In order to facilitate the ambitious climate and energy targets committed to by the EU, the European Commission has published, among other texts, a regulation on disclosures relating to sustainable investments and sustainability risks (SFDR).
Sustainability risks are environmental, social or governance (ESG) events or conditions that, if they occur, could cause an actual or a potential material negative impact on the value of an investment. When providing investment advice, UBP considers and assesses all relevant financial risks, including sustainability risks. You will find further details on sustainability risk management at UBP here: “Sustainability Risk Framework”
Sustainability remuneration policy
To ensure that these risks, and opportunities with respect to sustainability, are taken into account by all our business lines, the remuneration structure at UBP discourages excessive risk-taking with respect to sustainability and is linked to risk-adjusted performance. In parallel it provides motivation for developing responsible investment and sustainable practices. In this respect, our objective is to provide more transparency, in both qualitative or quantitative terms, on these factors and to promote sound and effective sustainability practices and sustainability risk management.
UBP’s Executive Committee has therefore set a series of sustainability key performance indicators (KPIs) which aim to promote responsible investment and corporate social responsibility (CSR). The remuneration of Executive Committee members is dependent, among other factors, on the achievement of these KPIs. Similarly, the remuneration of all members of UBP’s Responsible Investment Committee and Corporate Social Responsibility Committee is linked to the successful implementation of UBP’s Responsible Investment and CSR policies as defined by the Executive Committee.
In addition, all our investment professionals, investment advisors and institutional salespersons must comply with a “sustainability” objective of increasingly integrating sustainability into their business activities. This includes for instance complying with UBP’s Responsible Investment policy, gradually improving managed portfolios’ ESG characteristics, promoting sustainable solutions to our institutional clients, and including sustainability considerations in the development of new products. Those staff members’ annual variable remuneration is influenced by whether or not this objective has been achieved.
Principal adverse impact
Financial market participants and financial advisers are required by the Sustainable Finance Disclosure Regulation (SFDR) to provide information on how they consider Principal Adverse Impacts (PAI) in their investment decisions and investment advice. PAI are defined as “any negative, material or likely to be material effects on sustainability factors that are caused, contributed by or directly linked to investment decisions and advice performed by the legal entity”. As of 2021, given the limited availability of reliable data across all asset classes to rely on to implement such requirements, UBP has decided that it will not apply PAI analysis for the time being, either at entity or at group level. UBP may reconsider its position in the future. However, UBP takes into account PAI in the management of its sustainable products (as per Articles 8 and 9 of the SFDR).