We want the people who rent from us, who live in our houses and apartments, to be happy. We also want the people who conceive, plan and create those developments to be just as happy. At Archer Daniels Asset Management (“AdAM”) we pride ourselves on being not only visionary and innovative, but inclusive and resourceful too. In a sometimes high-pressure environment, we have a heart. We’re relaxed and friendly but always principled, industrious and detail-oriented. Sustainable action forms the basis of our business strategy – it is the prerequisite for the secure future of our Company.
AdAM defines sustainable business development as a holistic system that facilitates positive synergies. Our sustainability strategy therefore takes into consideration current developments such as demographic change, climate change and technological progress. We also consider the economic, ecological and social repercussions of our business activities across the entire value chain.
One of the greatest challenges at present is affordable housing that is nonetheless climate-friendly. To ensure its availability, we will continue to develop our portfolios with a sense of proportion. We believe that housing should be affordable for every one of our tenants.
By practicing efficient modernization, we make an effective contribution to climate protection on the one hand, while not exceeding our tenants’ budgets on the other.
Our sustainability targets
By practicing sustainability management, we want to do our part for sustainable business, a society worth living in and environmental protection. Our economic goal is to secure our future viability. To this end, we want to maintain and, if possible, increase the value of our properties. Our aim in this is to ensure a positive earnings trend for our stakeholders.
Our social goals include further increasing the satisfaction of our tenants and employees. In this way, we seek to increase loyalty among both groups. Another focus is on continuing our community involvement and improving the quality of life in our residential neighbourhoods.
In matters of ecology, our goal is to consume fewer resources, optimise the use of resources and increase our energy efficiency. We contribute to the reduction of CO₂ emissions with environmentally friendly portfolio management.
To achieve these goals, Archer Daniels Asset Management has drawn up a plan with targets and measures for each action area:
- CO₂ neutral by 2050, 50% reduction in CO₂ by 2030
- Circular and sustainable building. By 2050, construction waste will not exist
- Natural gas-free. By 2050, sustainable heating and cooling supply
- Climate adaptive and bio-divers. By 2050, all our homes will be climate adaptive
- Environmentally conscious and carefulness. In 2050, we will be living together in energy and environmental harmony
- Sustainable business operations. In 2050, we will be working in a green, sustainable environment.
The relevant business figures and quality indicators will be evaluated monthly at senior management level. Team leaders and employees are then involved based on this.
Climate, environment & supply chain
By improving energy efficiency and reducing emissions we are making a contribution to protecting the environment. Our measures focus on areas of the building shell that we can influence and on generating heating, cooling and energy. We always strive to achieve the best possible cost-benefit ratio. This is because ecological measures have economic consequences for our tenants.
Sustainable resource management has a positive effect on the environment and economic benefits for the Archer Daniels Asset Management funds and our tenants. That is why the responsible treatment of natural resources is anchored in our Company along the entire value chain. Business processes are always evaluated from the point of view of resource conservation and are adjusted if necessary.
EU Sustainable Finance Disclosure Regulation (EU SFDR)
REGULATION (EU) 2019/2088 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November 2019 on sustainability‐related disclosures in the financial services sector
Introduction
AdAM qualifies as a “financial market participant” pursuant to EU Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the SFDR).
Under the SFDR, financial market participants are required to publish information on their website, including on their policies on the integration of sustainability risks in their investment decision-making process and on how they consider principal adverse impacts of investment decisions on sustainability factors.
AdAM herewith discloses the way Sustainability Factors and Risks are integrated into the investment decision process and the results of the assessment of the likely impacts of Sustainability Risks on the returns of this Company.
In this section, the following definitions apply, in accordance with the SFDR:
“Sustainability risk” means an environmental, social or management situation or condition which, if it occurs, could cause an actual or potential material negative effect on the value of the investment.
“Sustainability factors” mean environmental, social and employee matters, respect for human rights, anti‐ corruption and anti‐bribery matters. AdAM promotes Sustainability Factors in all but one of the funds that are subject to the SFDR. The promotion of the sustainable factors is mainly achieved through the thematic approach of the investment strategy of each fund. ln addition, each investee company must fallow good governance practices and all the investments that consider the EU criteria for environmentally sustainable investments may not significantly harm any environmental or social objective.
Nevertheless, each fund remains also exposed to Sustainability Risks.
Sustainability Risks Integration (Article 3 SFDR)
Sustainability Risks are integrated into the investment decision making and risk monitoring to the extent that they represent a potential or actual material risk or identify an opportunity to put in place remedial actions to mitigate these risks.
The impacts following the occurrence of a Sustainability Risk may be numerous and vary depending on the specific risk and region. ln general, where a Sustainability Risk occurs in respect of an asset, there will be a negative impact on, or entire loss of, its value.
We refer to the AdAM ESG Policy for a more detailed description of the way Sustainability Factors and Risks are integrated into the due diligence procedure, the investment decisions process and the follow-up of the investment business.
Principal Adverse Sustainability Impacts statement (Article 4 SFDR)
Financial market participants are required under the SFDR to disclose whether they consider principal adverse impacts of their investment decisions on sustainability factors and if this is the case, to disclose a statement on their due diligence policies regarding those impacts.
AdAM does not consider principal adverse impacts of investment decisions on sustainability factors on entity level, within the meaning of the SFDR. The reason for that is that AdAM is an SME with limited resources and personnel. Therefore, we are not capable of determining exactly in a quantifiable manner what the adverse impacts of our investment decisions would be based on the different criteria set forth in the SFDR and its guidelines. Also the lack of availability of relevant data, due to the fact that we merely invest in real estate with limited resources, plays an important role in this decision.
