ESG Sustainable Investing

Transcription

ESG Sustainable Investing
Frank Klein
Managing Director
July 2010
Agenda

DB Advisors

What is social responsible investing?

DB Advisors ESG concept at a glance

Why social responsible investments?

Global growth of sustainable investments

Trends and drivers in the ESG market

ESG – The next steps

Conclusion
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DB Advisors
Deutsche Bank: Global firm, extensive resources

A global organization
Established in over 70 countries worldwide
A+ rated by Standard & Poor's
Tier 1 capital ratio of 11.2%*



Private Clients and
Asset Management

Businesses that serve a
broad range of clients
Asset
Management
Private &
Business
Clients
Corporate and
Investment Bank
Private
Wealth
Management
Global
Banking
Global
Markets
Deutsche Asset Management
EUR 540 billion AuM

A full range of asset
management capabilities
Institutional
DB Advisors
EUR 176 bn
Insurance
Alternatives
Retail
EUR 142 bn
EUR 45 bn
EUR 177 bn
Management of EUR 363 billion
for institutional clients worldwide
As of April 30, 2010
Source: DB Advisors, Deutsche Bank AG
Due to rounding, numbers may not add up to total
* As of March 31, 2010
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Corporate
Investments
Corporate
Investments
EUR 537 billion assets under management
Business lines
DWS
32.4%
Asset classes
RREEF¹
8.3%
Fixed Income
(incl. Cash)
66.5%
Hedge Funds
0.8%
Real Estate
7.7%
Insurance
25.8%
DB Advisors
33.5%
Quantitative
Strategies
2.3%
Infrastructure
1.2%
As of March 31, 2010
¹ Rosenberg Real Estate Equity Funds
Source: DB Advisors
Retail and institutional
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Equity
21.5%
DB Advisors Germany: Our clients
EUR 96 billion assets under management
Insurances
39.9%
Charities
4.8%
Banks
5.9%
Other Non-Profit
Organizations
2.7%
Supranationals
0.4%
Governments**
1.4%
Central Banks
7.5%
Corporates*
16.0%
Pension funds
21.4%
As of March 31, 2010
* Incl. Pooled Funds
** Incl. Local Authorities
Source: DB Advisors
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Our global fixed income platform
274 investment professionals
Frankfurt
Luxembourg
London
Warsaw
Seoul
Tokyo
Louisville
Taipei
New York
Manila
Boston
Hong Kong
Singapore
Mumbai
Melbourne
Madrid
Zurich
As of March 2010
Source: DB Advisors
Retail and institutional
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Americas:
101
Europe:
148
Asia:
25
We offer the complete asset management value chain
Risk
management
Strategic
asset allocation

ALM

Portfolio
optimization

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Research
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
Risk overlay

Structuring
Asset
management

Active management
(Stock selection,
corporates, ...)

Tactical overlay

Hedge funds

Indexed
Fund
administration

Master-KAG

Fund administration

Reporting
Reporting
What is social responsible investing?
Four dimensions of an investment
Source: DB Research
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Evolution of the term ESG
SRI
Socially
Responsible
Investment
Sustainability
Ethical
Exclusions
SEE
Social, Ethical,
Environmental
Responsible Investing
CG
Corporate
Governance
ESG
Environment,
Social, Governance
CSR
Corporate Social
Responsibility
Responsible investing for DB Advisors combines environmental, ethical, social
and governance considerations with investors' financial objectives, this means
responsible investing without compromising investment performance opportunities
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History of social responsible investments
Source: Evaluation Associates, Janet Kalwat, Ph.D. Oct 08
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Classification of ESG investment approaches
External versus internal
External
Internal

ESG ratings from external rating agencies


Sustainability indices


Negative approach (exclusion of investments
which are non-compliant with ESG factors)
Positive approach (selection of investments
which actively apply ESG criteria determined by
the investment company)
Best-in-class approach (selection of best
performing companies in each sector)
Broad versus core
Broad
Core

Simple screening (up to 2 negative criteria)


Engagement


Integration

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Negative screening / ethical exclusions (more
than 2 negative criteria)
Positive screening (including best-in-class and
SRI theme funds)
Combination of ethical exclusion and positive
screening
Use of different ESG concepts
Clients
Asset Managers
ESG already implemented
Negative screening
Negative screening
Weighted screening
Weighted screening
Engaged
Engaged approach
Integrated
Integrated approach
Focused asset
Focused asset approach
Others
Other RI approaches
Do not invest
Do not currently invest
0%
10%
20%
30%
40%
50%
0%
10%
20%
30%
40%
50%
60%
70%
ESG not yet implemented
Negative screening

Continental European clients focus on
exclusion criteria, integration and bestin-class,

UK clients on engagement, and

US clients on exclusion, shareholder
advocacy and community investing
Weighted screening
Engaged
Integrated
Focused asset
Others
0%
10%
20%
30%
40%
50%
As of June 2008
Source: Responsible Investment Landscape 2008, Asset Owners / Asset Managers
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60%
DB Advisors ESG concept at a glance
Responsible investing
DB Advisors/DWS concept at a glance



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Responsible investing on prudent basis
–
Guiding principle: ESG (Environment, Social, Governance)
–
Clear "best-in-class" approach
–
Positive theme overlay
–
Selective product-related exclusion criteria and UN global compact assessment
External ESG expertise combined with internal investment competence
–
Dedicated ESG research provider for measurable ESG performance
(Sustainalytics company)
–
Independent ESG advisory panel
–
DB Advisors/DWS investment expertise
Good performance since change of fund management and concept
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DB Advisors/DWS' understanding of responsible investing
Responsible investing for DB Advisors/DWS
combines environmental, ethical, social and
governance considerations with investors' financial
objectives, thus means responsible investing
without compromising the chance of investment
performance
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External know-how combined with internal expertise
DB Advisors/DWS
Sustainalytics company

Independent ESG research network in
Europe, North America, Asia and Middle
East

160 analysts are combining global
coverage with local know-how

Actually provides ESG raw data and
detailed company/sector reports for more
than 1,800 stocks (MSCI World +
DB Advisors / DWS theme basket)
Source: DB Advisors
For illustrative purposes only
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ESG advisory panel

Well regarded ESG experts from
foundations, clergy, academia and industry

Independent, regular review and counsel of
customized screening methodology and
selection criteria (best-in-class, premia)

Forum for further exchange and promotion
in the field of ESG
Research provider Sustainalytics company
Detailed company/sector reports

Worlds' largest independent ESG/SRI research provider

Independent Swiss-based company acting as a holding and combining the ESG expertise of
its 12 network partners in North America, Europe and Asia

