The primary objective of United Bankers’ (UB) investment activities is to achieve sustainably the highest possible return, at the customer’s preferred risk level, both in the long and in the short term. As part of the materialisation of this objective, we consider in our investment decisions how environmental and social responsibility, as well as good governance (ESG factors) actualise in our investment objects. We believe that taking the sustainability aspect into account also has a positive effect on the return on the investments.
The principles of sustainable investment are approved by UB’s Board of Directors. The drafting, updating and issuance of practical guidelines concerning the principles of sustainable investment is the responsibility of the United Bankers Sustainable Investment Steering Group. It consists of members from portfolio management, the compliance function, risk management, communications and sales. The company has appointed a director in charge of sustainable investment, leading the work of the steering group. The practical implementation of the principle lies with the company’s portfolio managers.
United Bankers Plc's Annual Review 2020 of Sustainable Investment is a summary of the company's sustainable investment implementation and development measures in 2020. In order to monitor the achievement of the targets, we prepare sustainability analyzes of our investment activities and funds.
We signed the Principles for Responsible Investment (PRI) supported by the United Nations in 2012. We report on our investment activities in accordance with these principles. In addition, we are members of Finland's Sustainable Investment Forum (Finsif), promoting sustainable investment in Finland by offering a networking facility and a channel for gathering information.
We have integrated sustainability aspects as part of our investment operations. These aspects are taken into account in portfolio management both for mutual funds and in discretionary asset management, as well as in the other investment products we offer (excluding index-based products). We consider the integration of the sustainability aspect as part of our products and services to be an essential part of the overall risk management within our corporate group. Sustainability is taken into account in selecting the investment object prior to making the investment decision, whereafter the materialisation of sustainability is monitored and reported to the investors regularly.
We have excluded from our investment objects companies engaged in the manufacturing and sales of controversial weapons (land mines, cluster bombs, depleted uranium as well as biological and chemical weapons), as well as companies participating in the development and production of nuclear weapons programmes. We also do not invest in companies whose principal line of business is tobacco, weapons, black coal production, gambling or adult entertainment.
We aim to reduce the negative environmental effects of our investments as well as to increase the positive sustainability effects of our investments in the long term. In order to monitor these objectives, we will be devising an annual sustainability report of our investment activities as of the year 2020. Furthermore, we report regularly on the sustainability activities of our funds in the fund’s regular monthly and quarterly reviews.
As concerns our equity and fixed income funds, we report the carbon intensity figure and the corresponding benchmark index figure selected for same on a monthly basis. In relation to our real estate funds, we report the carbon footprint calculated for same, as well as information pertaining to the energy consumption of the funds’ real estate objects annually. For our forest investments, in turn, we report the carbon balance (carbon sink) and the carbon reservoir, also annually. In addition, to the extent possible, we endeavour to report for all our funds also positive sustainability effects, in accordance, inter alia, with the sustainable development goals defined by the United Nations. We aspire to rank among the best operators in Finland in the sustainability reporting concerning our investments.
In asset management, we broker also third-party products. As concerns third parties, we require the inclusion of sustainability as part of investment activities. We monitor our co-operation partners’ compliance with sustainability principles on a regular basis. Some of the key factors being monitored include, for instance, the co-operation partners’ commitment to the PRI principles, as well as inclusion of sustainability as part of the selection process of investments.
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Fund classification pursuant to the Sustainable Finance Disclosure Regulation (SFDR)
As of yet, UB Fund Management Company does not classify its funds into the financial product categories referred to under the Sustainable Finance Disclosure Regulation (SFDR), but the implementation work in relation to this is ongoing and the objective is to classify UB’s funds in accordance with SFDR in the course of 2021.
Sustainability risks refer to events or circumstances pertaining to the environment, society or governance, the actualisation of which could have a factual or potential material adverse impact on the value of an investment. We consider integrating the sustainability aspect as part of UB’s products and services to be an integral part of the overall risk management within the group, and UB has determined procedures related to the assessment and management of sustainability risks. The implementation work to devise operational principles concerning sustainability risks as stipulated under the Sustainable Finance Disclosure Regulation (SFDR) within UB is, however, still ongoing owing to the ambiguous status and entry into force of the ancillary regulation supporting SFDR. UB aims to devise the operational principles concerning the consideration of sustainability risks referred to under SFDR during 2021, once the ancillary regulation supporting SFDR (e.g. regulatory technical standards of the European Securities and Markets Authority) become effective.
Sustainability factors refer to factors concerning the environment, social aspects and employee-related factors, respect for human rights, as well as matters pertaining to the prevention of corruption and bribery. In making its investment decisions, UB takes into account the manner in which environmental and social responsibility, as well as good governance (ESG factors) actualise in our investment objects. This is implemented, inter alia, through examining the operating practices of the company being invested in as regards sustainability factors and through assessing, prior to making the investment decision, how sustainability factors are being taken into account in the target company and what are the adverse impacts that a failure to consider sustainability factors could entail for the company. Investment objects may also be discarded based on this analysis. However, the implementation work for devising the operational principles for considering the principal adverse impacts on sustainability factors pursuant to the Sustainable Finance Disclosure Regulation (SFDR) is still ongoing owing to the ambiguous status and entry into force of the ancillary regulation supporting the SFDR and, hence, UB is not as of yet taking into account the principal adverse impacts on sustainability factors in the manner required by SFDR in its investment activities or advisory services, or in its insurance advisory services concerning insurance-based investment products. UB aims to devise the operational principles pertaining to the consideration of the principal adverse impacts on sustainability pursuant to SFDR during 2021, when the ancillary regulation supporting SFDR (e.g. regulatory technical standards of the European Securities and Markets Authority) enter into force.
One of the underlying objectives in UB’s remuneration policy is the furtherance of sustainability aspects. In the different remuneration models within the group, one of the qualitative criteria for variable remuneration is the attainment of the set sustainability targets, and this is evaluated as part of the personal performance of the recipient of the remuneration. Since the implementation work for devising the operational principles for considering the principal adverse impacts on sustainability factors pursuant to the Sustainable Finance Disclosure Regulation (SFDR) is still ongoing owing to the ambiguous status and entry into force of the ancillary regulation supporting the SFDR, sustainability risks will be taken into account in the scope required by SFDR once the group’s operational principles for sustainability risks have been devised.