Sustainable Finance Disclosure Regulation (SFDR)

Regulation (EU) 2019/2088 (Sustainable Finance Disclosure Regulation -SFDR) aims to provide greater transparency about the sustainability of financial products, in order to direct private funds towards sustainable investments, while preventing “green washing”. Its gradual implementation began in March 2021.


What is SFDR

Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 requires sustainability-related disclosures in the financial services sector (known as Sustainable Finance Disclosure Regulation - SFDR).

The purpose of the Regulation is to establish harmonised rules for financial market participants and financial advisers on transparency with regard to the integration of sustainability risks and the consideration of adverse sustainability impacts in investment decision-making processes and the provision of sustainability-related information with respect to financial products.

What is Sustainability Risk

Sustainability Risk (or ESG risk) means an environmental or social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment.

Sustainability risks are taken into consideration during the investment decision-making processes of Piraeus Bank or the Investment Manager in the event of an assignment, as well as in the provision of investment advice and are incorporated into the relevant ESG Investment Policy.

Sustainability risks may be considered as separate risks or as drivers that have an impact on other portfolio risks. The purpose of integrating sustainability risks into investment decision-making processes is to identify the occurrences of such risks in a timely manner and to take appropriate measures to mitigate the impact on investments or the portfolio as a whole.

Key risk indicators can be used to assess sustainability risks. Key risk indicators can be of quantitative and / or qualitative nature, based on sustainability factors (ESG) and measure the adverse impacts on the monitored data.

What are ESG Factors

Sustainability factors (ESG Factors) are events that may be responsible for negative impact on portfolio returns and are defined as E-Environmental, S-Social and G- Governance.

Environmental matters concern the company's interaction with the natural environment, including, but not limited to, climate impact mitigation, reducing gas emissions and preventing environmental risks.

Social matters include, inter alia, the protection of the health and safety of staff, employees' rights, monitoring of the supply chain and respect for the interests of communities and social minorities.

Good governance matters include, for example, anti-corruption measures, sound governance structures by boards and management, data protection.

Investment Policy

Piraeus Bank or the Investment Manager in the event of assignment, develops ESG Investment Policy for the identification, management and settlement of sustainability risks and the recognition and gradual integration of ESG factors and sustainability risks into the decision-making process, portfolio management, investment advice and product development (ESG), as well as for complying to national and European regulatory developments.

ESG Investment Policy aims, inter alia, to inform the investment community regarding the reduction of information asymmetries in integrating sustainability risks, the consideration of adverse impacts on sustainability and the promotion of environmental or social characteristics, as well as sustainable investments.

Whenever feasible and material, Piraeus Bank or the Investment Manager in the event of an assignment may consider the impact of sustainability factors and sustainability risks on investments. Financial products offered by Piraeus Bank may have special characteristics and/or ESG objectives and the relevant ESG Investment Policy developed by Piraeus Bank or the Investment Manager in the event of an assignment is available on their official website.

As sustainability factors and sustainability risks are gradually integrated into products, Piraeus Bank or the Investment Manager in the event of an assignment will assess in the future how sustainability risk management can be integrated into financial products and will update the pre-contractual disclosures accordingly in order to include information and details necessary to investors.

Integration of Sustainability Risks

Piraeus Bank (LEI 213800OYHR1MPQ5VJL60) or the Investment Manager in case of an assignment, in the process of making investment decisions and providing investment advice, in addition to common financial information, whenever feasible and material , will examine and consider the impact of sustainability factors and sustainability risks on investments, where sufficient data are available regarding these factors for all issuers of financial instruments included in the collective (UCITS) and private portfolios it manages, as well as those it proposes to its clients when providing investment advice.

Evaluation Results

For the Investment Management and Investment Advice Portfolios, Piraeus Bank or the Investment Manager in the event of an assignment will assess the following potential adverse impacts of sustainability risks on the returns of the financial products it provides or on those it offers advice :

CLIMATE AND OTHER FACTORS RELATING TO THE ENVIRONMENT (indicative):

  • Greenhouse Gas Emissions
  • Biodiversity
  • Water
  • Waste

SOCIAL FACTORS, LABOUR RELATIONS, HUMAN RIGHTS

  • Social and Labour Factors

CORPORATE GOVERNANCE FACTORS (indicative):

  • Transparency
  • Codes of conduct
  • Ethics

In cases where Piraeus Bank or the Investment Manager, in the event of an assignment, consider sustainability risks to be relevant to investments, they will make available the results of the assessment of the potential impact of sustainability risks on the returns of investment management portfolios or on the investment advices they provide.

Entity Disclosure - Articles 3 & 4 Reg 2019/2088 | Article 10 or 11 Draft RTS

As Piraeus Group has set as its strategic objective the sustainable growth, banking and investments, it closely monitors continuous developments in the changing legislative and regulatory framework and adapts accordingly investment products and services, as well as the process of the relevant investment-decisions making and providing investment advice, in order not only to meet the requirements of the applicable legislation and supervisory authorities , but also the increased interest of investors in products and services with sustainable investment characteristics and objectives.