The network offers a global coverage, but based on local knowledge, contacts and insights

Sustainalytics employs within their network roughly 160 employees and perform coverage of
more than 5,000 companies based on the same research standard and framework

Sustainalytics research is reviewed continuously and uploaded to "G-Cube"* on a monthly
basis

The decision for Sustainalytics company as independent ESG research provider has been
made after an extensive due diligence process and worldwide comparison of all well
regarded ESG research houses

Sustainalytics offers to DB Advisors/DWS a sufficient breadth and depth of coverage, a high
degree of transparency and customization opportunities as well as a wide set of ESG criteria
for every company analyzed
* G-Cube is DB Advisors' innovative proprietary web-based global research and relative-value platform. This centralized database is accessible from anywhere in the world by any of our
investment professionals, giving them a secured on-demand access to both internal and external research, as well as relative value investment recommendations.
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Members of our independent ESG advisory panel
Review and counsel of customized screening methodology and selection criteria
Member
Background
Prof. Dr. Alexander Bassen
Chair for finance and investments, University of Hamburg, scientific advisor for (among others)
carbon disclosure project, DVFA, DSW and Germany's corporate governance commission
Prof. Rob Bauer
Part-time Professor of Finance (Maastricht University), Faculty of Economics and Business administration, Director
of the European Centre of Corporate Engagement (ECCE), Director of the Netspar-UMBS Academy (postgraduate
education for professionals and Board members of pension funds and insurance companies
Christopher Burnham
Vice chairman of DeAM
Ex under secretary general of UN with reporting to Kofi Annan (until 2006), co-design of UN's first ethics office and
UN global compact
Michael Dittrich
Head of Administration, Bundesstiftung Umwelt, responsible for asset management, organization, finance, HR and
IT; attorney at law; lecturer at University of Osnabrück
Peter J. Hadasch
Director of pension and insurance services of Nestlé Group Germany
Jörg-Eduard Krumsiek
Managing Director of Deutsche Bank Foundation
Dr. Claus Meier
Director of finance of Evangelic Lutheran Church Bavaria, member of financial expert committee Evangelic
Lutheran Church Germany
Christian Strenger
Member of DWS supervisory board
Member of Germany's corporate governance commission, World Bank/OECD corporate governance forum, former
chairman of International Corporate Governance Network (ICGN)
Source: DB Advisors
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ESG solutions of DB Advisors/DWS

Global equity products:
DWS Invest Responsibility, DWS Klimawandel, DWS Invest Climate Change,
DWS Zukunftsressourcen, DWS Invest New Resources, DWS GO Green
Certificates Product Suite

European multi asset and fixed income products:
DVG Stiftungsfonds, GKD-Fonds, DWS Bildungsfonds

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Institutional mandates (equity, fixed income, dynamic asset allocation) with
consideration of individual client's restrictions
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ESG Investment process – equity
Investment
performance
ESG
investment
portfolio
(80 - 100 stocks)
Portfolio building
Idea pool
(350 stocks)
DB Advisors proprietary ESG
investment universe (700 stocks)
ESG analyzed global universe
MSCI World + DB Advisors themes
(1,800 stocks worldwide)
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G-Cube
Sustainalytics
ESG analysis
DB Advisors
ESG
performance
Advisory panel
Fundamental analysis
ESG best-in-class at DB Advisors
DB Advisors rating process
Final ESG company rating
Positive
ESG momentum
+
Rating (A - F)
Exemplary
behavior
+
Premia
Preliminary ESG score (0 - 100)
40%*
30%*
Environment
Social
Governance
10%
Reporting
8
35%
Employees
21
33%
Corporate ethics
11
40%
Goals and initiative
27
25%
Contractual partners
16
67%
Corporate govern.
14
50%
Implementation
29
20%
Customers
22
20%
Society
26
Weighting
Number of indicators
* Current weighting, recommended band with of the DB Advisors ESG advisory panels between 30% - 40%
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30%*
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DWS invest responsibility: ESG investment process
DB Advisors/DWS rating process details
Step I - processing of Sustainalytics raw data

Sustainalytics provides DB Advisors/DWS with nearly 200 ESG indicators for each
company within the ESG researched global universe (MSCI World companies +
proprietary DB Advisors/DWS theme pool, ~ 1,800 stocks)

Taking sector specific ESG issues into account, DB Advisors/DWS uses a
sophisticated, customized ESG methodology for each (sub)sector to weight the
three main themes (Environment, Social Interests, Governance) and the
respective indicators

Aggregation of indicator scores with their relevant weightings lead to a preliminary
ESG company score
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Step II - awarding ESG company ratings

Application of additional premia for exemplary conduct and positive momentum to reward
company achievements (proprietary DB Advisors/DWS process)

Calculation of final ESG company score, overall universe and sector ESG median scores

Company ranking within the overall ESG-researched global universe and within the industry
sectors

ESG company ratings are awarded based on the universe median score and application of
standard deviations
A
B
C
D
E
F

Excellent ESG performance
Very good ESG performance
Good ESG performance
Below average ESG performance
Questionable ESG performance
Poor ESG performance
ESG score  1.5 standard deviation (SD)
ESG score range: (0.5; 1.5) SD
ESG score range: (0.0; 0.5) SD
ESG score range: (-0.5; 0.0) SD
ESG score range: (-1.5; -0.5) SD
ESG score < -1.5 SD
ESG company ratings are feed into DB Advisors/DWS global research database G-Cube*
for all in-house analysts and portfolio managers
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Step III - construction of proprietary ESG investment universe (~700 companies)

"Universe-best-in-class" - inclusion of all companies with a rating from A - C

"Sector-best-in-class" - exclusion of all companies in the "universe-best-in-class" basket
below the relevant sector median ESG score to prevent sector bias

Monthly tracking of ESG company ratings and trends to ensure constant best-in-class 
companies longer than 6 months below C rating and with negative ESG momentum will be
excluded from the ESG investment universe

The portfolio management can to a minor extent also include "D" rated companies,
especially if
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–
Possible shareholder activism will be pursued
–
Noticeably positive ESG momentum is recognized
–
Companies fluctuating between C/D and are from fundamental aspects not replaceable by companies
with higher ESG scores
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Fundamental analysis
Narrowing the investment universe (~350 companies)

Strong, independent proprietary research base globally
–
Fundamental equity research by DB advisors and DWS alpha specialists and third party
research
–
Key investment themes identified by DB advisors and DWS alpha specialists and third
party research

