Evli Residential II Ky

Financial product’s sustainability information in accordance with EU Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 (sustainability‐related disclosures in the financial services sector). This is a financial product in accordance with Article 8 of the SFDR.

Publication date: December 5, 2022
Legal Entity Identifier: 3245928-9 (business identity code)

a) Summary

This financial product promotes environmental or social characteristics, but its objective is not to make sustainable investments.

The fund promotes environmental and social characteristics in accordance with Evli’s Principles for Responsible Investment, responsible investment principles for real estate funds, Climate Change Principles and climate targets, and requires that target companies follow good governance practices.

In the investment process the portfolio management assesses the development project from an ESG (Environmental, Social, Governance) perspective as part of the overall investment decision. If a significant and unresolved ESG issue is revealed in the assessment, there will be no investment.

The fund promotes climate change mitigation. As the fund participates in the development of real estate sites, it is able to have an influence on environmentally responsible building solutions already at the planning stage. The energy solutions focus on geothermal heat, solar collectors and more efficient heat recovery. Many investments in energy efficiency are also financially sensible in terms of life-cycle costs. In material selection, we focus on low-emission solutions. During the investment period of housing companies, the fund aims to promote environmental characteristics through its own actions and decisions, for example by trying to achieve greater energy efficiency by the real estate. In addition, space solutions at the planning stage and the fund’s own actions and decisions during the investment period are intended to improve the comfort and communality of the investments. Evli’s goal is to achieve carbon neutrality by 2050 at the latest, and it has set an interim target of a 50 percent reduction in indirect emissions from all investments by 2030, provided that this is possible in the investment environment. The comparison year is 2019. The fund-specific share of the emission reduction target may vary between funds.

The portfolio management team actively monitors target properties, for example their energy and water consumption and tenant satisfaction, and it also regularly visits the properties. Evli’s real estate funds have several stakeholders. The portfolio management team cooperates with various stakeholders in order to gain an understanding of which ESG matters are important to them and develop the quality of the properties and to support the energy efficiency targets. Evli’s real estate funds only deal with trusted partners and tenants. The fund aims to invest only in ‘A’ energy rated sites. In addition, all sites are compliant with nearly zero-emission building (NZEB) requirements.

As the fund is involved in the development of real estate, it has better opportunities to influence selected building-specific solutions than it would if it were buying completed real estate. Furthermore, as the fund participates in the development of real estate sites, it is able to have an influence on environmentally responsible building solutions already at the planning stage. Evli’s Principles of Responsible Investment and fund-specific responsibility principles set the framework for Evli’s engagement and conduct in the event of perceived breaches of norms.

The housing companies constructed by the fund are managed in accordance with the principles of good governance and taking stakeholders into account. Also during the construction period, partners are expected to exercise good governance, compliance with which is a prerequisite of cooperation. An assessment of the quality of corporate governance is an important part of the assessment of potential investments.

All active investments of the fund promote environmental and social characteristics. The proportion of ‘A’ energy rated sites in the portfolio, the energy consumption of sites, the indicators of principal adverse sustainability impacts associated with real estate investments (exposure to fossil fuel-related risk in real estate assets and exposure to risk related to energy-inefficient real estate assets) and carbon intensity are used as indicators to measure the realization of the environmental or social characteristics promoted by the fund. The fund collects data on sustainability indicators that are relevant to the promotion of its environmental and social characteristics. The data is not verified by a third party and the completeness of the data is reported at the same time. The completeness of the data does not affect compliance with the above principles.

b) No sustainable investment objective

This financial product promotes environmental or social characteristics, but its objective is not to make sustainable investments.

c) Environmental or social characteristics of the financial product

The fund promotes environmental and social characteristics in accordance with Evli’s Principles for Responsible Investment, responsible investment principles for real estate funds, Climate Change Principles and climate targets, and requires that target companies follow good governance practices.

In the investment process the portfolio management assesses the development project from an ESG (Environmental, Social, Governance) perspective as part of the overall investment decision. If a significant and unresolved ESG issue is revealed in the assessment, there will be no investment. As the fund is involved in the development of real estate, it has better opportunities to influence selected building-specific solutions than it would if it were buying completed real estate.