Piraeus Group has been developing sustainability policies since 2004. In 2020 it drafted the Sustainable Development Policy, which reflects the Group's holistic approach to sustainability and aims to set strategic guidelines for its support, promotion and financing. The Policy reinforces the Group's intentions to contribute to the achievement of the United Nations Sustainable Development Goals and the Paris Climate Agreement and aligns its operation with the UNEP-FI Principles for Responsible Banking.

Piraeus Group operates in line with its ESG Strategy and the Climate Change Strategy, with the aim to reduce its carbon footprint, support investments in RES projects and energy saving projects, assess the risk stemming from climate change for businesses operating in Greece, develop solutions in order for businesses to adapt to the new climate environment.

The active participation of Piraeus Group in international initiatives for corporate sustainability and the promotion of sustainable development and banking is continuous. The Group is a member of the UN Global Compact and the UN Environment Program Finance Initiative - UNEP FI, where it also serves on its Banking Board. The Group is signatory of the Principles for Responsible Banking and participates in UNEP FI's Collective Commitment to Climate Action (CCCA), pledging to align its portfolio with financing sustainable development in order to limit the increase of average temperature to 1.5o Celsius. Following from the CCCA, Piraeus has joined the Science Based Targets initiative, in order to establish scientifically documented targets for reducing its environmental footprint. Piraeus also participates in various UNEP FI working groups such as the Impact Assessment, and EU Taxonomy (jointly with EBF) with the objective of developing tools and ESG evaluation criteria. In order to strengthen the business actions that protect the natural environment, the Group has signed the international "Finance for Biodiversity Pledge" and is actively involved in the EU Business@Biodiversity Platform. Finally, Piraeus Asset Management is a member of the Principles for Responsible Investment (PRI) for their adoption and implementation.

Aiming to reduce the environmental footprint from its operation, Piraeus Bank has developed strategies and implements an Environmental Management System (EMS). Since 2011, it has been registered in the European Eco-Management and Audit Scheme (EMAS) and the EMS is certified according to the international standard ISO 14001:2015. This includes direct (Scope 1), indirect (Scope 2) and other indirect greenhouse gas emissions from its activities (Scope 3). The Group seeks to be climate neutral by 2030 in relation to its internal operations and by 2050 in terms of emissions attributed to its financing.

Piraeus Bank has acknowledged that its financing to businesses may involve environmental and social risks beyond financial risks, and has therefore been implementing an Environmental & Social Risk Management System (ESMS) since 2017. It applies environmental and social criteria to the evaluation process of all new business financing in order to mitigate and manage the aforementioned risks.

Furthermore, it is moving forward in 2021 to developing a roadmap for the full integration of climate and ESG risks into both risk management and decision-making in order for the Group to fully meet the regulatory guidance of the European Central Bank.

As part of its climate strategy, Piraeus Bank calculates annually the climate exposure of its business customers based on their turnover, who operate in selected sectors that may be economically affected by climate change. For this calculation, it has developed a unique software tool, the Climate Risk Management Model, which is being currently upgraded to align with emerging updates to climate risk management, such as the TCFD recommendations and UNEP FI climate scenarios proposals.

For its holistic approach to sustainability and sustainable banking, Piraeus Bank is continuously evaluated by prominent ESG rating indices (MSCI, ISS, CDP, Vigeo-Eiris, CRI), which include in their lists the companies with the highest corporate sustainability performance worldwide, applying economic, environmental and social criteria.

When Piraeus Bank* is providing investment management and investment advice services to its clients related to investment portfolios, it considers the principal adverse impacts of its investment decisions and investment advice on sustainability factors in accordance with the SFDR Regulation, provided that sufficient and reliable data are available on these factors.

Piraeus Bank or the Investment Manager in the event of an assignment, will assess and consider in its decision making process and provision of investment advice, in addition to common financial data, whenever feasible and material, the impact of sustainability factors and sustainability risks on investments, where sufficient and reliable information is available on these factors for all issuers of financial instruments included in the collective (UCITS) and private portfolios that it manages, as well as when it provides investment advice to its clients.

In cases where Piraeus Bank or the Investment Manager, in the event of an assignment, consider sustainability risks to be relevant to investments, they will disclose the assessment results pertaining to the potential principal adverse impacts of their investment decisions on the sustainability factors.

*Piraeus Bank (LEI 213800OYHR1MPQ5VJL60)

Remuneration Policy - Article 5 of Regulation (EU) 2019/2088

In accordance with Article 5 of Regulation (EU) 2019/2088, Piraeus Bank intends to include in the Remuneration Policy information on the integration of sustainability risks (ESG). The Bank is currently reviewing individual and collective targets, in order to incorporate elements related to the integration of sustainability risks and to update its Remuneration Policy in due course.