Responsible investment & ESG integration

As an asset manager with a focus on tangible assets, we see responsible investing as a key prerequisite for long-term value creation. ESG aspects (environmental, social, governance) are embedded in all phases of our investment process - from due diligence to ongoing asset management and disposal.

We see this vision as a motivation, obligation and promise. It reminds us that our entrepreneurial actions have a profound impact on people, our environment and our environment. And, most of all, that we are not seeking short-term profits, but rather lasting value that spans generations. We also bear a responsibility towards those who live and work in our properties; People for whom we provide a secure future through stable financial investments, whom we supply with sustainable infrastructure and who we support in realising themselves and their business.

Our sustainability approach applies to our key business areas, including:

• retail funds and
• Funds for institutional investors in real estate and infrastructure
• Individual mandates for individual investors
• Mobility leasing as provision of individual financing solutions for machines, systems, commercial vehicles and other equipment
• Closed-ended fund limited partnerships as well as construction and financing management services for commercial and public real estate as well as large-scale real estate.

This means that we cover 100% of our relevant business volume.¹

Our sustainability goals, strategy and measures are anchored in Commerz Real AG’s ESG framework and are updated regularly. These include, among other things, our Net Zero commitment, biodiversity targets, alignment with the EU Taxonomy, and annual greenhouse gas accounting according to the GHG Protocol and PCAF. Other measurable goals on social and governance complete the holistic perspective on ESG.²

1. ESG guidelines & screening in our products

We apply both positive and negative screening criteria, which are mandatory in all investment processes in accordance with our asset class policies. These criteria shall include, in particular:

Positive ESG criteria

• Climate & decarbonisation: Assessment of greenhouse gas emission intensity, transformation capability and net zero compatibility
• Environmental protection & resource efficiency: Energy and water consumption, waste management, circular economy approaches, biodiversity and ecological upgrading potential³
• Climate risks: Analysis of physical climate risks via external tools including several IPCC future scenarios, assessment of transitory risks based on emission intensity and the Carbon Risk Real Estate Monitor (CRREM) based on the 1.5°C path under the Paris Agreement
• Minimum protection, labour & human rights: Compliance with international standards of the OECD Guiding Principles, UN Guiding Principles, ILO core standards, International Bill of Human Rights
• Governance & Integrity: Review of business models, compliance structures and material supply chain risks, including ESG aspects

Negative screening/exclusion criteria

The exclusion criteria of Commerzbank apply to all investments, which we apply bindingly. We therefore link directly to the Commerzbank ESG framework, in which the full exclusion criteria are publicly available.

In addition to the ESG screenings, all investments, transactions and significant business relationships are subject to a binding reputational risk review process by Commerz Real. Potential ESG-related reputational risks are identified, documented and assessed throughout the entire investment and asset lifecycle. The initial review takes place in the responsible departments (first line of defence). In the event of indications of environmental, social or ethical risks, a structured report is provided to Compliance, which, as a second line of defence, carries out an in-depth reputational risk check in coordination with relevant specialist departments such as Sustainability Management. This includes business models, projects or tenants that contradict Commerz Real’s ESG objectives and Commerzbank’s Group standards or are linked to sensitive topic areas.

These are, among others:

• Human rights violations,
• discriminatory practices;

• Environmental impacts

   

The evaluation is carried out qualitatively using a standardised voting scale. Depending on the risk classification, investments can be continued without restrictions, can be pursued under conditions or are subject to escalation up to a decision at Board of Management or Management Board level. In the event of significant or high reputational risks, there is a clear recommendation not to enter into or terminate the investment or business relationship; follow-up is only permitted after formalised escalation and documented decision. Remedial actions may include termination or discontinuation of the business.

2. Mandatory ESG integration in investment decisions

Real estate

ESG due diligence is mandatory for every purchase. This includes e.g..

• Data collection on energy consumption, heating types, certifications, digital control, mobility infrastructure and more.
• Energy and decarbonization path analysis via CRREM.
• Assessing the net zero impact of the investment at portfolio level.

• Comprehensive climate risk analysis with external tool support incl. calculation of the annual expected loss on the following topics:

   

  • River flooding, flooding and storm flooding
  • storm, tornado, hail storm
  • Earthquakes
  • Lightning strike
  • Forest fire
  • Volcanic ash fall
  • Landslides

  • Lowering the floor

     

• Review of EU Taxonomy alignment where fund-related requirements exist.