The fund promotes climate change mitigation. As the fund participates in the development of real estate sites, it is able to have an influence on environmentally responsible building solutions already at the planning stage. The energy solutions focus on geothermal heat, solar collectors and more efficient heat recovery. Many investments in energy efficiency are also financially sensible in terms of life-cycle costs. In material selection, we focus on low-emission solutions. During the investment period of housing companies, the fund aims to promote environmental characteristics through its own actions and decisions, for example by trying to achieve greater energy efficiency by the real estate. In addition, space solutions at the planning stage and the fund’s own actions and decisions during the investment period are intended to improve the comfort and communality of the investments. Evli’s goal is to achieve carbon neutrality by 2050 at the latest, and it has set an interim target of a 50 percent reduction in indirect emissions from all investments by 2030, provided that this is possible in the investment environment. The comparison year is 2019. The fund-specific share of the emission reduction target may vary between funds.

The portfolio management team actively monitors target properties, for example their energy and water consumption and tenant satisfaction, and it also regularly visits the properties. Evli’s real estate funds have several stakeholders. The portfolio management team cooperates with various stakeholders in order to gain an understanding of which ESG matters are important to them and develop the quality of the properties and to support the energy efficiency targets.

d) Investment strategy

As a part of the Evli Fund Management Company, real estate funds have committed to complying with Evli’s Principles for Responsible Investment. In addition to complying with Evli’s Principles for Responsible Investment, the fund complies with the real estate funds’ own responsible investment principles.

Evli’s real estate funds only deal with trusted partners and tenants. The fund aims to invest only in ‘A’ energy rated sites. In addition, all sites are compliant with nearly zero-emission building (NZEB) requirements.

The housing companies constructed by the fund are managed in accordance with the principles of good governance and taking stakeholders into account. Also during the construction period, partners are expected to exercise good governance, compliance with which is a prerequisite of cooperation. An assessment of the quality of corporate governance is an important part of the assessment of potential investments.

e) Proportions of investments

All active investments of the fund promote environmental and social characteristics.

f) Monitoring of environmental or social characteristics

The proportion of ‘A’ energy rated sites in the portfolio, the energy consumption of sites, the indicators of principal adverse sustainability impacts associated with real estate investments (exposure to fossil fuel-related risk in real estate assets and exposure to risk related to energy-inefficient real estate assets) and carbon intensity are used as indicators to measure the realization of the environmental or social characteristics promoted by the fund.

g) Methods concerning environmental or social characteristics

The environmental and social characteristics promoted by the financial product are monitored and reported using the sustainability indicators mentioned above.

h) Data sources and data processing

In the investment process the portfolio manager assesses the development project from an ESG perspective as part of the overall investment decision. The fund collects data on sustainability indicators that are relevant to the promotion of its environmental and social characteristics. The data is not verified by a third party and the completeness of the data is reported at the same time.

i) Limitations of methods and data

The achievement of the promoted environmental and social characteristics is reported annually through the sustainability indicators mentioned above, in conjunction with which the completeness of the data is also reported. All active investments of the fund promote environmental and social characteristics by observing Evli’s Principles for Responsible Investment and fund-specific responsibility principles. The completeness of the data does not affect compliance with the above principles.

j) Due diligence

In the investment process the portfolio manager assesses the development project from an ESG perspective as part of the overall investment decision. If a significant and unresolved ESG issue is revealed in the assessment, there will be no investment. As the fund is involved in the development of real estate, it has better opportunities to influence selected building-specific solutions than it would if it were buying completed real estate. Furthermore, as the fund participates in the development of real estate sites, it is able to have an influence on environmentally responsible building solutions already at the planning stage. The portfolio management team actively monitors target properties, and it also regularly visits to them. The portfolio management team cooperates with various stakeholders in order to gain an understanding of which ESG matters are important to them and develop the quality of the properties and to support the energy efficiency targets. The methods are based on data collected from the targets, which is not verified by a third party.

k) Engagement policies

The financial product can be used to engage with the target companies as part of the promotion of environmental and social characteristics. Evli’s Principles of Responsible Investment and fund-specific responsibility principles set the framework for Evli’s engagement and conduct in the event of perceived breaches of norms.

l) Designated reference value

The fund does not have a benchmark index.

Information on environmental and social characteristics of the fund in accordance with article 8 of Sustainable Disclosure Regulation (in force from January 1, 2023)