Integration of ESG-related risks in the investment process
As a responsible investor, the integration of sustainability risks in the investment process is an essential part of creating a stable long-term portfolio.
Aquila Capital Investmentgesellschaft mbH considers principal adverse impacts of investment decisions on sustainability factors and has established internal policies for this purpose. The Group-wide ESG Policy provides a framework that specifies a detailed assessment and monitoring of the projects to be acquired.
Based on the respective fund or mandate-specific investment strategy, sustainability risks are identified as part of the project-related due diligence and considered in the process of investment decision-making or fund advisory. For this purpose, the Aquila Group leverages specialized service providers that take into account local requirements and project-specific characteristics. Depending on the underlying asset class, risks are measured and documented both qualitatively and quantitatively. The results of the due diligence are then incorporated into the investment process as part of the investment proposal.
Thus, the result of the due diligence has a direct influence on the investment decision and can, in extreme cases, lead to a negative investment decision if no sufficient risk mitigation measures can be implemented.
After an investment has been successfully made, ongoing monitoring is carried out at both portfolio and asset level by the responsible risk management functions. The aim of monitoring is to reduce sustainability risks over the entire term of the investment in order to minimize the negative effect on returns.
Compliance with the ESG Policy, together with Aquila Capital's overall governance framework, is governed by the Remuneration Policy.
Asset sourcing and analysis:
- Consider the ESG principles in the sector and country relevant to the investment opportunity.
Asset due diligence:
- Multi-faceted asset due diligence is conducted which considers the asset‘s compatibility with ESG principles of the respective fund or mandate.
- Ensure adequate transparency around ESG principles between our firm and partnering service providers.
- An asset will be integrated into our portfolio only after all relevant ESG factors have been assessed.
- Consideration of ESG principles in the ongoing maintenance and administration of an investment strategy or asset.
- Supplementary requirements will be enforced if local requirements appear lax.