The integration of the sustainability risks in investment decisions

Sustainability risk is an environmental, social or governance event or condition, the occurrence of which could have an actual or potential material adverse effect on the value of the investment.

For the determination of how sustainability risks are included in investment decisions, SAI Erste has identified the following relevant sustainability risks:

•           Environmental risks related to climate change mitigation, climate change adaptation and transition to a low-carbon economy, biodiversity protection, resource management, and waste and other pollutant emissions. 

•           Social risks related to labor and safety conditions and compliance with recognized labor standards, respect for human rights, and production safety.

•           Governance risks in connection with the due diligence of corporate management bodies, measures to combat bribery and corruption, and compliance with relevant laws and regulations.

SAI Erste relies on data from external providers for the collection of sustainability-related raw data that is subsequently used for its own analysis. The data used may be incomplete, inaccurate or temporarily unavailable. In addition, the providers of the sustainability ratings take into account different influencing factors and different weightings, so that there may be different sustainability scores for one and the same company invested in as part of the investment.

The forward-looking assessment of the expected impact of sustainability risks on the return of the asset management portfolios is that an asset management portfolio, compared to other financial products whose asset selection is not subject to sustainability criteria and sustainability risks, could generate a deviating performance pattern or a lower return in certain market phases.

However, SAI Erste is of the opinion that the consideration of sustainability risks can have a positive influence on the return, since the resulting lower or complete lack of weighting of securities of certain issuers in the asset management portfolio can at best mitigate or completely avoid disproportionately poor results due to the occurrence of a sustainability risk.