However, in its role as financial market participant, AdAM considers potential negative impacts of investment decisions in accordance with its ESG Policy. These potential negative impacts are being selected and monitored on an ongoing basis by AdAM in a qualitative manner. Extreme negative outliers are analysed more into detail and respective actions will be taken on a case-by-case basis (e.g., engagement with the respective companies or even exclusion of the respective asset) with the general goal to reduce negative impacts. In addition, AdAM makes a best effort to consider including principal adverse impacts on product level for all newly incorporated funds and funds that are still in the fundraising stage. Lastly, we are continuously monitoring further regulatory guidance and the development of industry and market practice in this area, in order to decide whether we will include PAIs in the future on entity level.
Integration of ESG risks in the remuneration policy (Article 5 SFDR)
Pursuant to the SFDR, AdAM is required to explain how its remuneration policy is consistent with the integration of sustainability risks.
AdAM’s remuneration policy considers sustainability risks in its remuneration policy by ensuring that performance is not evaluated only on financial performances but considers several other principles such as effective risk management, care for investors and for each other in the organisation, following our code of conduct.
Integration of Sustainable Factors in the remuneration policy is described in the last chapter of the ESG Policy and in the Human Resources Policy. Each member of staff is also bound by a Code of Conduct setting forth a conflict of interest procedure and a market abuse policy which must be strictly followed.
Integration of sustainability risks
The Archer Daniels Sterling Residential Fund has been categorised as an Article 8 financial product for the purposes of the SFDR and the environmental characteristics promoted by the Fund are set out in the Supplement to the Fund. The Manager engages third party service providers to provide data on water, electricity, gas and garbage collection usage relating to the Fund’s ESG characteristics with respect to property assets in the Fund, where information is available from such providers. Such information is based on available data, either actual or estimated and the Manager’s interpretation of same. Based on the data received, the Manager considers that the Fund’s environmental characteristics have been fully met. Further detail on the extent to which the environmental characteristics of the AdAM AIFM were attained, including the details on how the sustainability indicators performed will be provided once the regulatory technical standards (“RTS”) supplementing the SFDR have been finalised and implemented.
Taxonomy Regulation
Archer Daniels Sterling Residential Fund does not presently set a minimum proportion of its assets that must be invested in investments that contribute to environmentally sustainable economic activities in accordance with the Taxonomy Regulation, primarily due to the lack of available data and the delay to the publication of the RTS supplementing the Taxonomy Regulation. Therefore, for the purpose of the Taxonomy Regulation, it should be noted that during the relevant period, the Fund may not have been invested in investments that take into account the EU criteria for environmentally sustainable economic activities.
In the waning months of 2022 the European Securities and Markets Authority (ESMA) told the European Association for Investors in Non-Listed Real Estate (INREV) that real estate investment funds that seek to improve the sustainable performance of properties can go beyond Article 8 requirements (promoting environment and social characteristics) but that Article 9 (having sustainable investment as their objectives) is not applicable. This thus means that funds that acquire and upgrade poorly performing buildings would not meet Article 9 requirements at the outset. Investment funds that meet Article 9 requirements must be investing in assets that already qualify as sustainable. Where a “stranded-to-green” fund does not initially meet Article 9 requirements, it might be disclosed under Article 8; and under Article 9 only when all the assets in the portfolio are sustainable.
In practice, depending on the investment strategy and product, AdAM considers a relevant sub-set of the “sustainability factors” listed in the SFDR, including environmental, social and employee matters, respect for human rights, anti-corruption and/or anti-bribery matters by means of its global policy on integration of environmental, social and governance risks and value creation opportunities into its investment process.
With respect to certain investment strategies and products, AdAM has applied established ESG-related standards which vary depending on the investment strategy. AdAM shall in due course be a signatory to the United Nations-backed Principles for Responsible Investment (PRI).
Under the UK FCA’s Sustainability Disclosure Requirements (SDR) and investment labels as it stands now, funds as ours that may not currently be sustainable but aim to make a positive social as well as environmental impact in the future by inter alia making refurbishments to properties that we buy, take on the label of Sustainable Improvers. Otherwise said, the concept of stewardship and making measurable improvements to underlying ESG performance.
We believe that by being careful and not overpromising under SDR we are acting with due care, skill and diligence under FCA Handbook, PRIN 2.
Information on how remuneration policies are consistent with the integration of sustainability risks
AdAM AIFM’s remuneration practices are designed to promote sound and effective risk management and not to encourage risk-taking which is inconsistent with their risk appetites or the risk profiles of the portfolios which it manages. AdAM’s ESG / Responsible
Investment Policy sets out how its investment process incorporates consideration of ESG risks. Such risks form part of AdAM AIFM’s assessment of risk for the purposes of its remuneration policy. AdAM AIFM’s approach to remuneration enables variable remuneration for employees to be adjusted for performance. This adjustment is not based solely on financial metrics. Qualitative non-financial performance metrics form a significant part of the assessment process. These metrics may include, for example, an employee’s failure to adhere to effective risk-management, to comply with applicable regulatory rules, unethical behaviour or other behaviour that is contrary to AdAM’s Code of Conduct. Consideration of these factors (including where relevant an individual’s contribution to ESG- related efforts) may form part of the employee’s performance assessment process. In addition, a proportion of the variable remuneration for employees may be deferred. This allows ex-post performance adjustments (“clawback”) to be applied to deferred remuneration where risks, including sustainability risks, materialise in the future.
diversity and inclusion policy
Last updated on 16 May 2024
