Sustainability

INFORMATION PROVIDED BY RECORDE ASSET MANAGEMENT LTD (1123 BUDAPEST, ALKOTÁS UTCA 55-61. – “FUND MANAGER”) ACCORDING TO ARTICLE 3 (1), 4 AND 5 OF REGULATION (EU) 2019/2088 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL (SFDR):

Considering sustainability factors (i.e. environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters) in investment projects can have a significant positive impact on the value of investments. Sustainability risks, on the other hand, may negatively affect investments. A sustainability risk is an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential negative material impact on the value of the investment. These include activities that significantly harm the environment, fundamental human rights violations, the use of child labour, serious violations of workers’ rights and discrimination in the workplace.

Regulation

Regulation (EU) 2019/2088 of the European Parliament and of the Council (SFDR), which is directly applicable in all EU Member States, including Hungary, provides that management companies shall publish information on sustainability: (1) they shall publish information about their policies on the integration of sustainability risks into their investment decision‐making process (Article 3); (2) where they consider principal adverse impacts of investment decisions on sustainability factors, they shall also publish 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 they make available (Article 4); and (3) with respect to investment funds they manage, they shall provide information on sustainability in their prospectuses and management policies.

Article (6).

It is important to note that the commitment to sustainability by fund management companies is only described in general terms, since, based on the EU regulatory framework and the related detailed rules, there are still a number of questions regarding the comprehensive interpretation and implementation of legislation by capital market service providers.

In addition, at the time of the disclosure of this document, legislation governing the details of SFDR (e.g. information on sustainability indices) has not yet entered into force, which means that the information below may be modified and amended when being implemented.

Recorde Asset Management Ltd’s sustainability policy for investment decisions

As a financial market participant subject to SFDR, Recorde Asset Management Ltd recognises that sustainable development is a key issue and that sustainability risks must be proportionally integrated into investment decision-making processes, taking due account of the company’s size, the nature of its activities and the types of investment funds it manages as financial products under SFDR.

This means Recorde is committed to implementing this approach into its operations, corporate governance and activities and taking into account relevant, internationally accepted standards.

When making investment decisions, Recorde takes due account of its size, the nature and scale of its activities and the types of investment funds its manages, and using the principle of proportionality, considers the main adverse impacts on sustainability factors (i.e. environmental, social and governance impacts) and defines its due diligence policy as follows:

In its investment decision-making processes, Recorde assesses sustainability risks using public information and available indices, and based on its investment policy strives to avoid including investments in assets the issuer or manufacturer of which is thought to have caused a negative material impact on sustainability (e.g. activities that significantly harm the environment, fundamental human rights violations, the use of child labour, serious violations of workers’ rights or discrimination in the workplace)

Taking these due diligence principles into consideration, when making decisions about investments in assets from issuers and manufacturers with lower ESG (environmental, social and governance) indices and products made by manufacturers whose value greatly depends on the value of the assets of such issuers are given less weight. This is because these assets are more likely to have higher sustainability risks, which may have a material negative impact on sustainability factors.

Information on investment funds managed by Recorde

Recorde declares that it incorporates sustainability risks into its investment decision-making processes for all the investment funds it manages. The method for doing this is provided in section ... of the prospectus and section ... (risks) of the management policy of the funds concerned with effect from ... 2023.

Prospectuses and Management Policies from ... 2023 are available on www.recorde.hu under the Investment funds menu item.

Recorde does not apply articles 8 and 9 of the SFDR to its investment funds.

The integration of sustainability risks into remuneration practices

One of Recorde’s core objectives is to follow remuneration practices that allow for prudent risk management and do not encourage taking risks – including sustainability risks – that are not in line with its investment decision-making and responsible corporate governance procedures.

Recorde takes sustainability risks into consideration when determining the remuneration payable to its employees – both those covered by its remuneration policy and those not – under the remuneration policy or remuneration practices.

In this context, when employees are appraised, their environmental awareness, their conduct towards their colleagues and subordinates, their conduct when they represent or act on behalf of Recorde, and any actions that affect Recorde’s reputation are taken into consideration.

If a sustainability risk arises in the above context, it is reflected in the appraisal of the employee in question, which has an impact on the remuneration payable and paid to them.

Budapest, 3 October 2023 Recorde Asset Management Ltd.