As an investment advisory service provider, Zagrebačka banka d.d. (hereinafter referred to as the Bank) plays an important role in redirecting investments toward economic activities aiming to limit global warming as agreed under the Paris Agreement on climate change1 and acting in accordance with the comprehensive action plan2 and European Green Deal adopted by the European Commission to ensure the sustainable development of the EU and its transformation into a modern, self-sustainable and competitive economy, while ensuring no net emissions of greenhouse gas by 2050 and economic growth decoupled from resource use3.
As one of the most important steps within the comprehensive plan intended to achieve sustainable development, SFDR4 requires that financial market participants and financial advisers define and publish written policies on the integration of sustainability risks and ensure greater transparency in how financial market participants and financial advisers integrate sustainability risks in their investment decisions and advice or insurance advice.
Consequently, the Bank has adopted and published on its official website its “Policy on the Integration of Sustainability Risks in Investment Advisory Processes”, including but not limited to sustainability-relevant risks (ESG risks), which may result in negative impact on the performance of products supplied as part of investment advisory services.
An investment is considered to be sustainable if it is directed to an economic activity that contributes to environmental and/or social objectives without doing harm to other environmental and/or social objectives, provided that investee companies follow good governance practices.
SFDR defines 'sustainability risk' as 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. Such risks indeed result from accelerated climate change and disclosure of information in compliance with SFDR is therefore one of the key steps in directing investments to financial products that integrate sustainability risks and appropriately reduce their impact on the economy as a whole.
The Taxonomy Regulation5 is another important step in the transition to a low-carbon, climate-resilient and resource-efficient economy, aiming to define economic activities that may be considered environmentally sustainable, as well as conditions under which they may be considered to qualify as such. The environmental objectives intended to be covered by the Taxonomy Regulation are:
Pursuant to Article 11. of Commission Delegated Regulation SFDR RTS6 the Bank disclosure „Statement on Principal adverse impacts of investment advice on sustainability factors“
When selecting products it intends to include in its investment advisory service, the Bank ensures that the manufacturers of such products abide by the same standards and principles as are applied by the Bank and UniCredit Group6 with regard to sustainability risks, controversial sectors/industries and compliance with the principles of the UN Global Compact, and excludes manufacturers that fail to comply with such principles and standards.
The Bank prefers manufacturers assessed to be superior with regard to sustainability factors compared to other representatives of such sector or industry and, as regards its selection of products (investment service or financial instrument), the Bank will prefer products that are assessed to be superior with regard to sustainability factors and/or result in less adverse impacts on sustainability factors, regardless of whether or not such products are as consistent with a client’s profile as other products.
As part of its investment advisory services, the Bank is currently only able to offer products that do not qualify as sustainable financial products. However, as the Bank is committed to its role in directing investments to economic activities that will allow its clients to make a mark and directly impact environmental, social and governance matters after such products, as well as information on ESG assessment of companies, become widely available in the market, the Bank will rely on information that the manufacturers of such financial products are required to disclose. The Bank will make available to its clients all information about products integrated in its advice and will explain it in detail in the process of providing investment advice.
It is exactly because we take the role we play in the sustainable development of the community in which we operate seriously that the Bank guarantees that no financial instrument will be recommended to a client as being consistent with such client’s sustainability preferences7 unless this is indeed the case. More details of our investment advisory services are available within the Investor Information document.
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1 The Paris Agreement UNFCCC
2 https://ec.europa.eu/info/publications/sustainable-finance-renewed-strategy_en#action-plan
3 A European Green Deal European Commission (europa.eu)
4 SFDR – Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (Official Journal of the European Union, L 317, 9.12.2019).
5 Taxonomy Regulation – Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (Official Journal of the European Union, L 198, 22.6.2020).
6 Commission Delegated Regulation SFDR RTS - Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’, specifying the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in precontractual documents, on websites and in periodic reports (Official Journal of the European Union, L 196, 25.7.2022)
7 As detailed in Sustainability governance - UniCredit (unicreditgroup.eu)
8 Sustainability preferences means a client’s or potential client’s choice as to whether and, if so, to what extent, one or more of the following financial instruments shall be integrated into his or her investment:
a) a financial instrument for which the client or potential client determines that a minimum proportion shall be invested in environmentally sustainable investments defined in the applicable legislation as investments in economic activities that contribute to one or several of the following environmental objectives (while ensuring that investee companies follow good governance practices):
b) a financial instrument for which the client or potential client determines that a minimum proportion shall be invested in an economic activity that contributes to an environmental objective (objectives regarding the use of energy, renewable energy, raw materials, water and land, the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy) or 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 labor relations, or an investment in human capital or economically or socially disadvantaged communities (while disadvantaged communities (while ensuring that investee companies follow good governance practices) (so-called sustainable investments or SFDR-compliant investments);
c) a financial instrument that considers principal adverse impacts on sustainability factors of an environmental, social or governance nature (so-called investments considering principal adverse impacts).
Modified 20 June 2023
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