Shelter Investment Management


Statement on the integration of sustainability risks in investment decision‐making process and adverse impacts of investment decisions on sustainability factors (SFDR)


The European Sustainable Finance Disclosure Regulation “SFDR” requires Shelter Investment Management (SIM) to disclose via its website (1) its policy on integration of sustainability risks in investment decision‐making process and (2) where they consider principal adverse impacts of investment decisions on sustainability factors, a statement on due diligence policies with respect to those impacts, taking due account of their size, the nature and scale of their activities and the types of financial products.

However, as a company with less than 500 employees, SIM is authorized to make use of the “de minimis rule,” and therefore it can decide and must then disclose that it is not considering the “adverse impacts of its investment decisions on sustainability factors”, for both its advisory and discretionary management.

SIM has a policy for the integration of sustainability risks in the investment making process. Such policy has been approved by the Board of Directors on 11 September, 2023. The latest version of the sustainability risk policy can be consulted here: SIM Sustainability Risk Policy.

The Board of Directors of SIM has decided that for the time being, it does not wish to incorporate “adverse impacts of investment decisions on sustainability factors” in the manner as proposed in Art 3 and 4 of the SFDR regulation in its discretionary and advisory business.

 SIM will only take into consideration adverse impacts of investment decisions on sustainability factors in the UCITS Funds that it manages and where it is specifically mentioned in the prospectus of such UCITS Funds that SIM will to take into account such adverse impacts in investment decisions on sustainability factors.  

 For these UCITS Funds, reference is made to the Prospectus of the specific UCITS Funds on this website and in particular to the SFDR RTS Annex I of these UCITS Funds. More information on the consideration of principal adverse impact shall be disclosed in the Annual Report of these UCITS Funds starting no earlier than 1st of January 2023.   

SIM has decided for the “opting out” for discretionary and advisory business after careful analysis of the SFDR and RTS regulations for the following reasons:

1) SIM strongly supports “sustainable” portfolio management and believes that careful consideration of environmental social and governance factors is important when making portfolio investment decisions.

  • This incorporation of ESG elements is in the view of SIM however ultimately the choice and decision of our investors and the investor should not be forced into this direction by forcing the portfolio manager into a “binary” choice.
  • That is why SIM continues to offer different types of solutions that take into account different ESG considerations next to solutions that do not.
  • SIM’s ESG approach to investments cannot be guaranteed to be fully aligned with the specific requirements of the new EU regulations.

2) SIM is of the opinion that the EU SFD and RTS regulations are, at this stage, not fully “compatible” with efficient discretionary portfolio management in the interest of the investors :

  • Regulatory uncertainty : The EU regulations are – at this stage – in the opinion of SIM, unclear and highly complex. This creates the risk that SIM – if it would opt-in – would face government controls (and eventually fines) based on alignment with unclear and highly complex rules.
  • Ideologic direction: The EU regulation appears to reflect certain ideological views regarding what is to be considered environmentally friendly. SIM does not always support such ideological views. Examples include the views on nuclear power, pellets, private electric transportation means, coal, forced gender equality with board level thresholds.
  • Data quality: The data required to analyze sustainability risks and factors in accordance with the new EU regulations is at this stage – in the opinion of SIM – uncomplete and highly divergent. SIM has reviewed official reports that confirm this. Applying “sustainability screenings” within portfolio management and applying PAI’s leads to different portfolio compositions and thus results, depending on the data provider. Without reliable data, the outcome might not be in line with regulation or investor preferences and might impact risk and return of portfolio’s in an unacceptable manner.
  • Cost Impact: The actual cost of the sustainability data offered by data providers is highly expensive and pricing is not (yet) sufficiently aligned to the “company size” of the different users of this data. SIM is of the opinion that this cost can have important negative effects on the return of “sustainable” investment portfolio solutions. Especially as SIM is of the opinion that only these portfolio’s that specifically require ESG focus, should pay for these costs.
  • Return Impact: As evidenced by the 2022 results of equity markets, the impact of investors’ sustainability preferences can lead to particularly negative deviations in portfolio returns in comparison to standard non-sustainable benchmarks. The EU does not require the notification of this highly important risk factor instead requires informing investors only about the risks of not applying sustainability factors. We believe it is a necessary element of communication to investors when making disclosures to inform “both ways”.

SIM does not target a specific date when it intends to align its discretionary and advisory to these new European regulations. However regulatory certainty, quality of data at an acceptable pricing will be critical elements in SIM’s decision-making process. SIM continues to be committed to sustainable finance and it will continue to follow-up the developments on the regulatory and data side with the view to (re-)consider its position on a regular basis.


The Board of Directors

Shelter Investment Management

March 2023 (Fourth statement)