Company meetings

Qualitative screening and valuation tools
–

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Custom tailored to region and sector
Internal sector/country allocation signals
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Portfolio construction

Benchmark aware but not benchmark-driven

Portfolio manager is responsible for implementing all the investment decisions
pertaining to regional, sector, and currency allocation, single stock decisions and
weightings and implementation of style and size factors

Final ESG portfolio contains 70 - 100 stocks

Single stock weights usually vary between 0.75 to 5.0%

Typically the underweight of a certain sector within the portfolio will not exceed
15% of the benchmark (on GICS 10 level)
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Portfolio: DWS Invest Responsibility
ESG rating allocation
ESG rating allocation
Fund MSCI World
A
B
C
D
E
F
39.6
32.4
7.4
1.0
0.0
0.0
9.2
22.8
18.0
18.6
27.3
4.1
Total
80.4
100.0
A
C/D
Weighted average rating
(for Sustainalytics-rated companies)
Number of shares:
Rating coverage:
Not yet rated by ESG
(DB Advisors/DWS Themes/Innovaters)
80
1.800
90%
100%
10.2
1.4
0.0
4.9
1.1
2.9
Cash (excl. Derivatives)
9.4
Source: DB Advisors
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50%
40%
30%
20%
10%
0%
A
B
C
Fund
D
E
MSCI (R)
Excl. not ESG-rated companies and cash (scaled to 100%)
Clear ESG strategy within traditional sectors
Renewable energies and clean technologies
Personal health, development and balance
Emission control, reduction and avoidance
Waste avoidance, disposal and reprocessing
As of May 31, 2010
60%
Pers onal health,
developm ent and
balance
48%
Clear ESG
s trategy within
traditional
s ectors
14%
Em is s ion control,
reduction and
avoidance
10%
Was te
avoidance,
dis pos al and
reproces s ing
28%
F
ESG investment process – fixed income
Rating process
ESG
investment
portfolio
Investment
performance
80 - 100
10
15
15
DB Advisors
Portfolio building
Idea pool
350
30
20
20
DB Advisors proprietary ESG
investment universe
400
50
60
30
ESG analysis
G-Cube**
ESG analyzed universe
*
**
1.825
50
100
30
Corporates*
Covered bond issuers*
Sovereigns*
Agencies / Subsovereign*
Sustainalytics
ESG
performance
Advisory panel
Fundamental and relative value analysis
Number of issuers
G-Cube is DB Advisors' innovative proprietary web-based global research and relative-value platform. This centralized database is accessible from anywhere in the world by any of our
Source: DB Advisors; for illustrative purposes only
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ESG investment process fixed income
Rating process corporates, covered bond issuers*, agencies
ESG company rating
Rating (A - F)
ESG score (0 - 100)
40%**
30%**
Environment
Social concern
Governance
10%
Reporting
8
35%
Employees
21
33%
Corporate ethics
11
40%
Goals and initiatives
27
25%
Contractual partners
16
67%
Corporate govern.
14
50%
Implementation
29
20%
Customers
22
20%
Society
26
Weighting
Number of indicators
* Mortgage bonds
** Current weighting, recommended bandwidth of the DB Advisors ESG advisory panel between 30% - 40%
Source: DB Advisors; for illustrative purposes only
30
30%**
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One transparent, global process
Our process is designed to achieve consistent excess returns
with risk management and accountability at every step of the process
Research and
decision-making
Alpha specialists
Portfolio design
and construction
Conduct both research and
alpha decision-making
Implementation
Portfolio construction team
Dedicated portfolio manager
Communicate signals in
consistent framework
Creates a model portfolio
based on alpha signals
and blueprint
Implement client portfolio
Minimize time decay
of research
Process management
Process managers
Actively and continuously evaluate signal quality and risk exposures
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Rating process sovereigns (I)



Evaluation of the 100 largest countries in the world (as per GDP) with Sustainalytics country compliance
assessment
Avoid investments in countries, which are documented to not sufficiently follow well-established
international norms
Systematic screening on the basis of selected conventions and treaties (UN); assessment of a country's
factual governance (World Bank)
ESG Country Rating
Rating (red, yellow, green)
Exclusion criteria
Country Compliance Assessment Score
Standards (treaties, conventions, UN)




Major international Human Rights Instruments
ILO Core Conventions
Core Climate Convention
Conventions and agreements on nuclear, biological and
chemical weapons
Governance (World Bank)






Source: DB Advisors
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Voice and accountability
Political stability
Government effectiveness
Regulatory quality
Rule of law
Control of corruption
Rating process sovereigns (II)

Exclusion of those countries with a country compliance assessment score which is
clearly below the average of all countries assessed
ESG country rating: "Red"

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Investment in bonds of those countries with an ESG country rating "green"; to a
minor extend selective investments in "yellow" rated countries are possible
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Country compliance assessment
Scores 2009 - selected results
GDP
Rank
Country
Total Score
CCA Rank
Denmark
Finland
Austria
Iceland
Ireland
Netherlands
Norway
Sweden
Switzerland
Germany
Luxembourg
United Kingdom
Australia
28
33
25
98
31
16
24
22
21
4
67
6
14
47
47
46
46
46
46
46
46
46
45
45
45
44
1
1
3
3
3
3
3
3
3
10
10
10
13
Brazil
El Salvador
Jordan
Serbia
Argentina
United States
8
92
95
70
29
1
35
35
35
35
34
32
44
44
44
44
48
61
Algeria
Azerbaijan
Bahrain
Belarus
Lebanon
Russian Federation
Kazakhstan
United Arab Emirates
Venezuela, RB
Bangladesh
Cameroon
Oman
Thailand
45
73
99
63
83
9
52
49
30
61
89
78
34
31
31
31
31
31
31
29
29
29
28
28
28
28
68
68
68
68
68
68
79
79
79
84
84
84
84
Date of research: August 2009
Source: Systainalytics; for illustrative purposes only
Past performance is no guarantee of future results.
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CCA Recommendation
CCA details: Germany
Germany
Human Development Index - Rank
Investment Recommendation
Ratified
Score
10
Source
Yes
2
OHCHR
Yes
2
OHCHR
Yes
2
OHCHR
Yes
2
OHCHR
Yes
2
OHCHR
Yes
2
OHCHR
Yes
Yes
1
1
HDR
HDR
Yes
Yes
1
1
HDR
HDR
Yes
Yes
1
1
HDR
HDR
Yes
Yes
1
1
HDR
HDR
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
2
2
2
2
2
2
2
2
UNFCCC
UNEP
UNFCCC
CBD
UNDDA
CTBTO
OPWC
UNDDA
9
WB
45
Total
CCA Rank
HDR
22
International Agreement
Signed
Major international Human Rights Instruments
International Convention on the Elimination of All
Yes
Forms of Racial Discrimination (1965)
International Convention on Civil and Political Rights
Yes
(1966)
International Covenant on Economic, Social and
Yes
Cultural Rights (1966)
Convention on the Elimination of All Forms of
Yes
Discrimination Against Women (1979)
Convention against Torture and Other Cruel,
Yes
Inhuman or Degrading Treatment or Punishment
(1984)
Convention on the Rights of the Child (1989)
Yes
Fundamental Labour Right Conventions
Freedom of association and collective bargaining
Convention 87
NR
Convention 98
NR
Elimination of forced and compulsory labour
Convention 29
NR
Convention 105
NR
Elimination of discrimination in respect of
employment and occupation
Convention 100
NR
Convention 111
NR
Abolition of child labour
Convention 138
NR
Convention 182
NR
International Treaties
Framework Convention on Climate Change
Yes
Montreal Protocol (Ozone Layer)
Yes
Kyoto Protocol
Yes
Convention on Biological Diversity
Yes
Non-Proliferation of Nuclear Weapons Treaty
Yes
Comprehensive Nuclear Test Ban Treaty
Yes
Chemical Weapons Convention
Yes
Biological Weapons Convention
Yes
Governance
Voice and Accountability, Political Stability,
Government Effectiveness, Regulatory Quality,
Rule of Law, Control of Corruption
Credit research methodology
Original and timely credit analysis is the foundation for possibly generating alpha
Company analysis
Quantitative