   

  • This includes whether a significant contribution is made to one of the six environmental objectives:

     

    • Climate change mitigation
    • Climate change adaptation
    • Protection of water and marine resources
    • Preservation of biodiversity and ecosystems
    • Prevention and reduction of pollution
    • Transition to a circular economy (e.g. requirement of the asset’s overall waste management plans)
  • In addition, the other environmental objectives must not be significantly harmed ("Do no significant harm", DNSH check)

  • The minimum social standards must be complied with and thus ensure, among other things, the following:

     

    • Human rights (incl. labour and consumer rights)
    • OECD Guidelines for Multinational Enterprises
    • UN Guiding Principles on Business and Human Rights (UNGP)
    • ILO Core Labour Standards
    • The International Charter of Human Rights
    • Prevention of corruption and bribery
    • Tax responsibility (tax transparency, no aggressive tax practices)

    • Fair competition principles

       

In order to ensure compliance with the aforementioned minimum social standards, a query is carried out via the “Business & Human Rights Resource Centre” databases and the OECD database in addition to the use of our Business Partner Due Diligence (BPDD) tool. The database tracks 10,000 companies worldwide with regard to human rights violations & ongoing proceedings and lists any existing company statements.

After entry in the Business & Human Rights Resource Centre, the recorded response requests, the response rate, the number of lawsuits and allegations as well as the year of the last entry are documented in an Excel table. The link to the database page is also documented for later validation.

The OECD database lists known violations of human rights and environmental standards by companies. Findings are listed and linked by hit category. After entry in the OECD database, the number of existing hit categories (Employment and Industry Relations, General Policies, Human Rights, Concepts and principles, Combating Bribery, Bribe solicitation and extortion, Disclosure, Taxation) as well as the year of the last entry in an Excel table. The link to the database page is also documented for later validation.

If there are no hits or hits that are generally more than 5 years old, the business relationship cannot be objected to.

In the event of negative hits, a qualitative check of the allegations is carried out, in which it is checked whether the company has taken a position on the allegations, whether the associated circumstances have been remedied and on the basis of which the history is likely to lead to further violations.

If a negative hit is assessed as suspect after the qualitative check ("true hits"), Compliance is notified. In this case, the latter triggers a re-check for the initiator of the business relationship.

All business relationships entered into (new and existing) are reviewed regularly, the frequency of which is determined by the risk assessment of Compliance. Business relationships with “High” risk are reviewed annually, “Medium” every two years and “Low” every three years to ensure continued compliance with minimum social standards.

Infrastructure

For investments in infrastructure - in particular for funds that comply with the transparency obligations pursuant to Articles 8 and 9 of the Disclosure Regulation - we conduct impact and/or ESG due diligence:

ESG due diligence (to meet the requirements pursuant to Art. 8 of the OV)

• Review of the defined exclusion criteria of the respective funds, including

   

  • Investments in energy generation assets attributable to the fossil fuels sector
  • Investments in companies involved in activities related to controversial weapons (within the meaning of international treaties and conventions, United Nations principles and, where applicable, national laws)
  • Investments in companies involved in the cultivation and production of tobacco
  • Investments in companies which, in the opinion of the benchmark administrators, violate the United Nations Global Compact (UNGC) principles or the OECD Guidelines for Multinational Enterprises
  • Investments in companies that derive a proportion of their revenues from the exploration, extraction, production, distribution or refinement of coal, lignite, petroleum or gaseous fuels

  • Investments in companies that generate a certain proportion of their revenue from electricity generation with a GHG emission intensity of more than 100 g CO₂e/kWh

     

• Analysis of the investment in relation to the environmental and/or social characteristics defined by the Fund, such as

   

  • Reduction of CO₂e emissions,

  • Development, expansion and access to

     

    • Transport infrastructure,
    • Utility infrastructure,
    • communication infrastructure,
    • energy infrastructure and/or
    • Social infrastructure
  • Review of EU taxonomy complianceif fund-related requirements exist (procedure analogous to the explanations in the Real Estate section)

  • Creation of action plan items based on the results of the ESG due diligence, which are mandatory and reviewed annually

     

Impact due diligence (to meet the requirements pursuant to Art. 9 of the OV)

• Review of the defined exclusion criteria of the respective funds
• Analysis of the EU taxonomy-alignment of investments (procedure analogous to the explanations in the Real Estate section)
• For certain industries and assets: Separate review of supply chain risks in relation to human rights violations via whitelist mechanisms, currently for manufacturers of solar modules and battery storage

• Creation of action plan items based on the results of the impact due diligence, which are mandatory and reviewed annually. Depending on the requirements of the respective asset, the following topics, among others, are taken into account in this list:

   

  • Contribution to climate change mitigation (e.g. calculation of an individual product carbon footprint)
  • Climate change adaptation (e.g. definition of adaptation solutions as part of the analysis of physical climate risks)
  • Protection of water and marine resources
  • Preservation of biodiversity and ecosystems
  • Prevention and reduction of pollution
  • Transition to a circular economy (e.g. requirement of the asset’s overall waste management plans)
  • Human rights (e.g. statement by the solar module manufacturers on potential human rights violations and presentation of their mitigation measures)

3. ESG integration in ongoing asset management

Real estate

ESG is systematically and structuredly integrated into the operational portfolio. This is based on annual data processes, standardised analyses, technical assessments and the implementation of action-based decarbonisation paths.

