Sustainability-related disclosure requirements in the financial services sector

Conren Land Immobilien Kapitalverwaltungsgesellschaft mbH (CLKVG) is a capital management company within the meaning of the German Investment Code (Kapitalanlagegesetzbuch – KAGB). The object of the company is the management of alternative investment funds within the meaning of Sec. 1 Para. 3 KAGB as external German Investment Management Company (Kapitalverwaltungsgesellschaft – KVG). CLKVG, as a capital management company of CONREN Land AG, provides its investors with collective asset management with the property investment strategy and assumes responsibility in the area of sustainability.

Sustainability risks within the meaning of the Disclosure Regulation (EU) 2019/2088 and the Federal Financial Supervisory Authority (BaFin) are events or conditions in the areas of the environment, social affairs or corporate governance, the occurrence of which can have an actual or potential negative impact on the net assets, financial position and results of operations as well as on the reputation of a supervised company and thus on the value of the investments in the investment assets. CLKVG applies sustainability risks, taking into account the translation into known risk types of BaFin, to implement the legal requirements for an appropriate risk management system. The following disclosures about the integration of sustainability risks are regularly updated to ensure that they continue to meet the evolving regulatory requirements.

1. Inclusion of sustainability risks in the investment decision-making process (Article 3)

As part of its investment process, CLKVG not only includes the material financial risks in its investment decision, analyses and evaluates them on an ongoing basis, but also takes into account sustainability risks, the occurrence of which can actually or potentially have a significant negative impact on the performance of investment in the investment assets. The transitory and physical risks and the negative effects of each investment are identified during the acquisition due diligence and continuously monitored also throughout its time in the portfolio.

2. Not taking into account the main adverse effects of investment decisions on sustainability factors (Article 4)

CLKVG does not yet take into account any adverse effects on sustainability factors in its investment decisions. In this context, sustainability factors are understood to mean environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. In the market, the relevant data that must be used to determine and weight the adverse sustainability effects are currently not available to a sufficient extent. In light of regulatory developments and the available data, we review annually whether the material adverse impacts on sustainability factors need to be considered in the future. For 2024 it has been established that the material adverse impacts on sustainability factors will not be considered.

3. Inclusion of sustainability risks as part of the remuneration policy (Article 5)

CLKVG has developed a remuneration policy that aims to support the company's business strategy, corporate values and long-term interests. CLKVG's remuneration policy does not include any incentives to take sustainability risks for the company or the investment funds it manages. The way this is achieved is by granting variable remuneration elements on the basis of, among other things, compliance with regulatory requirements, in particular in relation to the solvency coefficient. Therefore, the remuneration policy stipulates that fixed and variable remuneration elements must be in a reasonable proportion to each other to prevent economic dependence on short-term developments.