MSIM Fund Management (Ireland) Limited Frankfurt Branch Statement onPrincipal Adverse Impacts of Investment Advice on Sustainability Factors
Legal Entity Identifier: 549300QDS5K6OGU25W78
Date approved: 7 November 2022
Date published: 1 December 2022

1Introduction
Morgan Stanley recognizes that global sustainability challenges, including climate change,resource scarcity and human rights, are of critical importance and must be addressed. As a
global financial services provider, Morgan Stanley partners with clients and stakeholders tomobilize capital at scale to help find solutions to these challenges.
In this regard, Morgan Stanley businesses coordinate with the Firm’s Environmental andSocial Risk Management (“ESRM”) group to address any potential environmental and social
due diligence considerations that may cause material harm and/or pose reputational risk to
the firm, as per the Morgan Stanley Environmental and Social Risk Management Policy. This
allows potential significant concerns to be escalated to the Firm Franchise Committee asrelevant.
This disclosure has been prepared in accordance with Articles 3, and 4 of the Sustainable
Finance Disclosure Regulation (EU) 2019/2088 (“SFDR”), which apply to MSIM FundManagement (Ireland) Limited Frankfurt Branch (“MSIM FMIL Frankfurt Branch”) as afinancial adviser under Directive 2014/64/EU (MiFID II) in the context of the following
business:•Morgan Stanley Investment Management (“MSIM”) Private Real Estate Investing,Infrastructure and Private Credit Teams (together the “MSIM Private GermanAdvisory Teams”).

This document provides information on how MSIM Private German Advisory Teams consider(i) sustainability risks; and (ii) the principal adverse impacts on sustainability factors, of theinvestment advice it provides.
For the purposes of this disclosure, a “sustainability risk” (as defined in SFDR) is anenvironmental, social or governance event or condition that, if it occurs, could cause an
actual or a potential material negative impact on the value of the investment. These risks
include, but are not limited to, climate change transition and physical risks; natural resources
depletion; waste intensity; labor retention, turnover and unrest; supply chain disruption;
corruption and fraud; and human rights violations. A sustainability risk trend may arise andimpact a specific investment or may have a broader impact on an economic sector (e.g. ITor Healthcare), geography (e.g. emerging market) or political region or country. The impacts
following the occurrence of a sustainability risk may be numerous and vary depending on
the specific risk, region and asset class.

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Integration of sustainability risks in investment advice
As a global investment manager, MSIM recognizes that various sustainability factors canpose actual or potential material risks to our investments at individual asset and/or portfolio
levels. MSIM also recognizes that the universe of relevant sustainability risks may grow and1

evolve over time as the universe of sustainability factors considered relevant to theinvestment community also grows. The materiality of such risks on an individual asset andon a portfolio as a whole depends on factors such as the industry sector, country, asset
class, and/or investment type. Sustainability risks can also materialize for assets andinvestments in a range of ways, for example: impaired or stranded asset values, increased
operational costs, unforeseen liabilities and penalties, loss of access to markets/customers,and reputational damage.
MSIM Private German Advisory Teams within MSIM FMIL Frankfurt Branch are responsible
for the due diligence of proposed investments and will advise affiliated MSIM investment
managers on the associated risks and opportunities. Those affiliated managers will makethe final investment recommendation regarding the proposed investments, will define therisk profile of the portfolio, and will ultimately be responsible for advising their funds on theincorporation of materially relevant sustainability risks across the investment process (duediligence and research, valuation, asset selection, portfolio construction, and ongoinginvestment monitoring) as appropriate.
MSIM Private German Advisory Teams will (in line with global MSIM Sustainable Investment
policies and procedures) consider materially relevant sustainability risks in their due
diligence of proposed investments and will advise MSIM affiliates accordingly. These may
include, for example the review and ongoing monitoring of energy, greenhouse gas, waterand waste data of assets and the implementation of any relevant ESG initiatives at asset
level. The MSIM Private German Advisory Teams will raise ESG issues or opportunities forreview as part of the Investment Committee process, as highlighted in the Investment
Committee checklist. Any ESG risks and opportunities which are identified by the MSIM
Private German Advisory Teams as part of asset management activities are escalated to theprivate investment funds advised by the MSIM investment managers, on a continuous basis.
Finally, within the Morgan Stanley Infrastructure, Real Estate Investing and Private Credit
divisions, the relevant MSIM teams seek to maintain insurance coverage against liability to
third parties and property damage in amounts and on terms that it considers customary andappropriate for its business.

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Consideration of principal adverse impacts in investment advice
As a global investment manager, MSIM recognizes that an unintended consequence of
certain investments may include some level of adverse impact on broader systemic
sustainability factors such as environmental matters, social and employee matters, respectfor human rights, anti-corruption and anti-bribery matters.
MSIM acknowledges that the systemic nature of sustainability issues, where relevant to agiven investment strategy, needs to be addressed in a coordinated and concerted manner
across the value chain. Through MSIM’s Global Sustainability Team and Global Risk &Analysis Team, MSIM periodically defines areas of potential principal adverse impact which
require attention. For example, these include potential contributions to:(i)

the increase of greenhouse gas emissions and systemic climate risk;(ii)

the increased use of finite natural resources;(iii)

the volume of hazardous and non-recyclable waste; and2

(iv)violations of social norms and employee rights.

MSIM uses reasonable efforts to obtain the required data to monitor these potential impacts,and to understand any remediation efforts undertaken by companies. As noted above, MSIM
Private German Advisory Teams within MSIM FMIL Frankfurt Branch will due diligence
investment opportunities, and in doing so will have regard to MSIM policies and procedures
regarding principal adverse impacts and will advise their affiliates accordingly. MSIM
investment managers will ultimately maintain discretion over the extent to which theoutcomes of this due diligence affect buy/sell decisions, portfolio construction, and ongoingengagement and asset stewardship.
The broader MSIM business considers potential adverse impacts through a combination ofactions including its global stewardship program, its thematic research, and its collaborative
efforts in the broader investment industry. Additionally, MSIM strives to adhere to several
normative business conduct codes and standards.
The collaboration of our MSIM Private German Advisory Teams with the Firm’s ESRM group
to identify and address potential environmental and social sensitivities, as outlined in theMorgan Stanley Environmental and Social Risk Policy, also supports our monitoring andconsideration of potential principal adverse impacts.
MSIM Private German Advisory Teams do not advise on “financial products” as defined
under SFDR and will therefore not use information disclosed made by financial market
participants under SFDR or rank and select financial products based on their adverse impact
on sustainability indicators.

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