Flossbach von Storch and ESG: What investors need to know about integration

Flossbach von Storch AG, based in Cologne, manages around 70 billion euros as an independent asset manager (as of the 2024 annual report) and has been obliged to disclose sustainability information at company and product level since 2021 under Regulation (EU) 2019/2088 (SFDR). Several of the company's mutual funds are classified as Article 8 funds according to SFDR, which means they promote ecological or social characteristics. In addition, the Delegated Regulation (EU) 2022/1288 with the mandatory pre-contractual and periodic annexes as well as the EU Taxonomy Regulation (EU) 2020/852 with quota information on ecologically sustainable investments apply. BaFin, as the national supervisory authority, has also clarified in several consultations and guidelines what expectations there are for marketing, fund names and ESG risk integration.

The article is written for compliance officers, treasurers and institutional investors who need to understand how a specific asset manager like Flossbach von Storch treats ESG operationally and what regulatory obligations this results in for their own organisation. You will learn how SFDR classifications work, which reporting obligations under the CSRD will apply from fiscal year 2025, how the EU taxonomy requires quotas and what role a sustainability officer actually plays in asset management. CIVAC is a compliance platform and officer-as-a-service: Licence the workspace for your internal officers or have our officers order it. The ESG evidence is therefore in a single filing system instead of being distributed across the investment team, legal and risk management.

Flossbach von Storch AG is an owner-managed asset management company founded in Cologne in 1998. The company is approved by BaFin as a capital management company in accordance with Section 17 KAGB and is subject to the European supervisory regime of Regulation (EU) No. 1095/2010 (ESMA) as well as the national circulars on conduct of business supervision (MaComp) and the minimum requirements for risk management (MaRisk). Mutual funds, special funds and asset management mandates are managed. According to the 2024 annual report, the assets under management were around 70 billion euros, the majority of which were in multi-asset strategies around the well-known Multiple Opportunities series. Clients include private investors through banks and asset managers as well as institutional investors such as pension funds, foundations and insurance companies, each of which has its own ESG requirements.

Three reporting frameworks are relevant for the ESG classification. Firstly, the SFDR at product and company level with the mandatory PAI declarations (Principal Adverse Impacts) according to Art. 4 SFDR and the product obligations of different levels of strictness according to Art. 8 and 9. Secondly, the CSRD (Directive (EU) 2022/2464) with the European Sustainability Reporting Standards (ESRS) as a mandatory taxonomy for the management report. Thirdly, the EU Taxonomy Regulation (EU) 2020/852, which requires quotas for ecologically sustainable investments. If you want to assess how Flossbach von Storch treats ESG, compare the preliminary and periodic appendixes of the Article 8 funds with your own requirements.

CIVAC brings together this comparison logic in the workspace and links it to the role of the ESG officer, so that classification, quotas and reporting requirements are kept in one ledger. The integration with risk management according to MaRisk AT 4.3.4 is not optional, but rather expected under supervisory law. A consolidated thread of evidence from the preliminary appendix to the internal ESG model to the voting rights vote allows BaFin inquiries to be answered without any research effort.

Regulation (EU) 2019/2088 (SFDR) has been in force since March 10, 2021 and distinguishes between three product categories. Article 6 products take sustainability risks into account in the investment process, but do not promote any ecological or social characteristics and are therefore not considered an ESG product in the narrower sense. Article 8 products promote environmental or social characteristics without sustainability being the exclusive investment objective, making them the most common regulatory category for multi-asset strategies. Article 9 products pursue a sustainability goal as an investment goal and must comply with the Do-No-Significant-Harm test (DNSH) and minimum protection rules in accordance with Article 18 of the Taxonomy Regulation, which significantly restricts the investment universes. The choice of category is a business policy decision with clear consequences for the list of obligations, marketing and supervisory risk.

Several Flossbach von Storch funds are classified as Article 8 products, as can be recognised by the mandatory Annex II of Delegated Regulation (EU) 2022/1288. This appendix lists the characteristics advertised, the methodology used, the minimum proportions of sustainable investments and the reference values. If you want to classify Flossbach von Storch ESG, you first read Appendix II of a specific fund and check which exclusion criteria apply (coal, controversial weapons, serious violations of the UN Global Compact), how ESG integration is specifically implemented in the investment process and which minimum quotas of sustainable investments are promised. Pure self-declarations without Appendix II are not proof of SFDR.

