Sustainability risk - an environmental, social or governance event or situation which, if it were to occur, could have a real or potential material adverse effect on the value of an investment.

An environmental event or situation (environmental factors) is an event or situation related to climate change, sustainable use and protection of resources (e.g. water, minerals, ecosystems, biodiversity), waste prevention and recycling, and pollution prevention and control.

A social event or situation (social determinants) is an event or situation related to human rights, gender equality and discrimination.

A governance event or situation (governance factors) is an event or situation relating to governance, employee relations, corruption, transparency of employee remuneration, circumvention of international sanctions and tax compliance. 

When managing a collective investment undertaking for informed investors ("CISII"), the management company aims to invest its assets responsibly. The integration of sustainability risks into the investment decision-making and execution process includes the following approaches, which may be applied together or separately: 

1. The methods used in the investment appraisal include a list of exceptions (list of countries, economic sectors and/or activities in which the Management Company cannot finance and invest IISKIS assets); 

2. Integration of sustainability indicators into the analysis and investment management processes for potential investments (the Management Company may additionally take into account the sustainability factors and potential risks associated with a particular investment as part of the normal analysis of a specific investment, as relevant to the specific case). 

The management company and the IISIC it manages pursue environmental and social well-being without investing in specific countries, economic sectors and/or activities. To this end, the Management Company has established and adopted a list of exemptions. The list of exemptions is used to restrict investments in certain countries, economic sectors and/or activities which, by their very nature, may give rise to unmanageable and unacceptable investment risks, adverse environmental or social impacts and are controversial.

The Management Company and the IISIC it manages will not invest in companies that have violated international human rights in the last 5 years; are known for failing to provide adequate working conditions; have caused environmental damage or have been involved in corruption incidents; have violated the Organisation for Economic Co-operation and Development's (OECD) Guidelines for Multinational Enterprises; or are subject to sanctions by the European Union, the United Nations and the Office of Foreign Assets Control of the US Department of Treasury.

The Management Company and the IISKIS it manages do not invest in countries that do not have transparent markets and are subject to sanctions by the United Nations, the European Union, the US Office of Foreign Assets Control.

The management company and IISKIS, which it manages, do not invest in:

1. The arms sector - the production and distribution of weapons, ammunition, combat vehicles, explosive devices or parts thereof;

2. Tobacco sector - the production, sale or distribution of tobacco and related products;

3. Alcohol sector - the sector that produces, sells or trades fermented or distilled alcoholic products;

4. Gambling sector - gambling and betting products and services, including related equipment, applications or services; 

5. The coal sector - coal mining, coal trading and coal power;

6. The nuclear energy sector - products and services from the nuclear industry, nuclear power generation or nuclear energy trading.

Although the Management Company has integrated the assessment of sustainability risks into its investment decision-making procedures, the Management Company does not assess the sustainability relevance of a specific investment target when making investment decisions on IISICs, as the Management Company does not manage an IISIC that promotes environmental or social features or a combination of these features, nor does it manage an IISIC that aims at sustainable investments within the meaning of Articles 8 and 9 of the Regulation. The Management Company may consider material sustainability aspects in the selection of investment targets, in the due diligence of potential investment targets and in the monitoring of investment targets, to the extent practical in the circumstances and in light of the Management Company's commitment to seek to earn the best possible return for investors and to act in their best interests at all times.