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Sustainable Finance Disclosure Regulation (SFDR)
Banque J. Safra Sarasin (Luxembourg) SA (“BJSSL”) is a part of the J. Safra Sarasin Group (the “Group”).
The Group continues to lead the industry in sustainability and is committed to driving further development through membership of leading industry bodies and as a founding signatory of the Principles for Responsible Banking and the Principles of Responsible Investing.
As per Group guidance, BJSSL is committed to contribute to achieving society’s goals as expressed in the UN Sustainable Development Goals, the Paris Climate Agreement and to achieving smart, sustainable goals.
Pursuant to the EU Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”), BJSSL is required, among others, to disclose the manner in which sustainability risks are integrated into investment decision-making and advice as well as information about the consideration of Principal Adverse Impacts.
“Sustainability Risks” refer to 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 investments made by BJSSL. Such risks are principally linked to climate-related events resulting from climate change (also known as physical risks) or to society’s response to climate change (also known as transition risks), which may result in unanticipated losses that could affect BJSSL and its investments. Social conditions (e.g. labor relations, investment in human capital, accident prevention, changing customer behavior, etc.) or governance shortcomings (e.g. recurrent significant breach of international agreements, bribery issues, product quality and safety, selling practices, etc.) may also translate into Sustainability Risks. The impacts following the occurrence of a Sustainability Risk may be numerous and vary depending on industries, regions and asset classes.
BJSSL relies on a wide range of tools described in the Group’s Sustainable Investment Policy to ensure that Sustainability Risks are properly integrated. In addition, the Group’s engagement and voting activities detailed in its Active Ownership Policy, ensure that Sustainability Risks are integrated and monitored on an ongoing basis. In alignment with the Group’s activities, Sustainability Risks are also integrated and monitored on an ongoing basis by BJSSL.
BJSSL employees are incentivized to apply sustainability considerations wherever possible and conduct their duties in a sustainable, client-orientated manner. Risk awareness, including consideration of Sustainability Risks, is part of the qualitative performance assessment of its employees as indicated in BJSSL’s remuneration policy.
BJSSL, in close collaboration with the Group, continues to closely monitor the evolving regulatory environment and review and enhance its in-house methodologies to ensure it remains at the forefront of sustainable investment.
As per Art. 10 of EU Regulation 2019/2088 on sustainability-related disclosures in the financial services sector, the Sustainable Multi-Asset, Thematic and Equity Income discretionary mandates consider environmental, social and governance factors as part of investment analysis, idea generation and portfolio construction.
The objective of the Sustainable Equity Global discretionary mandate is to reduce the carbon footprint (claims on carbon emissions per million USD invested) over time until it reaches net-zero by 2035 in line with J. Safra Sarasin's Climate Pledge. This is achieved by focusing on shares of companies contributing to a carbon-neutral outcome. To this end, the mandate will invest in «Green Champions», companies enabling substantial emissions reduction through innovative solutions, and «Climate Pledgers», companies on a temperature trajectory below 2°C, in line with the Paris Agreement. This investment approach will allow investors to harness opportunities and mitigate risks stemming from the climate transition. The portfolio will be below 2°C at all times, have high exposure to green revenues, and no exposure to stranded assets.
Information regarding the methodologies used to assess, measure and monitor the environmental and social characteristics of these products is available in the Group Sustainable Investment Policy
Further information is available on the Group Sustainability Website.
Principal Adverse Impacts Statement
Pursuant to EU Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector, Banque J. Safra Sarasin (Luxembourg) SA (“BJSSL”) as part of the J. Safra Sarasin Group (the “Group”) considers principal adverse impacts on sustainability factors as part of its investment decision making process as well as its investment advice.
2. Description of principal adverse sustainability impacts
Principal adverse impacts (“PAI”) are negative, material or likely to be material effects on environmental, social and employee matters that are caused, compounded by or directly linked to investment decisions and advice performed by the Bank.
