- INTRODUCTION AND PURPOSE OF THE POLICY
Regulation (EU) 2019/2088 of 27th of November, 2019 on sustainability‐related disclosures in the financial services sector, states that financial market participants and financial advisers should be required to disclose specific information regarding their approaches to the integration of sustainability risks and the consideration of adverse sustainability impacts.
Article 3, Transparency of Sustainability Risk Policies, states that “Financial market participants shall publish on their websites information about their policies on the integration of sustainability risks in their investment decision‐making process.
Financial advisers shall publish on their websites information about their policies on the integration of sustainability risks in their investment advice or insurance advice.”
Invexcel Patrimonio, E.A.F., S.L. (hereinafter “the Entity”) is a Financial Advisory Company (Empresa de Asesoramiento Financiero or EAF in Spanish) based in Madrid, Spain. The Entity, as an EAF, has drawn up this Sustainability Risk Integration Policy regarding Investment Advice (hereinafter “the Policy”), which includes the way in which sustainability risks, known as ESG criteria, are integrated in its investment advisory processes, and which should be published on its website.
This Policy is applicable, in general, to all the Entity’s personnel. In particular, all managers and employees must be acquainted with it, as well as all those who maintain a direct or indirect relationship with the provision of investment services to clients.
Given the size, nature and internal organization of the Entity, the scope and complexity of the activities it carries out, the Entity adheres to the principle of proportionality contemplated in the aforementioned Disclosure Regulation. The application of this Policy will be implemented and detailed throughout the period indicated by the regulator and to the extent possible due to the limitations indicated.
European supervisory authorities (ESMA, EBA y EIOPA) published, a statement on 25/02/2021 regarding the application of the disclosure regulation (SFDR) and its Regulatory Technical Standards (RTS), which is pending approval.
The main objective of the declaration is to guarantee a harmonized approach in the presentation of the content and methodologies of the information related to sustainability, considering the different dates of application of the regulation and the RTS:
- The Disclosure Regulation is applicable as of 10/03/2021 under the “comply or explain” principle.
- The RTS entered into force on 07/01/2022 for products that have investments with climate objectives, and for the remaining objectives on 01/01/2023.
- SUSTAINABILITY RISK INTEGRATION POLICY INVESTMENT ADVICE
A. ESG Criteria
The ESG criteria addresses the three pillars of sustainability, these being Environmental, Social and Governance:
- Environment Criteria (E): covers topics such as climate risk, the scarcity of natural resources, pollution and waste, activities with positive (e.g., renewable energy) and negative impacts on the environment, among others.
- Social Criteria (S): includes aspects such as compliance with human rights, labor rights, job creation, social impact of products and services, activities in developing countries, among others.
- Governance Criteria (G): encompasses elements related to corporate governance and the behavior of the company, such as the quality and effectiveness of the board, its relationship with shareholders, employees, customers, suppliers, and other interest groups; codes of business ethics, legal and regulatory compliance; among others.
The main purpose of the investment recommendations under these criteria is to generate positive impacts on society and the environment. This evaluation is not a static process, but will be in constant evolution.
At present, the Entity has decided not to integrate ESG criteria into its investment decision-making processes. The evaluation of the assets recommended by the Entity is mainly based on the combination of financial criteria when issuing investment recommendations. However, the Entity takes “extra-financial” ESG factors into account in its advisory processes, and aims to analyze the possible integration of these into investment proposals issued in the future.
B. Selection Criteria:
In regards to its advisory duties, the Entity may carry out an analysis of the environmental or social characteristics promoted by the financial product, and take the following into account.
- Its investment strategy set to achieve environmental or social characteristics.
- The minimum distribution of the underlying assets established in its investment policy.
- The indicators used in assessing ESG factors.
When analyzing Collective Investment Institutions (IIC) that it recommends to its clients, the Entity considers the category established in the IIC brochure and the suitability for the client.
The Company undertakes to comply solely with the disclosure requirements.
C. Principal Adverse Impacts (PAI): The Entity, in accordance with Article 4, point 5 b), as a financial advisor does not consider the PAI of investment decisions on sustainability factors when providing investment advice. It deems that in order to do so with the necessary rigor, it is essential to publish the corresponding regulatory developments of Regulation 2019/2088 on the disclosure of information related to sustainability in the financial services sector. once these developments are published and analyzed, the Entity may take the PAI of investment decisions on sustainability factors into account.
D. Remuneration Policy: The determination not to consider ESG factors into account when making investment decisions leaves the Entity’s remuneration policy unaffected.
- INFORMATION TO CUSTOMERS ABOUT THE POLICY
In compliance with Art. 3 of Regulation (EU) 2019/2088, the Entity will make this Policy available to its clients, and to the general public, via its website.
- POLICY APPROVAL AND REVIEW
The Policy has been approved by the company’s Board of Directors. Any modifications to this Policy will require the approval by the Board.
The Policy will be updated and/or modified at least in the following cases:
- When legal or regulatory changes take place that affect the established policy.
- When those responsible for the Entity’s internal control functions or management propose an update or modification, or when it is understood that there are sections that can be improved to achieve the proposed objectives or to adapt to the Entity’s current situation and business.
- When the supervisory bodies propose an update or modification.