ESG
Environmental Social Governance
E - Environmental
Impact on environment
Limitation of climate change
Low water consumption
Reduction of emissions
Optimal use of resources
Avoiding animal testing
S - Social
Respect for social values
Respect for human rights
Equality
Social inclusion
Promoting accountability
Support for diversity
G - Governance
Beneficial corporate management
Anti-bribery and anti-corruption
More women in higher positions
Sound governance structures
Transparency
Fair competition
Sustainability-related disclosures in the financial markets sector
Dear clients,
please, become familiar with the information published by UniCredit Bank pursunat to Regulation (EU) of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (hereinafter “Regulation”).
The Regulation is intended to raise awareness among end clients and is aimed at sustainable, socially responsible investment and investment promoting good governance.
Transparency towards investors is a key element of the Regulation. It is about unifying the conditions for informing final investors in individual Member States. In particular, the European Union wants to provide companies with a framework within which they will be able to offer a wide range of products while respecting sustainable financing rules.
Related agreements implementing ESG approach
On 25 September 2015, the UN General Assembly adopted a new global sustainable development framework: the 2030 Agenda, which has at its core the Sustainable Development Goals (SDGs).
The transition to a low‐carbon, more sustainable, resource‐efficient and circular economy in line with the SDGs is key to ensuring long‐term competitiveness of the economy of the Union.
The Paris Agreement adopted under the United Nations Framework Convention on Climate Change, which entered into force on 4 November 2016, seeks to strengthen the response to climate change by, inter alia, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate‐resilient development.
The EU is committed to achieving climate neutrality by 2050. Achieving this objective will involve transforming european society and the economy, which must be cost-effective and fair, as well as socially balanced. In this context, the Commission presented an anouncement on the EU Green Deal in 2019, which is to be the EU's new growth strategy to transform the Union into a climate-neutral, fair and prosperous society with a modern, resource-efficient and competitive economy. This objective is to be achieved in particular by adopting a regulatory base in a number of closely interconnected areas of the economy. Among other things, it is necessary to redirect financial flows into sustainable investments.
In accordance with the Regulation, UniCredit Bank hereby publishes information on the incorporation of ESG procedures into its investment and insurance advice.
Policy on the integration of sustainability risks – valid from 5th november 2021
- Reason for update: addition of a reference to the UniCredit Group's remuneration rules
Statement of principal adverse impacts of investment and insurance advice on sustainability factors – valid from 30th June 2023
- Reason for update: Modification of the document according to the Commission delegated regulation (EU) 2022/1288
Environmentally sustainable economic activities
Taxonomy is the shortened and established designation for 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.
The European Union in fulfilling its goal of becoming a climate-neutral, fair and prosperous society with a modern, resource-efficient and competitive economy needs to redirect financial flows into sustainable investments.
The financial sector should reorient itself towards green investments and thus support the transition of the European economy to zero emissions. Companies' approach to financing will determine the extent to which their activities are in line with the Taxonomy of sustainable Investments.
The Taxonomy defines what criteria an economic activity must meet in order to be considered environmentally sustainable.
For the purposes of establishing the degree to which an investment is environmentally sustainable, an economic activity shall qualify as environmentally sustainable where that economic activity:
contributes substantially to one or more of the environmental objectives set out in Taxonomy
does not significantly harm any of the environmental objectives set out in Taxonomy
is carried out in compliance with the minimum safeguards laid down in Taxonomy
complies with technical screening criteria that have been established by European Commission
The Taxonomy sets out the following environmental objectives:
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 aim of the Taxonomy is to provide firms and investment companies with an overview of what activities and in which sectors the European Union considers "green".
Sustainability in the investment services
In recent years, the financial world has undergone a significant transformation and a shift in the ranking of values. In addition to performance, investors today also attach importance to the environmental, social and ethical impact of the investment itself. In order to enable investors to make sufficiently informed decisions, easier identification and comparison of sustainable products, the European Union
adopted an action plan for sustainable finance to redirect capital flows to sustainable investments
implemented various directives, regulations and tools towards better transparency and information in the field of sustainability
has signed up to sustainable goals and a commitment to increase its responsibility in the field of ESG
Due to the strengthening ESG trend, the European Union amended the regulations in the field of providing investment services (MiFID regulatory framework):
- Commission Delegated Regulation (EU) 2021/1253 of 21 April 2021, amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms
- Commission Delegated Directive (EU) 2021/1269 of 21 April 2021, amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations
The intention is to expand the information obtained from the client with his/her preferences in the field of sustainability.
When providing investment advice, the Bank will also take sustainability preferences into account when evaluating suitability, if the client has such preferences.
Likewise in product governance, i.e. when determining the target market, the Bank will take into account the client's sustainability preferences.
If the client does not declare any preferences in the area of sustainability, the Bank will be able to offer or recommend financial instruments to the client even without taking into account the characteristics of sustainability.
Sustainable investment
Investment in an economic activity that contributes to an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy, or an investment 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 labour relations, or an investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives and that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance
Sustainability factors
Environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
Sustainability risk
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
Sustainability preferences
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 financial instrument for which the client or potential client determines that a minimum proportion shall be invested in environmentally sustainable investments as defined in Taxonomy,
- financial instrument for which the client or potential client determines that a minimum proportion shall be invested in sustainable investments,
- financial instrument that considers principal adverse impacts on sustainability factors where qualitative or quantitative elements demonstrating that consideration are determined by the client or potential client.
Sustainability in the insurance
Similar to investments, the EU has also updated regulations in the area of distribution of investment-based insurance products:
- Commission Delegated Regulation (EU) 2021/1257 of 21 April 2021, amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products
The intention is to expand the information obtained from the client with his/her preferences in the field of sustainability.
When providing insurance advice, the Bank will also take sustainability preferences into account when evaluating suitability, if the client has such preferences.
Likewise in product governance, i.e. when determining the target market, the Bank will take into account the client's sustainability preferences.
If the client does not declare any preferences in the area of sustainability, the Bank will be able to offer or recommend financial instruments to the client even without taking into account the characteristics of sustainability.
Sustainable investment
Investment in an economic activity that contributes to an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy, or an investment 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 labour relations, or an investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives and that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance.
Sustainability factors
Environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
Sustainability risk
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
Sustainability preferences
Customer’s or potential customer’s choice as to whether and, if so, to what extent, one or more of the following financial products should be integrated into his or her investment:
- an insurance-based investment product for which the customer or potential customer determines that a minimum proportion shall be invested in environmentally sustainable investments as defined in Taxonomy,
- an insurance-based investment product for which the customer or potential customer determines that a minimum proportion shall be invested in sustainable investments,
- an insurance-based investment product that considers principal adverse impacts on sustainability factors where qualitative or quantitative elements demonstrating that consideration are determined by the customer or potential customer.