Balance sheet analysis
Profit and loss
Cashflow
Ratios
Qualitative



Management
Regulatory environment
Specific industry and
company risks
Instrument-specific




Prospectus
Structure
Liquidity
Documentation
Results
Long-term view
current internal rating
G-Cube*
Short-term view
relative value + absolute return
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Company and credit investment criteria
Understanding the quality and risk of the company and the issue in equal depth
is essential to investment success
Qualitative
and quantitative research


Good or bad business
–
Industrial background
–
Company specific
–
Capital management
Instrument-specific
analysis

SWOT
–
Strengths, weaknesses,
opportunities, threats

What has changed / is changing?

Capital holders



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Guarantee
–
Holding company/operating
company/SPV
–
Subordination
–
Collateral
Covenants
–
Restrictions on corporate
activity/ownership
–
Triggering events
Optional
–
Principal payments
–
Coupon payments
Documentation
Quantitative internal rating model

Application of own discriminant
analyses (see E. Altman)

Selection of sectors, companies
and relevant ratios

Construction and testing of
sector models; analysis of
incorrectly classified companies
(inclusive qualitative analysis)

Internal rating

Credit quality forecast
Christoph Klein: "Analysis and Evaluation of Corporate Bonds", in: the Handbook of Finance,
F. J. Fabozzi, Wiley & Sons, Hoboken 2008, volume 2, pp. 447- 454.
Source: DB Advisors, for illustrative purposes only
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Investment process ESG credit
1. Sector analysis
8. Sell discipline
2. Independent and proprietary
analysis of directional and
fundamental credit drivers of
individual issuers
7. Permanent risk
management and
monitoring
3. ESG analysis
II
6. Portfolio construction incl.
validation of the ESG profile
5. Long-term and short-term view
on individual credit instruments
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4. Instrument specific analysis
Why social responsible investments?
Increased relevance for companies and investors
Climate risks affect profitability

"There will be a large creation and re-distribution of shareholder value in the
transition to a low carbon economy – there will be winners and losers at sector
level, and within sectors at company level. The winners are more likely to be those
businesses that take the time to understand and address this complex area."
Tom Delay, Chief Executive, The Carbon Trust

The correlation between climate risks and opportunities and financial performance
is quantifiable. Litigation, regulation, reputation and investments will affect.
CAPEX, Cash Flow, Operating Costs and Cost of Capital
40
UniHH0710
Increased relevance for companies and investors

Scandals and climate change with first financial impact,
e.g. for re-insurance companies

Media coverage faster and more immediate, e.g. internet

Discussion on values

Trust and reputation

Increased number of CSR and sustainability reports

Recruit and retain employees

Consistent strategy of companies for production and
investment side
Reasons to invest in SRI/ESG strategies,
in % of clients who follow SRI/ESG
approaches
Beliefs of
ow ners and
Board
42%
38%
Social &
environmental
values
36%
13%
27%
Corporate
culture
25%
21%
Performance

Company valuation including sustainability performance

Legal and regulatory requirements, e.g. for pension funds


41
Lobby and special interest groups, e.g. UN PRI, UNEP
FI, Global Compact
Increase / extension of ESG product offering at Asset
Management companies
UniHH0710
13%
6%
Other
75%
12%
2007
2006
Source: IPE, European Institutional Asset Management Survey 2008
Global growth of sustainable investments
Observable trends in the asset management industry
Competitive pressures show that asset managers need to be differentiated either in solutions,
expensive alpha or cheap beta
70
Solution
AuM growth 2003 - 06, Europe, percent
ETFs
60
Life cycle funds
Beta
50
Index
funds
40
Higher alpha
Structured
funds
Hedge
funds
Private
equity
SRI funds
30
Certificates
20
Active equity
Active
bonds
10
Balanced funds
0
Traditional alpha
-10
0
25
50
75
100
125
150
Revenue margin in basis points
Source: McKinsey CEO Conference Book, 2008
43
UniHH0710
175
200
225
Core – Satellite trend
Competitive pressures show that asset managers need to be differentiated
either in innovative products, expensive alpha or cheap beta
CAGR, 2008 – 2012 (%)
Passive products/ETFs
ETFs
Innovative products
Passive fixed
income
Infrastructure funds
Passive equity
LDI
Fixed
Structured products
income
core and
specialties
Equity
core and
specialties
Money
market
Commodities
Real estate (incl. REITs)
Absolute return
Short-extension funds
Hedge funds
Quantitative products
Private equity
Active products
Active
Passive
Innovative
Estimated size, 2008 (USD trn)
Scale = USD 1 trn
Source: BCG, Conquering the crisis: Global asset management, 2009
44
UniHH0710
Net revenue margin (basis points)
Strong growth in global ESG market
2005
EUR 2.6 trillion
2003
EUR 1.9 trillion
NordNorth
amerika
America
64%
64%
NordNorth
America
amerika
84%
84%
2007
EUR 5 trillion
Australien/
Australia/
Asien
Asia
1%
NordNorth
amerika
America
39%
39%
Australien/
Australia/
Asien
Asia
8%
8%
Europa
Europe
16%
16%
Europa
Europe
35%
35%

