1.25 UK 17 (2430312)

1.5 BRD 16 (2480346)

8.75 Rabo 17 (2553133)

4.0 Belgien 22 (2565098)

7.125 Peru 19 (10071932)

1.75 BRD 20 (10264792)

6.5 IBRD 13 (10532836)

9.5 EBRD 13 (10680440)

LGT Sustainable Bond Fund Global (EUR) IM (10689293)

Ant DWM Inc Microf (10899247)

7.5 IBRD 17 (11068618)

8.0 IBRD 20 (11104624)

1.1 Frankreich 22 (11330803)

2.5 Sudafrika 17 (11422411)

6.5 EIB 15 (11497304)

5.5 Chile 20 (11592129)

LGT Select Insurance‐Linked Securities (USD) IM (13566524)

Ant JB PhysGd AX (4478125)

Ut JB Mp RSAM SuWa (1930471)

Ant FSI Asia Pac Sus (2373012)

Ant iShs DJESS (2496007)

Ant JB Mp RSAM SCl (2844019)

Ant SWC(LU) EM (3650280)

Ant iShs SP GT&FI (4303628)

Ant Sara In OeS Eq (4889559)

Ant FSI Gl EM Sus B (10051995)

Ant LO Gen Gl IC (10166376)

LGT Sustainable Equity Fund Global (EUR) IM (10689303)

Ant ERST RESP ST GL (10724319)

LGT Sustainable Quality Equity Fund (USD) IM (18390810)

Ant Sar In S E RE G (2950143)

Ant CS REF Green Pr (10077844)


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Engagement/voting policy/votes (if applicable) Link to Web page of ESG Analysis provider(s) (if applicable) URL to the research findings that are available to investors (if appropriate) Detailed fund holdings (no more than 6 months old) CSR Policy of the Company l (if applicable) Other (please list): Additional If applicable, specify what the amount of donations and the percentage of management fees that the fund gave to charities in the last year. ________________________________ COMMITMENT FROM EUROSIF AND THE NATIONAL SUSTAINABLE INVESTMENT FORUMS

Eurosif is responsible for maintaining and publicising the Transparency Code.

Eurosif promotes received responses to the Code on its website.

Eurosif maintains a “transparent” logo that is awarded to those funds complying with the Code and whose answers have been sent to Eurosif. Complying funds can use this logo in their marketing collateral, in accordance with the Logo Specifi cations Manual (see. www.eurosif.org) and provided the Code is up to date.

Eurosif commits to reviewing the Code. The process for reviewing the Code will be open and inclusive.European SRI Transparency Code


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About Eurosif

The European Sustainable Investment Forum (Eurosif) is the leading European membership association whose mission is to develop sustainability through European financial markets. Eurosif works as a non‐for‐profit partnership of the national Europe‐based national Sustainable Investment Forums (SIFs) with the support and involvement of Member Affiliates. Eurosif Member Affi liates include a range of organisations covering the value chain of the sustainable investment industry, from institutional investors, asset managers to fi nancial services providers, ESG analysis fi rms, academic institutes and NGOs. Eurosif speaks authoritatively and broadly on SRI (sustainable and responsible investment) issues. The main activities of Eurosif are public policy, research and creating platforms for nurturing sustainable investing best practices. For more details, please see www.eurosif.org. National sustainable investment forums in Europe to date include:

Belsif*,Belgium

Dansif, Denmark

Finsif, Finland

Forum Nachaltige Geldanlagen* (FNG) e.V., Austria, Germany and Switzerland

Forum per la Finanza Sostenibile*(FFS), Italy

Forum pour l’Investissement Responsable* (FIR), France

Norsif, Norway

Spainsif*, Spain

Swesif*, Sweden

UK Sustainable Investment and Finance Association* (UKSIF), UK

Vereniging van Beleggers voor Duurzame Ontwikkeling* (VBDO), the Netherlands

*Member of Eurosif For further information on Eurosif or more details on the European SRI Transparency Code, please look at our website, www.eurosif.org and contact Eurosif at +32 (0)2 274 14 35 or by email at [email protected]. Eurosif A.I.S.B.L. 331, rue du Progrès, 1030 Brussels, Belgium Tel. : +32 (0)2 274 14 35 Disclaimer – Eurosif does not accept responsibility or legal liability for errors, incomplete or misleading information provided by signatories in their responses to the European SRI Transparency Code. Eurosif does not provide any financial advice nor endorse any specific funds, organizations or individuals.


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The illustrations in this brochure are details from Willem van de Velde the Younger, Detail from "Ships off the Coast", 1672 © Sammlungen des Fürsten von und zu Liechtenstein, Vaduz–Wien LIECHTENSTEIN. The Princely Collections

New and popular subjects amongst Dutch painters were the marine, the so-called seascape or ship picture. These genres were particularly well-suited to depicting the rich trading and nautical power of the still-young nation of the States-General of the Netherlands. Willem van de Velde the Younger specialised in this genre. He often borrowed detailed motifs from his father, a marine draftsman who recorded the activities of the Dutch fleet, and combined these to create imaginary compositions. His painting “Ships Off the Coast” depicts ships with their particular features, accurately proportioned and skilfully executed. The painting, dated 1672, was created in the year in which van de Velde went to England.

LGT Capital Management Ltd. Schützenstrasse 6 CH-8808 Pfäffikon Phone +41 55 415 92 11 [email protected] www.lgt.com LGT Group is represented in more than 20 locations in Europe, Asia and the Middle East. A complete address list can be seen at www.lgt.com

lgt capital management ltd. · sustainable and responsible investing is an essential part of the...

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