Statement on consideration of principal adverse impacts in investment advice

Purpose

Pursuant to Article 4(5) of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”), as further described in Article 11 of the Commission Delegated Regulation (EU) 2022/1288 (“SFDR Delegated Regulation”), this statement provides information on how Sparkasse Bank Malta plc (“the Bank”) integrates principal adverse impacts in its investment decision making process on sustainability factors.

Description of principal adverse impacts

SFDR describes principal adverse impacts as the negative, material or likely to be material effects on sustainability factors caused, compounded by or directly linked to investments, with sustainability factors referring to environmental, social and employee matters, respects for human rights, anti-corruption and anti-bribery matters. SFDR requires, among other, investment advisors to disclose whether, and if so, how they consider principal adverse impacts of investment decisions on sustainability factors. 
 
Furthermore SFDR requires product manufacturers to disclose if they consider principal adverse impacts in their investment decisions, and if so, how their financial products consider principal adverse impacts on sustainability factors. The SFDR Delegated Regulation defines mandatory principal adverse impact indicators and a number of additional voluntary indicators that manufacturers are required to report on, when considering principal adverse impacts of investment decisions on sustainability factors. These indicators can be used, in whole or in part, to measure the principal adverse impacts of investments in financial products on sustainability factors.

Consideration of principal adverse impacts

Sparkasse Bank Malta plc does not manufacture investment products but provides investment advice on selected third party investment products, primarily Undertakings for Collective Investment Schemes, fixed income securities and equities. The Bank does not make any assessment of principal adverse impacts itself but considers the principal adverse impacts of investment advice on sustainability factors, only when selecting third party financial products for its advisory portfolios. The consideration is based on the information made available by manufacturers, including in particular, the pre-contractual and periodic disclosures prescribed by SFDR for financial products that promote environmental or social characteristics (also referred to as Article 8 products) and financial products that have sustainable investment as their objective (also referred to as Article 9 products). This does not mean however, that all financial products selected by the Bank for its advisory portfolios consider principal adverse impacts, promote environmental or social characteristics or have sustainability as their primary objective.

Responsible and Sustainable Investing policy

The Bank actively engages with customers to whom it provides investment advice to understand whether they wish to include financial products which have assessed principal adverse impacts, in their portfolio and seek to meet those preferences to the extent possible.

Alignment of Remuneration Policy with sustainability investments

In line with our Remuneration Policy, no variable remuneration is paid to our staff unless it is determined to be justified following a performance assessment based on quantitative as well as qualitative criteria. In any case, the quantitative assessment does not take into consideration the amount of sales or the specific products purchased resulting from personal investment recommendations.  

Published - March 2023
 

Change Log
April 2021 - Version 1.0  Initial statement on principal adverse impacts created taking into consideration the regulatory development at this time and the information made available by product manufacturers.
March 2023 - Version 2.0 Statement on principal adverse impacts revised due to more information made available by product manufacturers. The statement was updated to reflect, how principal adverse impacts are taken into consideration when selecting financial products for advisory portfolios.