Sustainability policy

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Vision

At Vive, investing goes beyond just financial aspects. Vive includes sustainability criteria in its selection policy. In doing so, Vive strives to select investment funds and managers that excel in their category when it comes to sustainability. This involves a two-way approach to sustainability.

1. Sustainability risks (Outside-In): Vive analyses the sustainability risks that can affect the performance of investments, such as environmental problems, social risks and poor corporate governance. In short, these are referred to as ESG factors: Environment (Environment), Social (People and Society) and Governance (Good Governance). We integrate these risks into our investment process to make informed selection decisions that increase the robustness of our portfolios.
2. Sustainability impact (Inside-out): Vive does not have a goal for sustainable investments but promotes social characteristics through its selection policy. Vive does this based on the frameworks of the Sustainable Finance Disclosure Regulation (SFDR), the European legislation that promotes transparency around sustainability.

By managing sustainability risks with ESG integration, we strengthen our risk-reward ratio and support our long-term goals.

Application of sustainable investing

Vive has not formulated specific sustainability goals but promotes social characteristics. Vive selects investment funds based on a selection policy that takes into account sustainable characteristics, with the aim of a balanced risk-return ratio. The sustainability selection criteria are based on the following principles:

1. Exclusion policy: Vive only invests in funds that actively exclude investments based on a structured exclusion policy, if this is possible within the asset class.
2. Best-in-Class Selection: Vive only invests in funds that excel in sustainability through ESG performance within their asset class and mandate and that promote ESG goals or make a positive impact in line with the SFDR criteria. To ensure this, Vive only selects funds with:
   • Minimum MSCI ESG rating BBB
   • Minimum SFDR article 8 classification, with a preference for article 9 funds
3. Voting Rights and Engagement: Vive only invests in funds that actively exercise their voting rights and have a clear engagement strategy to stimulate improvements in sustainability aspects. This is only relevant for equity funds.‍
4. Social features: Vive promotes social features by investing only in investment funds that:
   • less than 0.5% of the portfolio is invested in companies that are directly or indirectly involved with controversial weapons.
   • less than 0.5% of the portfolio is invested in companies that derive at least 5% of their turnover from tobacco production or at least 15% from the combined turnover of tobacco distribution, supply or retail.
   • less than 0.5% of the portfolio is invested in companies that are directly involved in highly ongoing controversies. These controversies may relate to the environment, customers, human rights, labour rights or governance and are determined using the “MSCI ESG Controversies” methodology.
   • less than 0.5% of the portfolio is invested in companies that violate the UN Global Compact (UNGC) principles.

For government bonds, the minimum SFDR classification is not used as standard, because they are usually less measurable as with other asset classes.

With this policy, we ensure that our investments not only meet financial requirements, but also contribute to sustainable and social value, in line with the ongoing development of sustainability standards and regulations.

Overview by criterion

1. Sustainability risks & ESG ratings

Sustainability risks

A sustainability risk is an event or circumstance in the field of: Environment, Social (people and society) or Governance that may have a negative impact on the value of an investment. Examples of such risks include:

Environmental risks: Climate change can reduce the value of investments in CO₂ intensive sectors, because the business model of these companies may not be sustainable in the long run.

Social risks: Poor working conditions or human rights violations can damage a company's reputation, with negative consequences for business results.

Administrative risks: Lack of good governance, such as corruption or insufficient risk management, can lead to operational and financial problems.

ESG ratings

ESG ratings measure how well a company deals with financially relevant sustainability risks and opportunities. These assessments are used to identify industry leaders and laggards based on:

1. Their exposure to ESG risks.
2. Their ability to effectively manage these risks compared to competitors.

Vive uses MSCI's MSCI ESG Ratings to assess funds in terms of sustainability risks. MSCI ESG ratings are designed to quantitatively measure sustainability risks in order to assess a company's resilience to industry-related sustainability risks. The MSCI ESG ratings are categorized as:

1. ‍Leaders: AAA, AA‍
2. average: YES, BBB, BB‍
3. Stragglers: B, CC

These ratings apply to various asset classes, such as stocks, corporate loans, and government bonds. Funds are also rated, based on the rating of the underlying companies in which they invest.

What does Vive do in terms of sustainability risks and ESG ratings?

At Vive, we actively integrate MSCI ESG ratings into our investment policy to reduce sustainability risks. Our Best-in-Class approach focuses on selecting funds that perform better in their sector on sustainability risk criteria than their comparable competitors. We use ESG ratings as an important measure in our selection process. These ratings help us identify funds that meet the standards of our sustainability risk policy. Vive only selects funds with a minimum ESG rating (BBB), striving for the highest scores in each segment. The funds that Vive invests in score as follows based on MSCI ESG ratings.

2. Negative Impact Mitigation (PAI)

Principal Adverse Impact (PAI) criteria

One way to invest sustainably is to exclude investments that have a negative impact on people and the environment. To identify the negative consequences of investments, the Principle Adverse Impact (PAI) indicators have been drawn up. This set of 64 measurable indicators evaluates the possible negative effects of an investment.

For investment products that indicate that they take into account the adverse effects of investment decisions on sustainability factors, it is mandatory to report on at least 18 of these 64 PAI indicators. Of these 18, 14 are core indicators that must be measured for all relevant investment products; in addition, 4 additional indicators of your choice may be included. The 14 mandatory indicators are:

• Greenhouse gas emissions
• Carbon footprint
• Greenhouse gas intensity of companies in which investments have been made
• Exposure to companies active in the fossil fuel sector
• Non-renewable energy consumption and generation
• Energy consumption intensity by sector with major climate effects
• Negative consequences for biodiversity-sensitive areas
• Emissions into water
• Hazardous and radioactive waste ratio
• Violations of the UNGC and OECD guidelines
• Absence of procedures and compliance mechanisms for monitoring compliance with UNGC and OECD guidelines
• Unadjusted gender pay gap
• Gender Diversity Board of Directors
• Controversial weapons

What does Vive do in terms of negative impact and PAI?

