Sustainability information Gerlin Participaties Coöperatief UA

Gerlin Participaties Coöperatief UA ('Gerlin Participaties') is a constructive and engaged long-term shareholder holding interests in ambitious publicly traded companies in Germany. Gerlin Participaties promotes ecological or social characteristics but does not have a sustainable investment objective. At present, Gerlin Participaties does not take into account the principal adverse impacts of its investment decisions on sustainability factors but expects to have sufficient data in the short to medium term to do so.

No Sustainable Investment Objective

This financial product promotes ecological or social characteristics but does not have a sustainable investment objective as referred to in Article 9 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the "SFDR").

Ecological or Social Characteristics of the Financial Product

Gerlin Participaties promotes ecological and social characteristics.

Gerlin Participaties promotes the following environmental objectives as defined in Regulation (EU) 2019/2088 (the "Taxonomy"): climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

Gerlin Participaties promotes the following social objectives: decent work, adequate living standards and well-being, and inclusive and sustainable communities and society. As sub-objectives, Gerlin Participaties focuses on employee safety, employee well-being, recruitment, development and retention of employees, diversity, human rights, data privacy, and security.

Gerlin uses quantifiable and qualifiable sustainability indicators. It reports on these annually. See the description under the heading 'Methodology.'

Investment Strategy

Gerlin Participaties invests in ambitious publicly traded companies in Germany. It actively invests in companies that are well-positioned for a sustainable future or at least have the ambition to become so. Key selection criteria include the quality of management, the company's growth potential and profitability, its position in the market segment in which it operates, a strong vision on ESG risks, and solid balance sheet ratios. In many cases, a significant portion of the shares is still held by the original founding family and/or the current management. Before investing in a company, Gerlin Participaties conducts a fundamental analysis, considering all company-specific risks, including sustainability risks, and weighing them accordingly. Gerlin Participaties positions itself as a constructive and engaged long-term shareholder.

The binding elements used in selecting investments to meet the ecological and/or social characteristics promoted by Gerlin Participaties are:

its investment universe and exclusion policy. Gerlin Participaties invests in German small and micro caps. This results in relatively low exposure to sustainability risks, as country risk is relatively low and certain high-risk sectors such as mining and oil production are not included in this investment universe. Additionally, Gerlin Participaties explicitly excludes certain sectors, such as tobacco, weapons, pornography, and gambling. Gerlin Participaties also refrains from investing in a company if it has reason to believe that, in the medium to long term, the investment will not qualify as a sustainable investment.
conducting a fundamental analysis of the company. ESG is an integral part of Gerlin Participaties' fundamental analysis, aiming to determine whether a company can create sustainable value in the medium to long term and thus be future-proof.
exercising active ownership as outlined in the Stewardship Policy of Teslin Capital Management BV (“TCM”). Gerlin Participaties actively guides companies towards a sustainable future. By taking substantial stakes in the companies it invests in and acting as a constructive shareholder, Gerlin Participaties is well-positioned to challenge the companies in which it invests on ESG matters, encourage improvements, and monitor their ESG progress over time.

Regarding the proper governance of publicly traded companies, TCM has set out its vision in the Stewardship Policy. Gerlin Participaties focuses on the following topics:

appointment and composition of the management board and supervisory board;
independence and responsibility of the management board and supervisory board;
remuneration policy, shareholder rights, and integrity (throughout the entire value chain); and
compliance with laws and regulations.

TCM has an ESG committee. This committee aims to identify and implement potential sustainability improvements within the investment funds it manages and the companies in which these investment funds invest.

Investment Allocation

Gerlin Participaties will allocate its assets based on its investment strategy, as discussed under “What investment strategy does this financial product follow?”. Gerlin Participaties has not established a minimum share of its investments that must meet the ecological or social characteristics it promotes. Gerlin Participaties has also not set a minimum share of sustainable investments within its portfolio.

Gerlin Participaties intends to allocate its assets fully to sustainable investments in the long term, in accordance with the chart below.

Gerlin Participaties has not set a minimum percentage for the alignment of its sustainable investments with the Taxonomy. Gerlin Participaties intends to assess the sustainability of its investments in the future while taking into account the framework of the Taxonomy and the SFDR. However, it currently lacks sufficient data to do so. Gerlin Participaties will report in its annual reports on the extent to which its sustainable investments are aligned with the Taxonomy, once it has sufficient information available.

Gerlin Participaties has not set a minimum percentage for sustainable investments with an environmental objective that must not be aligned with the Taxonomy. The company intends to assess the sustainability of its investments in the future while considering the framework of the Taxonomy and the SFDR but currently lacks sufficient data to do so. Gerlin Participaties will report in its annual reports on the extent to which its sustainable investments with an environmental objective are not aligned with the Taxonomy, once it has sufficient information available.

Gerlin Participaties has not set a minimum percentage for its sustainable investments to qualify as socially sustainable.