3. Description of policies to identify and prioritize principal adverse sustainability impacts
Identification and Prioritization of Principal Adverse Impacts
Adverse impacts are prioritized according to their materiality and type as well as the investment strategy, ESG priorities and sustainable objective of the investment product. BJSSL considers an adverse impact on sustainability factors to be principal where it has a material, negative impact on efforts to accelerate transition to a low carbon economy and/or to advance inclusive growth. The methodology used to incorporate the consideration of potential adverse impacts into the investment process is described in the Group Sustainable Investment Policy.
Further information about BJSSL’s policies to identify and prioritise principal adverse sustainability impacts will be published following the finalisation of the applicable European Commission Delegated Regulation.
Methodologies & Data Sources
The Group, and BJSSL as part of it, uses external data sources, publicly available information and own proprietary tools and frameworks to identify, assess and monitor adverse impacts. Where data is insufficient, an alternative approach is used including direct company engagement and estimation methods (industry average).
4. Engagement Policies
The Group’s engagement and voting approach are detailed in its Active Ownership Policy and Proxy Voting Guidelines and its activities are reported in the annual Active Ownership Report.
5. References to International Standards
The Group is a founding signatory of the Principles for Responsible Banking and the Principles of Responsible Investing, and is a member of Swiss Sustainable Finance, the Swiss Climate Foundation and the Global Footprint Network. Furthermore, the Group adheres to a number of international norms, including the OECD Guidelines and transparently reports on its progress in the annual Sustainability Report aligned with the Task Force on Climate-Related Financial Disclosures (“TCFD”).
The Group is committed to contributing to the achievement of society’s goals as expressed in the Sustainable Development Goals (SDGs) and the Paris Agreement. This commitment is underpinned by the J. Safra Sarasin Sustainable Asset Management Climate Pledge, which aims for a carbon-neutral outcome in assets under management by 2035.
Further sustainability-related disclosures
1. Mandates promoting environmental or social characteristics (Article 8)
Mandates that promote environmental characteristics are required as per Article 6 of the Regulation (EU) 2020/852 (the “Taxonomy Regulation") to state that the “do no significant harm” principle applies only to those investments underlying the mandate that take into account the EU criteria for environmentally sustainable economic activities. The investments underlying the remaining portion of the mandate do not take into account the EU criteria for environmentally sustainable economic activities.
It should however be noted that notwithstanding the above, these mandates do not take into account the EU criteria for environmentally sustainable economic activities within the meaning of the Taxonomy Regulation and portfolio alignment with such Taxonomy Regulation is not calculated. Therefore, the “do not significantly harm” principle does not apply to any of the investments underlying these mandates.
2. Mandates with a sustainable investment objective (Article 9)
Pursuant to the Taxonomy Regulation, this mandate invests in economic activities that contribute to an environmental objective and are subject to the disclosure requirements of Article 9 of the SFDR. It is therefore required to disclose information about the environmentally sustainable investments made.
The Sustainable Equity - Global Climate 2035 mandate may contribute to any of the six environmental objectives defined by the EU. These are, climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, the protection and restoration of biodiversity and ecosystems. The focus is currently on climate mitigation and adaptation, as well as the sustainable use and protection of water and marine resources. Should more opportunities arise in one or more of the other three objectives, then the mandate is allowed to pursue those. Contribution to each objective may fluctuate over time and not all objectives are equally weighted.
In order to contribute to these objectives, it is expected that the mandate will make investments in EU Taxonomy-eligible economic activities. However, due to the current lack of data for the assessment of the EU Taxonomy alignment of its investments, the mandate cannot at this stage accurately calculate to what extent the underlying investments qualify as environmentally sustainable as per the Article 3 of the Taxonomy Regulation.
As data becomes more available it is expected that this calculation will become more accurate and will be made available to investors in the coming years. Such data will therefore be integrated in a future version of this document, along with information relating to the proportion of enabling and transitional activities.
3. Mandates that do not promote environmental or social characteristics and / or do not have a sustainable investment objective
These mandates do not take into account the EU criteria for environmentally sustainable economic activities.