CIVAC stores a template in the workspace for comparing Appendix II content against its own investment policy, so that institutional investors and investment committees can make decisions without the jungle of Excel. The appointment certificate, signed, filed, verifiable. The template also allows the comparison of Annex II and Annex IV (Periodic Annex) for consistency of promise and delivery, a key test area for ESMA since 2024. Inconsistencies between advertised methodology and actual portfolio composition are the most common starting point for greenwashing investigations and investor lawsuits.

The Delegated Regulation (EU) 2022/1288 (RTS) has specified since January 1, 2023 what the SFDR disclosure must formally look like. For Article 8 products, Annex II requires 14 structured fields, including environmental or social characteristics promoted, methodology used, data sources, treatment of method limitations, underlying due diligence, engagement policy, and a clear indication of whether an EU benchmark (Climate Transition Benchmark, Paris-Aligned Benchmark) is used. For Article 9 products, Annex III supplements the DNSH test per investment with the obligation to check each individual investment against the PAI indicators.

Flossbach von Storch typically describes an integrated ESG assessment in the previous appendices: an internal assessment model that links data points from external providers (e.g. MSCI ESG, Sustainalytics) with fundamental analysis, defined exclusions and an engagement program with documented exercise of voting rights according to SRD II (Directive (EU) 2017/828). Anyone who wants to seriously assess Flossbach von Storch ESG checks three points: firstly, whether the methodology promised in the previous appendix is ​​quantitatively proven in the periodic appendix, secondly, how high the proportion of sustainable investments according to the SFDR definition actually is, thirdly, which voting rights decisions have been documented in the last 12 months. Others run compliance like a filing cabinet. We run it like software.

CIVAC links the preliminary appendix, periodic appendix and engagement report with the mandate of the sustainability officer in a workspace and specifies the owner, deadline and version status so that the supervisory authority can immediately see who was responsible for which statement on which deadline. In addition, the workspace displays the data origin for each ESG data point, such as MSCI score status, Sustainalytics controversy level or ISS voting recommendation with date and methodology version. This means that a later query about a reporting date can be resolved at any time without the investment team, legal and reporting having to meet again.

The EU Taxonomy Regulation (EU) 2020/852 defines six environmental objectives and determines when an economic activity is considered ecologically sustainable. For funds, this means a quota: what proportion of the portfolio is focused on taxonomy-compliant activities, separated according to the goals of climate protection, adaptation to climate change, sustainable use of water resources, transition to a circular economy, prevention and reduction of environmental pollution, and protection and restoration of biodiversity. The delegated regulations (EU) 2021/2139 (climate) and (EU) 2023/2486 (remaining four objectives) contain the technical evaluation criteria for each activity with specific thresholds, such as CO2 intensity, energy efficiency classes or water consumption.

For asset managers like Flossbach von Storch, this means in practice: for every Article 8 and Article 9 fund there must be one in the periodic appendix Taxonomy quota is shown, separated by sales, capital expenditure (CapEx) and operating expenditure (OpEx). The rate is often low because many issuers have only been providing full taxonomy reporting since fiscal year 2023 and because the DNSH thresholds are strict. Investors should not read the ratio in isolation, but rather in the context of the portfolio's underlying activities and industry structure. Due to the system, a globally diversified multi-asset fund will show a lower taxonomy quota than a pure European infrastructure equity fund.

CIVAC offers a template in the workspace to check the plausibility of the taxonomy information against the issuer's ESRS-E1 climate reporting and against the CDP climate risk disclosure, so that a compliance officer can check the quotas without a third-party system. The auditor calls, the evidence is ready. The template also takes into account the separation between taxonomy-capable activities (eligible) and taxonomy-compliant activities (aligned), which are often mixed up in reporting, as well as the special situation with government bonds, which according to the current reading can be excluded from the reference basis.

