Transparency of the integration of the sustainibility risks
Sustainability factors mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
A sustainability risk is an event or condition, the occurrence of which could have a material adverse effect on the value of the investment.
SAI ERSTE has identified the following general sustainability risks:
- Environmental risks related to mitigating the effects of climate change, adaptation to climate change and the transition to a low-carbon economy, biodiversity protection, resource management, and waste and other pollutant emissions.
- Social risks related to labour and safety conditions and compliance with recognized labour standards, respect for human rights, and production safety.
- Governance risks in connection with the due diligence of the company's management bodies, measures to combat bribery and corruption, and compliance with the relevant laws and regulations.
The quantitative and/or qualitative assessment of sustainability risks requires the evaluation of several relevant sources of information published by third parties. Taking into account the fact that, so far, there has been no standardised disclosure of sustainability factors, assessments that are not evidence-based may lead to inconsistent outcomes.
The sustainability data currently available to SAI ERSTE are incomplete, inaccurate and/or not updated. Even when such data are identified, there is no guarantee that sustainability risk assessments are accurate and may constitute grounds for an investment decision-making process and/or the identification of any actual/potential adverse impact on sustainability factors.
In view of the considerations above, the investment policy of SAI ERSTE is not compatible with the integration of sustainability risks in the investment decision-making process and, thus, the company is currently unable to consider the EU criteria for sustainability in terms of environment matters and/or the adverse impacts of investment decision on sustainability factors. Nevertheless, the company is strongly committed to the objectives of the Regulation and will continue to make consistent compliance efforts, as part of the Erste Asset Management Group.
To this end, a first step, besides actively monitoring the regular sustainability reports published by the companies in which SAI ERSTE invests, is for the company to apply exclusion criteria that leads to the strict exclusion from the SAI ERSTE investment of socially, economically, and environmentally relevant fields such as: coal mining, the manufacture and sale of controversial weapons, and businesses which do not adhere to the standards of the International Labour Organization (ILO) or the UN Global Compact.
As regards the forward-looking assessment of the estimated impact of sustainability risks on the investment portfolio managed, based on the currently available data, SAI ERSTE is not able to actually assess the potential impact of sustainability risks on portfolio returns. So far, the overall assessment of available data shows that sustainability risks may cause lower asset values and may result in negative impacts on the portfolio’s net asset value.