What are sustainability risks?

Sustainability risks (ESG risks) are events or conditions from the three areas of environment, social affairs and governance, the occurrence of which could have a negative impact on the value of the investment. These risks can affect individual companies as well as entire industries or regions.

What are some examples of sustainability risks in the three areas?

Environment:

As a result of climate change, increased occurrence of extreme weather events could pose a risk. This risk is also called physical risk. An example of this would be an extreme dry period in a certain region. This could cause levels of transport routes such as rivers to drop to such an extent that the transport of goods could be impaired.

Social:

In the social sphere, risks could arise, for example, from non-compliance with labour law standards or health protection.

Corporate governance:

Examples of risks in the area of corporate governance include non-compliance with tax honesty or corruption in companies.

Information on the inclusion of sustainability risks in advisory activities

In order to include sustainability risks, the information provided by providers (financial market participants) and their financial products is taken into account in the selection process. Providers who do not have a recognisable strategy for including sustainability risks in their investment decisions may not be promoted. In their documentation, it shall be shown separately if the consideration of sustainability risks in an investment decision means recognisable advantages or disadvantages. The respective provider shall provide information on the consideration of sustainability risks in investment decisions in its pre-contractual information. Questions on this can also be discussed in advance with a possible authorised advisor or broker of the respective products. In order to assess sustainability risks, additional information from service providers, associations or organisations that specialise in assessing these risks is used, among other things. In principle, the broadest possible spread (diversification) of the investment in financial products or, if necessary, also within a financial product is also recommended with regard to sustainability risks.

Information on the consideration of adverse impacts on sustainability factors As part of the development/promotion process, the main adverse impacts of investment decisions on sustainability factors are considered. The consideration is based on the information provided by the providers on their sustainability and, if applicable, the sustainability of the respective

financial product.

Information on the remuneration policy when taking sustainability risks into account

Remuneration for the development or promotion of financial products is not influenced by the respective sustainability risks. For a description of the procedure for taking sustainability factors into account, please refer to the investment guidelines or the prospectuses of the products concerned.

Please read the CSR strategy of our company here.