Directive (EU) 2022/2464 (CSRD) expands the user group of non-financial reporting from around 11,700 to around 49,000 companies in the EU. Sie verlangt die Berichterstattung nach den European Sustainability Reporting Standards (ESRS), die durch delegierte Verordnung (EU) 2023/2772 vom 31. Juli 2023 für Geschäftsjahre ab dem 1. Januar 2024 (Welle 1) verbindlich wurden. Depending on the threshold values ​​(total assets over 25 million euros, turnover over 50 million euros, more than 250 employees, fulfilment of two of the three criteria), asset managers such as Flossbach von Storch themselves fall under the CSRD and must publish a sustainability report in the management report, which is mandatory digitally tagged (xHTML/iXBRL) and checked by an auditor with limited assurance. Later Wave 2 and Wave 3 companies will follow with financial years from 2025 and 2026 respectively.

In terms of content, the ESRS require a double materiality analysis (Impact + Financial Materiality), topic-specific disclosure requirements (ESRS E1 to E5 Environmental, ESRS S1 to S4 Social, ESRS G1 Governance) and overarching standards (ESRS 1 and 2). For an investment house, ESRS E1 (climate change, with Scope 1-3 emissions, financially exposed assets, transition plan) and ESRS G1 (business conduct, including lobbying and corruption prevention) are particularly central. CIVAC provides a template for a double materiality analysis in the workspace, pre-mapped against the ESRS datapoints, with owner, deadline and versioning for each datapoint. Licence the workspace for your internal representatives or have our representatives order it.

The template also takes into account the interface to the SFDR-PAI declaration, so that data can be used twice. Also included are the phase-in simplifications of the ESRS for the first two reporting years (e.g. the time spread of Scope 3 emissions or ESRS S1 information on the company's own workforce) as well as the mappings to the ISSB standards IFRS S1 and S2, which makes dual use easier for listed subsidiaries.

Unlike the data protection officer (Art. 37 GDPR) or the money laundering officer (Section 7 GwG), a sustainability officer is not universally required by law. However, in practice, the SFDR obligations, CSRD reporting obligations and ESG risk integration under EBA/EIOPA/ESMA guidelines require clearly defined responsibilities. The BaFin guidelines on sustainable investment funds from August 2, 2021 and the ESMA Final Report on Anti-Greenwashing (2024) expect a documented governance structure in which a specific person or function is responsible for ESG integration, with access to management and sufficient resources.

Operationally, the sustainability officer covers five areas. First, SFDR classification and maintenance of preliminary and periodic appendixes per product. Second, CSRD reporting with dual materiality analysis and ESRS datapoint maintenance. Third, taxonomy quota calculation and DNSH plausibility check. Fourth, ESG risk integration in risk management according to MaRisk AT 4.3.4 and in the suitability test according to MiFID II Annex II No. 5 as well as in the suitability and appropriateness tests for mandate customers. Fifth, engagement and voting under SRD II with documented voting on threshold issues such as climate transition plan and board compensation. Upon request, CIVAC appoints an external sustainability officer via an appointment certificate, with a documented reporting line to management, fixed reporting dates and a workspace that keeps the evidence audit-proof, documented and paragraph-proof. The CIVAC SLA is two working days instead of the classic two to six weeks and delivers the appointment certificate immediately in a version-specific version.

Operational interfaces exist to the money laundering officer function in accordance with Section 7 of the GwG (in suspected cases of anti-greenwashing relevance), with the data protection officer in accordance with Article 37 of the GDPR (when processing beneficial owner or customer sustainability preference data) and with the information security officer (while protecting the exercise of voting rights and ESG data points from manipulation). CIVAC bundles these roles in a consistent ordering and reporting regime.

ESMA published a final report on greenwashing in 2024 and published a joint statement from the ESAs (ESMA, EBA, EIOPA) on supervisory priorities for 2024 to 2026 in May 2024. There are three test fields at the centre. Firstly, whether the marketing material and fund name correctly reflect the SFDR classification and the actual portfolio composition, i.e. no green impressions without Annex II substance. Secondly, whether the methodology promised in the previous appendix is ​​quantitatively proven in the periodic appendix, for example via hit rates per exclusion criterion and proportion of sustainable investments. Thirdly, whether ESG data providers (MSCI, Sustainalytics, ISS ESG) are applied consistently and their methodology is comprehensible in the investment documentation.

