​"Information | Sustainability Risks in Financial Products"

What are Sustainability Risks?

Sustainability risks (ESG risks) refer to events or conditions in the three areas of Environment (E), Social (S), and Governance (G) that could have negative impacts on the value of an investment or asset. These risks can affect individual companies as well as entire industries or regions.

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What are examples of sustainability risks in the three areas?

• Environment: Due to climate change, increasingly frequent extreme weather events could pose a risk. This is also referred to as physical risk. An example of this would be an extreme drought in a particular region. As a result, water levels in transport routes such as rivers could fall so low that the transportation of goods could be disrupted.

• Social: In the social realm, risks could arise, for example, from non-compliance with labor laws or health and safety regulations.

• Governance: Examples of risks in governance include non-compliance with tax honesty or corruption within companies.

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Information on the Inclusion of Sustainability Risks in Advisory Activities (Art. 3 TVO)

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To incorporate sustainability risks into advisory services, the information provided by providers (market participants) and their financial products is considered during the selection process.

Providers who clearly do not have a strategy for integrating sustainability risks into their investment decisions may not be offered.

In the advisory process, it will be specified if considering sustainability risks in the investment decision leads to noticeable advantages or disadvantages for the client.

The provider will inform the client about how sustainability risks are taken into account in their investment decisions through their pre-contractual information. The client can address any questions about this before committing to an investment.

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To assess sustainability risks, the financial advisor uses additional information from service providers, associations, or organizations that specialize in evaluating these risks. As with other types of risks, broad diversification (spreading investments across different assets or financial products) is generally recommended.

 

Information on the Consideration of Adverse Impacts on Sustainability Factors (Art. 4 TVO in conjunction with Art. 11 of the Supplement to TVO, January 1, 2023)

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Declaration on the consideration of the most significant adverse impacts on sustainability factors in investment and insurance advice:

The goal of our advisory service is to recommend a suitable investment or insurance product to you. We also consider your sustainability preferences, if you wish. You can specify whether you would like ecological and/or social values, as well as principles of good governance, or whether the most significant adverse impacts of investment decisions on sustainability factors should be taken into account.

Depending on the type of investment (in companies, countries, real estate, etc.), the legislator has defined “indicators” for the most significant adverse impacts of investment decisions on sustainability factors in the following areas:

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• Environmental, social, and labor matters

• Respect for human rights

• Fighting corruption and bribery

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Product providers are legally required to publish a statement outlining their strategy for addressing the most significant adverse impacts and how they manage them. This specifically relates to greenhouse gas emissions, water use, biodiversity, waste, social and labor matters (including human rights and corruption).

If you decide that the most significant adverse impacts of your investment decisions on sustainability factors should be considered in the product selection process, we will take into account the information provided by the product providers, as well as their stated strategies.

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We do not apply our own classification or selection methods to the information provided by the product providers, nor do we conduct a separate assessment of the credibility of the information provided.

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Information on the Remuneration Policy in the Consideration of Sustainability Risks (Art. 5 TVO)

The remuneration for brokering financial products is not influenced by the respective sustainability risks associated with the products.

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Status: January 2023