At the end of 2019, the Regulation 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”) was adopted by the European Union. The Regulation takes an all-encompassing and evolving approach to sustainable finance, requiring all financial market participants1 and financial advisers to publish information online on discretionary management and the investment advice that they provide, in particular:
- the integration of Sustainability Risks;
- the consideration of principal adverse impacts (“PAI”) in the investment processes at entity level;
- the remuneration policies in relation to the integration of sustainability risks; and
- the publication of sustainability-related disclosures including information on the Bank’s Article 8 and 9 products as defined below and on the consideration of PAI at product level.
The below information is applicable to BANQUE RAIFFEISEN S.C., LUXEMBOURG, a cooperative company (société coopérative) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 4, rue Léon Laval, L-3372 Leudelange, Grand Duchy of Luxembourg and registered with the Luxembourg trade and companies register under the number B20128 (hereinafter referred to as the "Bank" or “Banque Raiffeisen”).
The mandatory publication of the below information shows how sustainability is central for Banque Raiffeisen’s investment strategy and processes.
Definitions
For the purposes of SFDR:
- sustainability risk means “an environmental, 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”.
- sustainable investment means:
- an “investment in an economic activity that contributes to an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy,
- or an investment in an economic activity that contributes to a social objective, in particular an investment that contributes to tackling inequality or that fosters social cohesion, social integration and labour relations,
- or an investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives and that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance.”
- sustainability factors mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters. The inclusion of sustainability factors in the investment decision-making and advisory process can bring benefits beyond the financial markets. It can enhance the resilience of the real economy and the stability of the financial system.
- pre-contractual disclosure means the prospectus or offering documents for a fund and the investment management agreement or other terms and conditions for a portfolio management service. In the specific case of Banque Raiffeisen, pre-contractual disclosure means the R-Gestion mandate (for the discretionary management) and the Investor Guide (for the investment advice).
- Article 6 product means a financial product that does not promote Environmental/Social (E/S) characteristics, that does not have as its objective sustainable investment and that does not meet the definition of Articles 8 and 9 SFDR.
- Article 8 product means, as per the SFDR, a financial product that promotes E/S characteristics. Those products integrate ESG into their strategy and process and promote environmental and/or social characteristics. If those products invest in companies, they must follow good governance practices. Such promotion may for example include screening out certain investments based on ESG criteria or considering ESG ratings when making investment decisions. While those products do not have a sustainable investment objective, they may have a pocket of sustainable investments.
- Article 9 product means, as per the SFDR, a financial product that has a sustainable investment objective. ESG considerations are a key element of the investment strategy and process. Furthermore, only sustainable investments are made (cf. definition of “sustainable investment”). An example of a sustainable strategy is impact investing, with the aim to have a measurable positive impact on society.