The ESMA guidelines on fund names with ESG or sustainability terms from May 14, 2024 require since November 21, 2024 (for existing funds May 21, 2025) that at least 80 percent of the investments in the name fulfil promised ESG or sustainability characteristics, as well as specific exclusion criteria for each name group, such as Paris Aligned benchmark exclusions for funds with the word transition, sustainable or impact in the name. Asset managers like Flossbach von Storch had to check their fund names accordingly and make adjustments if necessary. CIVAC maintains a greenwashing self-audit template in the workspace that compares marketing texts, fund name, appendix II and periodic appendix and highlights inconsistencies. The ESG officer can then audit the marketing and investment teams using the same documentation system and address risks before a regulatory notice is issued. The clock starts on awareness.

In addition, the template provides a four-eye process for press releases, fact sheets and sales material with a defined release chain (investment team, ESG officer, compliance, management) and an audit trail that shows who released which statement and when. This documentation is the most effective defence against greenwashing allegations and against derivative claims for damages from institutional investors.

Any institutional investor who wants to assess a fund from Flossbach von Storch or another asset manager from an ESG perspective needs to proceed in six steps. First, check SFDR classification (Articles 6, 8 or 9) and read the pre-appendix. Second, compare Annex II for specific exclusions, methodology, minimum sustainable investment rates and benchmarks. Thirdly, read the last Periodic Annex and check whether the methodology promised in the previous Annex is quantitatively proven, in particular the minimum sustainable investment quota and the taxonomy quota. Fourth, interpret the taxonomy ratio in the context of the underlying activities, not in isolation, and take into account the industry structure of the portfolio. Fifth, check the voting rights and engagement reporting of the last twelve months and compare it with the engagement topics promised in the previous appendix.

Sixth, compare your own investment policy statement (IPS) with the fund characteristics. Pension funds, foundations and church investors often have additional exclusions that are not included in Annex II of a broad Article 8 fund. This gap must be closed either through a special fund, an asset management mandate or direct communication with the asset manager. In the workspace, CIVAC provides a template for the suitability test according to MiFID II Annex II No. 5 in combination with the client's sustainability preferences, so that the recommendation to the investor is documented in an audit-proof manner. The clock starts on awareness.

In addition, an annual ESG due diligence by the investor is recommended for every mandated asset manager, which includes not only the preliminary and periodic appendices, but also the staffing of the ESG team, the methodology versions, external data provider contracts and possible reputational risks from ongoing ESMA or BaFin investigations includes. CIVAC keeps the results as an audit-proof client file and provides the investment committee with a completed resolution proposal.

An asset manager's ESG obligations are not a PR task, but an operational compliance discipline: SFDR classification, RTS annexes, taxonomy quotas, CSRD reporting, ESG risk integration, engagement documentation and greenwashing prevention. For institutional investors, the assessment of a specific company like Flossbach von Storch is not done with a marketing document, but rather requires a structured examination of the regulatory appendixes. CIVAC is a compliance platform and officer-as-a-service with 25 live officer roles, 490 ready-to-use audit templates, 93 controls according to ISO/IEC 27001:2022, EU data residency and a documented reporting line per role. The CIVAC SLA for the order is 2 working days instead of the classic 2 to 6 weeks and thus reduces the vacancy risks in the event of a change in personnel or illness.

Two delivery models are available. Licence the workspace for your internal officers, where your ESG, risk and compliance teams share a common ledger. Or have our representatives appointed, where a CIVAC employee is formally appointed via an appointment certificate as an external ESG/sustainability representative, with a fixed reporting line to the management and defined escalation channels for supervisory contacts. Both paths deliver the same result: an audit-proof, documented, paragraph-proof evidence base for BaFin supervision, auditors and clients. Turn reading into an assignment. Write to info@civac.de or use the contact form. Order deadlines and onboarding steps can be found in the FAQ.

For client investments with ESG requirements, the CIVAC workspace can also be expanded to include the suitability test according to MiFID II Annex II No. 5, client reporting according to SRD II and engagement documentation. This means that every investor has their own audit-proof file in which investment policy, sustainability preferences, recommendations, exercise of voting rights and reporting come together. This turns an asset management mandate into a verifiable compliance process that meets the increasing requirements of BaFin, ESMA and institutional trust committees.