Monitoring of Ecological or Social Characteristics

Gerlin Participaties will report annually on its performance regarding ecological and social characteristics in its annual report, as provided for in the SFDR. It does not intend to have this reporting audited by an external assurance party.

Methodologies

Gerlin Participaties uses quantifiable and qualifiable sustainability indicators in its ESG policy to measure the sustainability of an investment. Currently, it employs the following quantifiable indicators: carbon footprint, employee absenteeism, and workplace accidents. Additionally, Gerlin Participaties uses the following qualitative indicators: the presence of company policies on ESG or CSR, anti-corruption, business ethics, whistleblowing, codes of conduct, health and safety, data protection and privacy, procurement, ESG-dependent remuneration, diversity, and inclusion.

Gerlin Participaties may use ad hoc sustainability indicators to measure the sustainability of its investments. It reports annually (in an appendix to its annual report) on the sustainability indicators used and the performance of its investments against these indicators.

The ESG analysis can be broadly described as follows:

Identifying sustainability themes: Before investing, Gerlin identifies relevant sustainability themes based on industry data and company projects, using public sources and Regulation (EU) 2019/2088 (the "Taxonomy") and the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the "SFDR"). This includes analyzing sectoral trends and peer initiatives related to sustainability. Gerlin Participaties seeks publicly available information about a company's performance on identified sustainability themes and engages with the company on these topics.
Scoring sustainability categories: Gerlin scores companies on nine sustainability categories: climate and energy, circularity, ecosystem impact, employee well-being, customer impact, corporate social responsibility, corporate governance, supply chain management, and resilience within the ESG framework. It identifies material themes within these categories. Gerlin Participaties intends to use the following indicators to determine whether an industry scores ‘low,’ ‘medium,’ or ‘high’: regulatory pressure on the sector to become more sustainable, current sustainability measures within the sector, competitive advantages of a stronger sustainability position, the extent and scope of sustainability risks within the sector, and transition and physical risks.
Selecting sustainability indicators: Based on the identified themes, Gerlin selects relevant ad hoc quantitative and qualitative indicators and collects data accordingly.
Proposing and evaluating sustainability goals: Gerlin formulates sustainability improvement suggestions and discusses them with company management. These suggestions are linked to concrete objectives based on the selected indicators, after which Gerlin engages in discussions with the company’s management.

Gerlin Participaties intends to assess the sustainability of its investments in the future while considering the framework of the Taxonomy and the SFDR. However, it currently lacks sufficient data to do so. Gerlin Participaties expects to obtain sufficient data in the short to medium term, particularly due to the sustainability reporting standards outlined in Directive (EU) 2022/2464 on corporate sustainability reporting (the “CSRD”), which will require companies in which it invests to report on sustainability in the short to medium term.

Data Sources and Processing

Gerlin Participaties uses publicly available data from the companies in which it invests to achieve its ecological and social characteristics. On an ad hoc basis, it may commission external parties to conduct sustainability analyses on a company in which it invests, a company it is considering investing in, or an entire market or sector. In such cases, the data used is determined through mutual agreement. An example of such an ESG analysis is the ESG report that Gerlin prepared with Holtara for 2023.

Gerlin Participaties has not implemented specific measures to ensure data quality and does not have a dedicated process for handling data related to sustainability factors.

Gerlin Participaties generally cannot indicate what proportion of the sustainability data it processes or will process consists of estimates.

Methodological and Data Limitations

Gerlin Participaties currently uses only a limited set of sustainability indicators to assess the performance of its investments in relation to sustainability factors, as described above under Methodologies. This may provide an incomplete picture of the sustainability of its investments.

At present, Gerlin Participaties lacks sufficient information to report on the principal adverse impacts of its investment decisions on sustainability factors, as referred to in Commission Delegated Regulation (EU) 2022/1288.

Due Diligence

Before making an investment, Gerlin Participaties conducts due diligence on the relevant company. It generally does not use external parties for this process, as its investments are primarily limited to publicly traded companies in Germany.

Engagement Policy

Gerlin Participaties positions itself as a constructive and engaged long-term shareholder. In this context, it conducts engagement in line with the stewardship policy of TCM. This includes engaging in discussions on sustainability with the companies in which it invests. Gerlin Participaties does this as part of its ESG strategy, engaging directly with the management of the companies it invests in. More information can be found in the appendix ‘Pre-contractual disclosure under Article 8 SFDR Regulation (EU) 2019/2088’ of the Information Memorandum.

Engagement is a cornerstone of Gerlin Participaties’ investment strategy and entrepreneurial shareholder approach. This means that it seeks to speak with the boards of the companies in which it invests multiple times a year. Gerlin Participaties aims to build a consistent and constructive relationship with both executives and supervisory board members. It seeks to collaborate with the companies it invests in, encouraging them to focus on long-term, sustainable value creation.