• Systematic data collection and validation

   

  • Annual collection of all relevant energy, water and waste data in the ESG data management system. This includes submetering, smart meter data and property and facility management information

     

• Calculation of climate-related key figures

   

  • Calculation of CO₂e emissions according to GHG Protocol (Scope 1-3), based on measured consumption data

  • Determination of climate impacts in accordance with the PCAF standard, e.g. for determining portfolio-related emission intensities

     

• Climate risk & transition risk management

   

  • Annual CRREM stranding analyses to determine Paris compliance, decarbonization pathways and critical transition risks

  • Regular physical climate risk analyses (heat, heavy rain, flooding, etc.) at asset level based on the EU taxonomy and international best practices

     

• Action-oriented decarbonisation strategies

   

  • Development and use of property-specific ESG action plans, with structural measures, digitisation steps and renewable energy options

  • Prioritisation based on:

     

    • Energy and CO₂e intensity
    • CRREM stranding year
    • Economic efficiency (cost-benefit analysis)
    • Technical feasibility

  • Annual monitoring of implemented measures

     

• Governance & contract management

   

  • Embedding ESG requirements in property/facility management contracts (e.g. obligation to collect data, energy optimisation, maintenance according to efficiency standards).

  • Use of green leases to actively involve tenants in achieving ESG goals. This includes:

     

    • Sustainable user behaviour,
    • CO₂-neutral power supply,
    • Access to consumption data

Infrastructure

ESG processes are also firmly established in the operation of infrastructure investments:

• Annual data collection to calculate CO₂e emissions
• Regular climate risk analysis of tangible asset investments
• Ongoing maintenance and implementation of action plan items from impact and/or ESG due diligence
• Conversion of external electricity purchases for tangible asset investments in renewable energies to green electricity to reduce CO₂e emissions

4. Engagement & Stewardship in Real Assets

Our engagement and stewardship approach is geared to the specific structures, influences and risk profiles of real assets. The aim is to minimise sustainability-related risks, promote long-term value creation and improve environmental and social standards through a structured, continuous dialogue with relevant stakeholders.

4.1 Commitment and thematic focus

We understand engagement as an integral part of our investment and asset management process throughout the entire lifecycle of an investment. In particular, we engage with material environmental, social and governance (ESG) issues relevant to tangible assets, including:

• Environment: Energy efficiency, greenhouse gas emissions, resource efficiency (water, waste), climate risks and climate adaptation
• Social concerns: Social minimum standards along the value chain, e.g. social and employee affairs, user and tenant safety, access and affordability and neighbourhood development
• Governance: ESG Roles and Responsibilities, Compliance, Transparency, Governance and Control Mechanisms

The engagement approach is applicable to all relevant real asset investments to the extent our influence (direct or indirect) allows and is prioritised based on risk.

4.2 Exposure to asset classes

Real estate

In the real estate sector, we pursue an active partnership approach with tenants, property and facility managers and other service providers. The key tools are:

• Continuous dialogue to increase energy efficiency and reduce resource consumption (e.g. electricity, heat, water)
• Use of green leases: Sustainability appendices and ESG guides to clarify responsibilities and minimum requirements
• ESG standards in property and facility management contracts
• Regular ESG data queries and reporting formats to track progress

The aim is to promote sustainable operations and continuously improve ESG performance together with key operational stakeholders.

Infrastructure

For infrastructure investments, our commitment is particularly focused on the implementation and follow-up of ESG action plan items. Among other things, this involves:

• Structured dialogues with operators, management companies and insurers
• Monitoring compliance with minimum social standards, in particular with regard to occupational health and safety
• Use of whitelisting logicto ensure that only manufacturers with defined minimum standards are involved
• Integration of ESG aspects into existing monitoring, risk and compliance processes

Our approach takes into account the regulatory, operational and contractual framework conditions of the respective infrastructure investment.

4.3 Engagement tools and escalation mechanisms

Depending on the situation and the opportunity to influence, we use different engagement tools, including:

• Direct dialogue and regular coordination meetings
• Written recommendations and action lists
• Delivery of operational KPIs related to ESG objectives
• Use of contractual leeway (e.g. reporting obligations, sustainability clauses)

If material ESG risks are not addressed despite appropriate engagement efforts or improvements are not implemented, this can lead to an escalation within our internal governance structures. Depending on the form of investment and the contractual options, a reduction or termination of the exposure can also be considered as an ultima ratio.

