Information about Merill SICAV PLC’s Integration of Sustainability Risk

The below information is disclosed in line with regulatory obligations relating to Regulation (EU) 2019/2088 (SFDR) of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector which came into force on the 10th March 2021.

In line with SFDR obligations, Merill SICAV PLC (‘the Company’) falls under the scope of a Financial Market Participant.

Article 3 of SFDR requires Financial Market Participants to publish on their website information about their policies on the integration of sustainability risk in their investment decision processes.

The Company has in place a sustainability risk policy which is governed by the ESG Committee – an internal committee within the Company. The role of the ESG Committee is to provide direction on ESG investment risk strategy and develop internal tools and resources which promote awareness and understanding of ESG risks within the firm. The Company’s investment approach is governed by incorporating a number of investment principles into its processes amongst which include active management, the focus on total returns, and emphasis on capital preservation.

1. ESG Investment Risk Management Approach

Whilst the Company’s investment process has always to some degree, taken into account ESG related risk factors, the Company has systematically incorporated this approach.

1.1 ESG Integration

The Company primarily employs an ESG integration investment strategy. ESG integration describes an approach where material ESG risk factors are considered as part of the broader investment process.  

In line with the Company’s active management philosophy, ESG integration involves considering both:

• Top-down  macro-level  ESG  analysis:  analysing  and  evaluating  trends  and  development  at  a global/regional/country level in terms of the political, legal and regulatory, environmental and social megatrends shaping the operating environment of governments and economic development, and which set the stage for corporate activities;
• Bottom-up micro level ESG issuer analysis: at the corporate level, this involves fundamental analysis and evaluation of ESG management and performance trends and developments for a given industry.

The Company acknowledges the need to be pragmatic when assessing ESG factors, to take into account legal and cultural differences in different markets.  As such, the analysis will be sensitive to the issuer’s individual situation in terms of the local norms, laws, regulation and expectations of the market in which it operates.

The scope of the Company’s ESG integration strategy is to factor in ESG factors at different levels:

• Issuer: in terms of credit analysis e.g. what is the ESG risk exposure on an individual issuer-by-issuer level?
• Sector: as part of the issuer analysis e.g. what are the material ESG risks for certain industries/sectors, and to what degree are there common ESG risks across sectors?
• Portfolio/team: in terms of portfolio characteristics e.g. What is the ESG investment risk exposures at a fund level? and at the;
• Company: in terms of oversight of ESG risks across all portfolio strategies e.g. what is the ESG investment risk exposure across all the Fund mandates?

Remuneration Policy

The Company’s staff remuneration is set to ensure that remuneration is also rewarding staff members acting in line with the mission, vision and strategy of the shareholder and Board of Directors respectively. Sustainability risk is integrated within the Company’s remuneration policy and therefore, the Company expects all staff members to follow such practices as set by the ESG Committee of the Company.