ESG account for 7% of total global industry AuM; 17% in Europe and 11% in the US*
As of October 2008
Source: Eurosif; *based on 2007 data, Europe per EuroSIF, US per USSif, global per BSR 2009
45
UniHH0710
Europa
Europe
53%
53%
Europe as largest ESG market dominated by institutional
investors
Core and broad SRI in Europe, 2002 - 2007
EUR billion
Core 511.7
Broad
2,153.7
Core 105
Core 34
Broad* 302
Broad* 928
2002 (EU-8)
2005 (EU-9)
Broad SRI
Institutional vs. retail SRI investors by country
2007 (EU-13)
Core SRI
Type of institutional investors
EU
Universities
NL
NO
Insurance & Mutuals
UK
DK
Publ. authorities & govts.
BE
SE
Corporate PFs
FR
NGOs & Foundations
AT
DE
Publ. PFs or Reserve Funds
ES**
CH
Religious inst. & Charities
IT**
0%
20%
40%
60%
80%
100%
0%
5%
10%
15%
20%
25%
% of AuM
Institutional
Retail
As of October 2008
Source: Eurosif, * Recalculated according to new Broard definition, ** Based on Core SRI only
46
UniHH0710
% of respondents
30%
35%
Trends and drivers in the ESG place
Increased demand from investors

Institutional investors
–
–
Large pension funds leading, e.g. in sector specific
investments and EM funds, driving demand despite
economic downturn (in continental Europe)
Expectation that pension funds and endowments
increase ESG allocation to 75% of assets by 2010
–
Increased interest from corporate pension plans
–
UN PRI signatories with total volume of more than
USD 20 trn and more than 700 institutions***
–
Investors more concerned with ESG topics than
analysts while researching companies**
Main demand drivers for ESG strategies
over the next 3 years*
Demand from
institutional investors
External pressure
(NGOs, media etc.)

Retail investors increase allocation to ESG products

Due to sizable resources large institutions (asset owners)
have highest potential to establish innovative policies on
ESG investments and dictate topics/values
=> standard setting also to the benefit of smaller institutional investors***
UniHH0710
35%
Demand from
retail investors
High Net Worth Individuals: increase from 8% (2007)
to 12% / > EUR 1 trn (2012) of total AuM expected*
48
47%
Legislative

* As of October 2008, Source: Eurosif
** Source: University Maastricht/ECCE Survey
*** Source: ASR Research April 2010, EA, DB Advisors Competitive Analysis
53%
34%
International initiatives
(PRI etc.)
27%
22%
Materiality
% of respondents
Main driver for ESG strategies: Institutional investors
Climate change and ESG investments remain firmly on the agenda
Global institutional
asset distribution*
Global pension
asset allocation**
100%
7%
9%
7%
100.00
53%
40.20%
1.80%
16.50%
24%
Banks
Non-profits and governments
Corporations
Pension funds
Insurance
41.50%
Equity
Bonds
Others
Cash

A report by the UN has found that attitudes to responsible investing have "turn[ed] a corner," becoming a
mainstream rather than a niche practice. It found that the financial crisis has strengthened institutional
investors' resolve to consider ESG issues****

In November 09, a new petition, organized by CERES and signed by some of the largest US institutional
investors, called on the SEC to require US companies to disclose climate-related risks in filings****
Source: * Global Asset Management 2008, Boston Consulting Group; ** Watson Wyatt, 2009 Global Pension Assets Study, January 2009;
*** Eurosif, as of October 2008; **** DB Advisors Competitor Trend Book Nov 09
49
UniHH0710
External pressure from various sources

Regulation and legislation in Europe with less influence

Public and media reflect company image and reputation

Increased transparency requirements

International / supranational initiatives (e.g. UN PRI)

Lobby and special interest groups (NGOs, trade unions) with increased influence
Factors driving responsible investment in domestic market during the next three to five years
Legislation (domestic)
Regulation (domestic and international)
Supranational initiatives
External pressures
Climate change concerns
Internal pressures
Financial returns
Others
0%
Source: RI Landscape AO 08, DB Advisors Competitive Analysis
50
UniHH0710
10%
20%
30%
40%
50%
60%
70%
80%
New field of activity for consultants

60% of investors make use of consultants for SRI manager selection

Almost two-thirds of US consultants have reported increased client interest in ESG
investments over the past year and 88% believe that interest will rise over the next
three years

Acceleration of activities: buildup of global resources, integration in RfPs, studies

Positioning for market leadership
–
Mercer has topped its team by several ESG specialists; cooperation with International
Finance Corporation to develop a sustainability rating for Emerging Markets fund
managers
–
Watson Wyatt hired former Goldman Sachs Head of Consultant Relations to lead global
sustainability initiative
–
Russell develops new ESG strategies
Source: RI Landscape 2008, Asset Owners; DB Advisors Competitive Analysis Group; DB ADvisors Competitor trend book Nov 09
51
UniHH0710
New investment solutions support market growth

Increased allocation to Money Market
funds

Fixed income allocation on the rise; bonds
issued by corporates, governments,
supranationals and covered bonds

Real estate: "Green buildings" promise
higher market value**

Micro finance

Alternatives: Hedge funds, Private equity,
Venture capital mainly driven by individual
large pension funds; diversification at initial
stage

Percentage of AuM invested using responsible
investment criteria allocated to different asset classes*
Publicity listed
equities
Fixed income
Real estate and
infrastructure
Private equity
Hedge funds
Emerging Markets
Other

*
**
52
Index funds, ETFs
Source: RI Landscape AO 08
As of November 2008, Source: P. Eichholz, / N. Kok / J. M. Quigley, Maastricht University, Netherlands
UniHH0710
0%
10%
20%
30%
40%
50%
60%
70%
Shift in focus from equity to fixed income necessary
Global institutional
asset allocation*
European institutional
asset allocation**
100%
100%
27%
25%
European ESG
asset allocation***
100%
50%
38%
54%
39%
11%
10%
16%
5%
6%
3%
5%
Alternative
Hybrid/balanced
Fixed Income
Structured products
Money market
Equity
Other alternatives
Real estate
Cash
Fixed Income
Equity
Source: * Global Asset Management 2009, BCG, July 2009
** IPE European Institutional Asset Management Survey 2009
*** European SRI Study 2008, Eurosif
53
UniHH0710
1.4%
3.5%
4%
Alternative/HF
PE/VC
Others
Equity
0.8%
1.3%
Property
Commodities
Bonds
ESG integration is low relative to global market
UN PRI signatories' assets
Source: BSR, ESG in the Mainstream, 2009
54
UniHH0710
Performance debate and fiduciary duty
Extra-financial performance