Vive does not take into account any adverse effects of its investment decisions on sustainability factors.

This is because Vive currently only invests in unlisted investment funds. In Vive's current position, it is not yet possible to intervene directly or take targeted measures at the level of the underlying investments in these funds. For this reason, we cannot effectively limit specific negative effects in the field of sustainability.

What Vive does do is only select funds with a structured exclusion policy. Vive has not drawn up any specific exclusions that the underlying funds must use.

What do the underlying funds do in terms of negative impact and PAI?

The underlying funds that Vive invests in report on the specific negative effects (PAI indicators) that they mitigate through their own exclusion policy. Below is an overview of the negative effects that limit the funds in each Vive asset class.

3. Positive social and environmental contribution (SFDR)

Sustainable Finance Disclosure Regulation (SFDR) classifications

The SFDR provides a European framework for classifying investments based on their sustainability performance. Only investments that meet the SFDR requirements for “sustainable investments” may be labeled as such. These regulations require financial institutions to report transparently on how sustainability is integrated into their investment choices and enable investors to be better informed about the sustainability of investment products. SFDR divides products into three categories based on the extent to which sustainability plays a role:

• Article 6: Investment products that do not actively integrate sustainability and usually do not provide specific information about how to address sustainability risks within the investment strategy. These products are often referred to as “grey investments.”
• Article 8: Investment products that take into account the impact of investments on ESG criteria, without sustainability being the primary focus. These funds can pursue sustainable investment goals, but this is not mandatory. Article 8 funds are known as “light green investments.”
• Article 9: Investment products with an explicit focus on sustainable goals, with the aim of measurable positive impact on the environment, climate or social areas. Article 9 funds focus on deep sustainability and are referred to as “dark green investments.”

This classification system helps investors distinguish between the sustainability performance of investment products and provides a standardized basis for responsible investment choices.

What does Vive do in terms of positive social and environmental contribution & SFDR

Where possible, Vive only selects funds that meet at least SFDR article 8 criteria, with a strong preference for article 9 funds. However, these classifications do not apply to investments in government bonds. Vive's selection criteria do not set a minimum percentage of sustainable investments in accordance with SFDR, but only apply to the fund's SFDR classification. As an investment product, Vive itself also falls under SFDR regulations and is classified as an SFDR article 8 product. Below is an overview of Vive's funds and the SFDR classifications.

What do the underlying funds do in the area of positive social and environmental contribution & SFDR

Funds with an SFDR article 8 classification are not required to have a minimum target of sustainable investments in accordance with SFDR. Vive also does not set a minimum requirement for this. However, some of the funds that Vive invests in do have a minimum target for these sustainable investments.

Below is an overview of the objectives of the funds in which Vive invests, as well as the reported percentages of sustainable investments achieved in accordance with SFDR.

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What is a sustainable investment in accordance with SFDR?

Fund managers have internal policies and methodologies for measuring whether an investment is sustainable in accordance with SFDR. There is no uniform set of instruments for classifying investments as sustainable in accordance with SFDR. SFDR legislation states that an investment can be called sustainable under three conditions:

1. The investment must make a positive contribution to an environmental or social goal.
2. The investment must comply with the “Do No Significant Harm” principle, which means that the investment does not contribute to activities that can cause major damage, such as controversial weapons.
3. The company in which investments are made must comply with good governance practices with clear rules to prevent social problems.

If a fund manager determines that an investment meets all three of these conditions, then it is a sustainable investment in accordance with SFDR.

4. Environmentally sustainable investments (EU taxonomy)

EU taxonomy

An investment is only classified as environmentally sustainable by the EU taxonomy if the underlying activity contributes significantly and measurably to at least one of the six established environmental objectives. In addition, data must also be used to show that the company is not significantly harming other environmental goals (the “Do No Significant Harm” principle). The company must also comply with social standards, such as protecting employment rights and respecting human rights.

The six ecological objectives of the EU taxonomy are:

1. Climate change mitigation: Reducing the company's impact on global warming by, for example, reducing greenhouse gas emissions.
2. Adapting to climate change: Measures to control the impact of climate change on the organization, for example by building dikes to protect against floods.
3. Sustainable use and protection of water and marine resources: Promoting efficient water use and protecting water quality.
4. Transition to a circular economy: Promoting recycling, reuse and reducing waste generation.
5. Pollution prevention and control: Preventing and reducing air, water and soil pollution.
6. Protection and restoration of biodiversity and ecosystems: Preserving and restoring natural habitats and preventing biodiversity loss

What does Vive do in the field of environmentally sustainable investments & the EU Taxonomy

None of Vive's sustainable selection criteria relate to sustainable investments under the EU Taxonomy.

What do the underlying funds do in the field of environmentally sustainable investments & the EU Taxonomy

None of the underlying funds that Vive invests in has a target for environmentally sustainable investments in accordance with the EU Taxonomy.

Only the Euro Corporate Loans Fund reports ecologically sustainable investments of 1.06% afterwards (31/12/2023) in accordance with the EU Taxonomy.

Continuous improvement and adjustment

Sustainability is a constantly evolving topic. At Vive, we recognize that the standards, legislation and insights surrounding sustainable investing are continuing to evolve. That is why we are constantly refining our sustainability policy and adapting it to the latest developments. This enables us to continuously align our strategy with industry best practices.

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