The entity has a Policy on integrating ESG risks into investment decisions, approved by the Board of Directors of the entity on 21st October 2021, and which covers the ESG risk management criteria to be applied in the organization in its role as a financial market participant.
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Policy on integrating ESG risks into investment decisions
A sustainability risk is understood as an environmental, social or governance event or condition that, if it were to occur, could have a material adverse impact on the value of an investment.
Investment decisions take into account sustainability risks and they are based on in-house and third-party analyses.
The integration of ESG risks shall also be generally included in the principles for action in the provision of discretionary portfolio management, by means of the criteria and methodology deemed appropriate to be implemented in accordance with the Bank’s Policy on integrating ESG risks into investment decisions.
In accordance with Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector and Delegated Regulation (EU) 2022/1288 supplementing it, financial market participants and financial advisers must disclose whether or not they consider principal adverse impacts (PAIs) to measure the adverse impact that investment decisions and financial advice may have on sustainability factors.
PAIs should be understood as those impacts of investment advice and decisions that have negative effects on sustainability factors (ESG) or, in other words, environmental and social matters, as well as those regarding corporate governance.
Pursuant to Articles 4.1(b) and 4.5(b) of Regulation (EU) 2019/2088, the Entity, in the role it may play as a financial market participant or financial advisor, declares that it does not conduct analysis of the adverse impact of investment decisions and investment advice on sustainability factors.
This decision is a result of the following reasons:
- At present, the Entity does not have sufficiently robust processes for analysing the information available to enable it to quantify, thoroughly, the foreseeable and real impact of investment and advisory decisions on sustainability factors.
- Bearing in mind the level of the Entity in terms of size, scale of activities and characteristics, in accordance with the applicable regulations and exceptions contemplated in Article 4 of Regulation (EU) 2019/2088, we are allowed not to consider PAIs.
The Entity’s decision not to consider PAIs Entity-wide does not prevent the monitoring of PAIs in the management of specific financial products, as part of the application of ESG integration processes in investment and advisory decisions.
The fact that PAIs are not currently considered Entity-wide does not prevent the Entity’s decision regarding the consideration of PAIs on sustainability factors from changing in the future, in the event that the regulation implementing this matter should establish new requirements and that the degree of evolution of the data and information necessary for disclosure of PAIs on the market should give rise to greater maturity in the availability thereof and of the associated methodologies to calculate them.
In accordance with Article 5 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, the Bank has included information in its Remuneration Policy, pending final approval by the Board of Directors, on the consistency of the Policy with the integration of sustainability risks.
As such, the Bank shall include among the basic principles governing its Remuneration Policy that it will “ensure that it does not remunerate or evaluate the performance of its personnel in a way that conflicts with its obligation to act in the best interest of its clients, taking into account environmental, social and governance (ESG) risks, and the transparency obligations of Regulation (EU) 2019/2088”.
The bank believes that the integration of ESG criteria in the evaluation and analysis of products may have a favourable effect on the long-term performance of companies and contribute to the greater economic, social and environmentally sustainable progress of society.
Information on the consideration of ESG aspects in the products marketed by the bank is contained in the prospectus for each product, where applicable. The bank does not conduct a formal analysis of ESG aspects and their potential impact on the value of the products it markets. In this regard, the bank only considers the information provided by the various management companies and carries out an exercise in transparency by reporting this information. For more information about the integration of ESG aspects in the products, please read the product prospectus.