Is financial performance alone a sufficient indicator?
–
Added Value / Extra-Financial Mindset / Sources of financial added value
–
Long-term vs. short-term orientation: economic benefits or avoided liabilities by ESG materialize slowly
–
Credible and transparent extra-financial reporting

G-factor important for rating agencies analysis as measure of stability

Double return: e.g. Microfinance
fighting poverty and investment performance
Fiduciary duty

Past: Sacrificing performance in favor of sustainable investing contradicts fiduciary duty;
exclusion of companies/sectors increases volatility

Today: 70% of European institutional investors believe that it is "a trustees' fiduciary duty to
include ESG in their decision-making process and during manager selection processes,"
rather than just focusing on returns**
Today
“(…) it is necessary for investment management agreements (…) to use ESG language (…); it is important
that it is made absolutely clear (…) that ESG is regarded as a mainstream investment consideration”*
Source: University Maastricht 2008, Eurosif European SRI Study 2008, EA October 2008, Derwall, Koedijk, September 2, 2008,
* UNEP FI Fiduciary Responsibility II, July 2009; ** DB Advisors Competitor Trend Book Nov 09
55
UniHH0710
Evolution of ESG equity perception (Mercer)
Negative
…the SRI US funds underperformed the
conventional benchmark. The results of the
German SRI funds are also negative compared
to the chosen benchmark index.
1995 White
... although the SRI funds have a slightly worse
performance the difference is not significant.
But a cross-sectional analysis reveals further
signs of an under-performance of the SRI funds.
1997 Gregory, Matatko, Luther
…discovered a negative relationship between
CSR and financial performance.
1997 Wright & Ferris
…investors who allocate their wealth to socially
responsible equity mutual funds pay a price, i.e.
they receive a lower risk-adjusted return for
their investment.
2003 Geczy, Stambaugh, Levin
Neutral
Positive
...socially screened portfolios do not differ from
unscreened portfolios in regard to performance.
1997 Guerard
…a positive relationship between CR
performance and financial performance exists.
2003 Orlitzky et al.
...well diversified socially screened portfolio has
no worse performance than conventional
indices that comprise a broader investment
universe.
1997 Sauer
…a relation between social and financial
measures exists by chance
2000 McWilliams, Siegel
...environmentally efficient stocks produce
superior returns vs. low-ranked environmental
stocks.
2005 Derwall et al.
…no difference in risk-adjusted performance
(Jensen's alpha) between screened and
unscreened funds.
2002 Bauer, Koedijk, Otten
…socially screened assets have no clear
disadvantage concerning their performance
compared to conventional assets.
2005 Schröder
... a trading strategy going long in the portfolio
of high social responsibility and short in the
portfolio of low social responsibility, yields an
abnormal performance.
2006 Kempf, Osthoff
...a company with good CR performance has a
lower risk exposure. Assuming that risk is a
major cost driver, companies with a good CR
performance can reduce their cost of capital.
2006 Bassen, Hölz, Schlange
…there is a slight tendency that ESG funds
perform better than the relevant benchmarks.
2007 DWS/DB Advisors Global Head of
Equity Research
Various academic research underpin a change in perception for performance of ESG
investments: from negative to neutral / slightly positive
56
UniHH0710
ESG Fixed Income performance equals conventional
Theoretical considerations

Passive management: restricted universe unproblematic due to efficient market assumption

Active management: constraints on investment opportunity set
investment decisions

Government and high quality bonds: market timing / duration positioning most important

Corporate bonds: ideosyncratic risk exploited by active management or eliminated through
diversification
ESG investment constraints may have impact on performance
sub-optimal
Empirical evidence

Limited research; Attribution to factors E, S, G not proven; factor G in particular relevant for
fixed income; Analytical pitfalls
Scientific study

ESG fixed income
performance matches
that of conventional
funds
Descriptive statistics Performance 2008
ESG
Conventional
fixed income
funds
fixed income funds
Investor perception
6.8%
43.2%
41.3%
Strong advantage ESG
-2%
-6.3%
Advantage ESG
Similar
Advantage conventional
Strong advantage conventional
Source: Derwall/Koedijk, 2 September 2008 (data sample based on bond mutual funds labelled by the US Social Investment Forum as socially responsible in
investing; 09/87 - 03/03); Sarasin/Uni Zurich November 2008; Cerulli in Euromoney Institutional Investor, April 2009; Feri Studie 2009 Nachhaltige Investments
57
UniHH0710
7.9%
Mainstreaming of ESG – in the long run


Existing ESG approaches refined
–
Growth of theme funds dominating especially in Europe**
–
Factors E and G in focus so far; S can be a decisive factor for credit spreads*
–
Approx. 34% of investors have no active proxy voting policy – international companies
increasingly in focus; more engagement expected from investors and easy to implement**
Mainstreaming still to come – UN PRI may provide external pressure
–
Global pension funds can be standard setters for smaller institutions
–
Inclusion of ESG topics in company analysis reflects importance of risks/chances resulting
from ESG factors for long-term financial stability of companies***
–
Financial aspects of ESG investments decisive for mainstreaming*
–
Expertise and implementation stage varies widely at investors****
–
Resarch: sell-side research cutting staff, incorporation in mainstream analysis, ESG KPI,
new ESG manual of CFA institute
Source: *University Maastricht 2008, **Eurosif 2008, ***RI Landscape 2008 AO, **** Rimetrics 2008
58
UniHH0710
ESG – The next steps
DB Advisors ESG commitment


60
Research
–
ESG ratings embedded in DB Advisors proprietary research platform (G-Cube)
–
ESG framework implemented in equity, fixed income multi asset portfolios
–
Support of research projects on analysis of extra-financial risks and climate change with selected
universities and institutes
–
DB Advisors Climate Change research group
Collaborations/Initiatives
–
Signatory of the UN Principles of Responsible Investing (UN PRI)
–
Members of Eurosif and forum "Nachhaltige Geldanlagen"
–
Member of the DVFA non-financials working group (ESG key performance indicators)
–
World Bank / OECD Global Corporate Governance Forum, International Corporate Governance
Network (ICGN), German Corporate Governance Commission
–
Member of Investor Network on ClimateRisk (INCR)
–
Member of Institutional Investors Group on Climate Change (IIGCC)
–
Since 2009, holder of the ISO 14001 certificate; an environmental management standard focused on
Total Quality Management
UniHH0710
External know-how combined with internal expertise
DB Advisors
Sustainalytics company
Independent ESG research
network in Europe, North
America, Asia and Middle
East