4.4 Transparency and reporting of results

The results of our engagement activities are documented and incorporated into our overall ESG monitoring. As part of our PRI reporting we report on:

• Type and focus of engagement activities carried out
• Relevant topics (environment, social, governance)
• Progress made and challenges identified
• Qualitative and - where possible - quantitative results

Our goal is to create transparency about the impact and effectiveness of our commitment and to continuously develop this approach.

5. Standards & measures to ensure sustainable investments

The EU Taxonomy Regulation ⁴ is a central component of our understanding of sustainability. It creates an EU-wide classification system. It considers economic activities to be environmentally sustainable if they contribute significantly to one or more of the six environmental objectives of the EU Taxonomy and do not significantly harm any of the other environmental objectives. In addition, compliance with minimum social standards must be ensured, including the exclusion of child labour and fair pay within the value chain.

As a financial services company, we want to do our part. For this reason, we analyse the ratio of EU taxonomy-aligned investments for Commerz Real Group funds as an indicator of the environmental sustainability of investments. Based on the fund volume, we already cover more than 95% of the CR Group’s managed portfolio. The investments are intended to make a significant contribution to the environmental objective of climate change mitigation and/or the environmental objective of “climate change adaptation” within the meaning of the Taxonomy Regulation.⁵

Compliance with minimum taxonomy quotas is ensured by binding standards and processes in our asset class policies. They determine:

• Impact and/or ESG due diligence content
• Mandatory minimum requirements
• Roles & Responsibilities
• Monitoring processes
• Contract integrations (e.g. sustainability clauses of a green lease ⁶ or contract appendix to ensure minimum protection for service provider contracts)
• Regular reporting to fund management and management

In this way, we create a consistent, verifiable set of rules that ensures compliance with international standards and regulatory requirements.

6. Management, management reporting and external transparency

The management, monitoring and reporting of sustainability aspects is systematically integrated into the internal management and decision-making processes of the Commerz Real Group.

Asset-level control and monitoring

At the fund and company level, ESG indicators and progress are collected, analysed and incorporated into internal management at least annually. The results are discussed in relevant committees, in particular the Sustainability Board, and are incorporated into strategic and operational decisions.

Climate risks are collected at the level of the individual tangible asset investments by an external tool and regularly reviewed. The tool’s data is presented in a climate risk dashboard and made available to asset and risk management.

Based on this data, risks are quantified and mitigation measures are defined by the respective responsible units.

In the real estate sector, ESG dashboards are created annually for all properties. These provide asset managers with all relevant sustainability key figures in a structured manner and at a glance, including:

• Energy and emission key figures incl. breakdown by cause, Scope 1, 2 and 3 classification and benchmarking according to CRREM
• Results of climate risk and decarbonisation analyses
• Consumed water
• Produced renewable energy (with existing photovoltaic systems)
• Contribution to the Sustainable Development Goals (SDGs)
• Information on sustainability certificates and green leases
• Climate risks

The ESG dashboards thus serve as a central tool for the continuous operational control, monitoring and further development of sustainability performance at asset level.

Management at company level & management reporting

Since 2026, the newly established Sustainability Board has dealt with all material sustainability topics. This committee is composed of management representatives of Commerz Real AG and the significant subsidiaries and performs a central management and control function for sustainability at Group and portfolio level. In particular, the Sustainability Board deals with:

• progress towards ESG objectives,
• material sustainability risks and opportunities,
• as well as the further development of the ESG strategy and the underlying measures.

Correspondingly, management reporting includes key sustainability indicators, including greenhouse gas emissions, climate risks and the implementation status of ESG measures and action plan items. Reporting is asset class-specific and takes into account the different requirements of the Real Estate and Infrastructure divisions.

The key sustainability indicators from the leasing business of Commerz Real Mobilienleasing GmbH are prepared in an ESG dashboard for this company and updated regularly. The dashboard includes the binding sustainability objectives of Commerz Leasing to ensure continuous operational control, monitoring and further development of the company’s sustainability performance:

• Continuation rate
• Volume of environmentally sustainable new business
• Emissions and emission intensity

External transparency

The central basis for Group-wide ESG reporting is the ESG framework of Commerz Real AG, in which the main ESG goals, measures and ongoing progress on the defined ESG KPIs are presented transparently and regularly updated.

Commerz Real presents its ESG principles, goals, measures and progress transparently to investors, business partners and the public. External disclosure is guided by recognised regulatory and voluntary frameworks, in particular SFDR, EU Taxonomy, CSRD and the UN Principles for Responsible Investment (PRI). Key information is provided through the ESG framework as well as complementary content on the corporate website.

7. Downloads & further information

• Commerz Real AG ESG framework
• Responsible Investment Statement
• PRI information
• Commerzbank exclusion criteria

8. Up-to-date

This page is updated at least once a year to fully reflect regulatory developments as well as our own progress.