160 analysts are combining
global coverage with local
know-how


Actually provides e-raw data
and detailed company/sector
reports for more than 1,800
stocks (MSCI World +
DB Advisors theme basket)

Source: DB Advisors, for illustrative purposes only
61
Carbon footprint
UniHH0710
Construct carbon footprint
analysis using carbon
emissions data provided by
Bloomberg
ESG advisory panel

Well regarded e-experts from
foundations, clergy,
academia and industry

Independent, regular review
and counsel of customized
screening methodology and
selection criteria (best-inclass, premia)

Forum for further exchange
and promotion in the field of
ESG
Weighting carbon data by
index weight to adjust for
sector over/underweights
Carbon footprint analysis

DWS/DB Advisors have recently secured two leading sources for CO2 data:
Truecost and RiskMetrics/Innovest

RiskMetrics/Innovest concept to integrate also a carbon risk score and a carbon
improvement vector is the more promising concept

Global coverage ~ 2500 stocks

Step-by-step rolled out to make all PMs aware of their portfolios Carbon footprint

Data is feed into internal databases (G-Cube, Portfolio Viewer) and is accessible
for all portfolio managers and analysts
62
UniHH0710
DWS equity fund
Carbon Footprint Performance (CO2 emission in t / USD mn sales)
377.7
394.4
120.6
27.1
33.5
22.6
0.8
23.7
28.1
499.3
414.2
642.1
159.2
49.5
57.6
29.2
8.9
23.2
16.9
2,876.3
Sector adjusted average
117.7
248.0
80%
60%
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
at
er
ia
ls
En
er
gy
In
du
st
ria
C
on
ls
.S
ta
pl
es
In
f.
Te
ch
H
.
ea
lth
ca
re
C
on
.D
is
.
Te
le
co
m
.
Fi
na
nc
ia
ls
Energy
Materials
Insutrials
Consumer discretionary
Consumer staples
Healthcare
Financials
Information technology
Telecommunication services
Utilities
CO2-Deviation
Fund vs. MSCI World
M
MSCI World
til
itie
s
Fund
U
Sector
Fund
Overall carbon intensity 53% lower than benchmark
As of April 30, 2010
63
UniHH0710
MSCI (RI)
Issues in ESG fixed income

Number of covered companies by Sustainalytics

Sector over/underweights due to Sustainalytics ratings

New issues not yet rated, especially smaller non-listed firms

No ratings for subsidiaries (i.e. GE vs. GECC)

Climate change product innovations
64
UniHH0710
Credit research methodology
Original and timely credit analysis is the foundation for generating alpha.
Company analysis
Quantitative




Balance sheet analysis
Profit and loss
Cash Flow
Ratios
Qualitative



Management
Regulatory environment
Specific industry and
company risks
Instrument-specific




Prospectus
Structure
Liquidity
Documentation
Results
Long-term view
Current internal rating
G-Cube
Short-term view
Relative value + absolute return
Environmental Analysis
G-Cube is DB Advisors’ innovative proprietary web-based global research and relative-value platform. This centralized database is accessible from anywhere in the world by any of our
investment professionals, giving them a secured on-demand access to both internal and external research, as well as relative value investment recommendations
65
UniHH0710
Company and credit investment criteria
Understanding the quality and risk of the company and the issue in equal depth
is essential to investment success
Qualitative
and quantitative research


Good or bad business
–
Industrial background
–
Company specific
–
Capital management
Instrument-specific
analysis

SWOT
–
Strengths, weaknesses,
opportunities, threats

What has changed / is changing?

Capital holders



66
UniHH0710
Guarantee
Environmental
Analysis

Carbon footprint
–
Holding company/operating
company/SPV

Sustainalytics environmental
rating
–
Subordination

Thematic analysis
–
Collateral
Covenants
–
Restrictions on corporate
activity/ownership
–
Triggering events
Optional
–
Principal payments
–
Coupon payments
Documentation
ESG fixed income fund: E-portfolio analysis
E-Fund
Carbon Footprint Performance (CO2 emission in t / USD mln sales)
170.6
5.9
6.5
250.0
Carbon_Risk_Score
IBOXX EUR Corp Carbon_Performance_Im
0
228.0
4.0
5.6
6.0
-10
996.1
8.6
6.8
5.3
41.3
8.6 -20 7.8
8.0
25.0
7.2
6.3
5.4
-30
48.7
4.3
4.4
7.1
28.1
6.6 -40 5.9
6.0
4.0
4.7
4.7
7.0
-50
8.3
n/a
4.9
n/a
14.7
6.7 -60 6.5
7.6
1152.6
6.8
6.4
4.2
-70
215.3
5.7
6.3
7.0
7.0
6.0
6.0
200.0
50.0
00.0
Fund
170.6
IBOXX
EUR Corp
215.3
5.0
4.0
Fund
5.9
6.7
5.7
7.1
6.2
6.6
5.8
6.3
7.9
7.6
4.7
er
gy
at
er
ia
ls
In
du
st
ria
C
ls
on
s.
D
is
C
on
cr
.
s.
St
ap
le
H
s
ea
lth
C
ar
e
Fi
na
nc
ia
ls
In
f.
Te
ch
.
Te
le
co
m
.
U
til
iti
es
Sector Adjusted Average:
Fund
206.0
875.4
16.8
12.3
27.7
12.8
3.0
n/a
13.8
888.8
M
0.04
0.05
0.10
0.07
0.06
0.04
0.41
0.00
0.10
0.13
En
Energy
Energy
Energy
Materials
Industrials
Consumer Discretionary
Consumer Staples
Health Care
Financials
Information Technology
Telecommunication Services
Utilities
CO2-Deviation Fund vs. IBOXX (in %)
5.0
IBOXX
EUR Corp
5.7
4.0
3.0
3.0
2.0
2.0
1.0
1.0
0.0
0.0
Fund
6.5
IBOXX
EUR Corp
6.3
50.0
0.0
Overall Carbon Intensity
(in t CO2/USD mln Sales)
(*) Higher values rank better
Source: DB Advisors, for illustrative purposes only , April 2010
67
UniHH0710
Carbon Performance Improvement Vector (*)
Carbon data coverage:
Carbon Risk Score (*)
Fund: 90%
IBOXX EUR Corp: 84%
Fixed income - climate change product innovations

Building
on mega trend


Leveraging DB
global leadership
in climate change

Leveraging
DB Advisors
successful fixed
income process

Proven expertise
in launching
environmentally
driven credit fund

68
UniHH0710






Rising environmental awareness will ultimately lead to a changing regulatory environment.
Pollution costs expected to increase substantially putting pressure on corporate earnings (i.e.,
launch of phase III of the EU cap & trade system)
Coping with changing environmental framework affects credit quality while offering alpha
opportunities
Market leader in listed climate change funds with ~ EUR 6 billion in AuM
Proven commitment to cleantech and resource conservation
Dedicated climate change research and strategy function
Fundamental bottom-up credit analysis of ~ 700 investment-grade issuers across all sectors
Further selection criteria are quantitative carbon emissions data and over 50 environmental key
performance indicators provided by an outside research firm (Sustainalytics)
Sector allocation is driven by thematic analysis
Currently managing two mandates with total AuM of EUR 175 million (AuM at launch in April
2009: EUR 10 million)
Strong inflows in current mandates underline strategy's success and client satisfaction
35bp average fees
Distinctions between ESG, Environmental and Carbon products
Environmental,
Social, Governance
(ESG)



Environmental (E)


Carbon (C)


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Composition: 40% environmental-, 30% social, 30% governance criteria (data
from Sustainalytics)
Carbon tilt included in environmental criteria but overall not a dominating factor
(portfolio carbon intensity deviation around 5% of Benchmark)
Carbon rule of >20% less carbon intensity compared to benchmark index
Other environmental issues taken into consideration (Sustainalytics environmental
KPIs, thematic analysis)
Carbon intensity as the sole factor (>20% less carbon intensity compared to
benchmark index)
No further environmental constraints
The difference between ESG, E, C is that carbon intensity is the only factor for C,
the most important one for E, and just one of many for ESG
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Economic arguments for environmental fund

Environmental awareness increasing and stricter regulation to be expected
favoring companies already adhering to tighter environmental guidelines.

Emissions prices are forecast to rise which will put pressure on earnings of
affected companies
low carbon emitting firms potentially outperform.

CO2 emission markets phase III limits are likely to be even tighter than phase II.
The EU is aiming for a 20% reduction in emissions between 1990 and 2020. This
will involve a cut of approx. 220 million tones from current phase II scheme.

Internal climate change research team (Mark Fulton and team).

DB Advisors analysts are able to address environmental issues/costs in one-onone meetings with company management.
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Environmental Criteria
Extensive environmental analysis used for issuer selection

Carbon footprint
–


71
CO2 Emission in t / USD million sales (overall CO2 emissions per USD revenue target of 20% below
Benchmark (sector adjusted))
Sustainalytics rating
–
Using data provided by an external research firm Sustainalytics
–
The company provides environmental, social and governance research and analysis, sustainability
consulting and responsible investment services.
–
Turning over 50 environmental key performance indicators (i.e., formal environmental policy,
contractors and supply chain related controversies) into grades on a scale of A to F, we aim to achieve
a portfolio with an average environmental score of B.
Thematic analysis – opportunistic investments in environmentally friendly issuers such as
–
I.e., water/wind power company
–
Manufacturer of solar panels
–
Waste avoidance and management
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Conclusion
Conclusion

Responsible investments (ESG) are increasingly attracting the attention of
institutional and private investors

The ESG market has grown stongly in recent years and product spectrum will
become broader and therefore spur future asset growth

Going forward, corporates and sovereigns will be increasingly judged on
sustainabliltiy issues

Need for action remains in particular with respect to the development of reliable
standards and uniform definitions

Climate change product innovations
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Contact
DB Advisors
Deutsche Asset Management Investmentgesellschaft mbH
Mainzer Landstrasse 178 - 190
60327 Frankfurt am Main
www.dbadvisors.com
Frank Klein
Tel.
+49 (69) 71 706 - 3499
Fax
+49 (69) 71 706 - 3107
frank.klein@db.com
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Disclosure
DB Advisors is the brand name for the institutional asset management division of Deutsche Asset Management, the asset management arm of Deutsche
Bank AG. In the US, Deutsche Asset Management relates to the asset management activities of Deutsche Bank Trust Company Americas, Deutsche
Investment Management Americas Inc. and DWS Trust Company; in Canada, Deutsche Asset Management Canada Limited (Deutsche Asset
Management Canada Limited is a wholly owned subsidiary of Deutsche Investment Management Americas Inc); in Germany and Luxembourg: DWS
Investment GmbH, DWS Investment S.A., DWS Finanz-Service GmbH, Deutsche Asset Management Investmentgesellschaft mbH, and Deutsche Asset
Management International GmbH; in Australia, Deutsche Asset Management (Australia) Limited (ABN 63 116 232 154); in Hong Kong, Deutsche Asset
Management (Hong Kong) Limited; in Japan, Deutsche Asset Management Limited (Japan); in Singapore, Deutsche Asset Management (Asia) Limited
(Company Reg. No. 198701485N) and in the United Kingdom, RREEF Limited, RREEF Global Advisers Limited, and Deutsche Asset Management (UK)
Limited; in addition to other regional entities in the Deutsche Bank Group.
This material was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. It is intended
for informational purposes only and it is not intended that it be relied on to make any investment decision. It does not constitute investment advice or a
recommendation or an offer or solicitation and is not the basis for any contract to purchase or sell any security or other instrument, or for Deutsche Bank
AG and its affiliates to enter into or arrange any type of transaction as a consequence of any information contained herein. Neither Deutsche Bank AG nor
any of its affiliates, gives any warranty as to the accuracy, reliability or completeness of information which is contained in this document. Except insofar as
liability under any statute cannot be excluded, no member of the Deutsche Bank Group, the Issuer or any officer, employee or associate of them accepts
any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or for any resulting loss or damage
whether direct, indirect, consequential or otherwise suffered by the recipient of this document or any other person.
The views expressed in this document constitute Deutsche Bank AG or its affiliates’ judgment at the time of issue and are subject to change.The value of
shares/units and their derived income may fall as well as rise. Past performance or any prediction or forecast is not indicative of future results. This
document is only for professional investors. No further distribution is allowed without prior written consent of the Issuer.
Any forecasts provided herein are based upon our opinion of the market as at this date and are subject to change, dependent on future changes in the
market. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily
indicative of the future or likely performance. Investments are subject to risks, including possible loss of principal amount invested.
Certain Deutsche Asset Management investment strategies may not be available in every region or country for legal or other reasons, and information
about these strategies is not directed to those investors residing or located in any such region or country.
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ESG Sustainable Investing

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