Sustainability-related disclosures for mutual fund management and our discretionary investment mandates
On 10 March 2021, the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”) entered into force. Sustainable finance is a relatively new field of finance. Currently, there is no universally accepted framework or list of factors to consider ensuring that investments are sustainable. Furthermore, the legal and regulatory framework governing sustainable finance is still under development, in particular, the level 2 draft regulatory technical standards referred to in the SFDR.
The lack of common standards may result in different approaches to setting and achieving environmental, social and governance (“ESG”) objectives. Sustainability factors may vary depending on investment themes, asset classes, investment philosophy and subjective use of different ESG indicators governing portfolio construction. The selection and weightings applied, may to a certain extent be subjective or based on metrics that may share the same name but have different underlying meanings. ESG information, whether from an external and/or internal source, is, by nature and in many instances, based on a qualitative and judgmental assessment, especially in the absence of well-defined market standards and due to the existence of multiple approaches to sustainable investment. An element of subjectivity and discretion is therefore inherent to the interpretation and use of ESG data. It may consequently be difficult to compare strategies integrating ESG criteria. Investors should note that the subjective value that they may or may not assign to certain types of ESG criteria may differ substantially from that of a subfund, for example.
ESG information from third-party data providers may be incomplete, inaccurate or unavailable. As a result, there exists a risk of incorrectly assessing a security or issuer, resulting in the incorrect inclusion or exclusion of a security. The ESG data providers may change the evaluation of issuers or instruments, at their discretion and from time to time, due to ESG or other factors.
The approach to sustainable finance may evolve and develop over time, both due to a refinement of investment decision making processes to address ESG factors and risks and because of legal and regulatory developments.
Sustainability factors including environmental, social and governance aspects, may represent a sustainability risk, that, if it occurs, similarly to other risks, could cause an actual or potential material negative impact on the value of the investments held by the investment funds or clients’ portfolios. In a similar way, sustainability factors may represent an opportunity for the investment funds and portfolios that, if it occurs, could case an actual or potential material positive impact on the value of investments in the investment funds and clients’ portfolios.
The consideration of sustainability risks within the investment decision process may have either a positive or a negative impact on the value of investments and the overall performance of the investment funds and clients’ portfolios.
Integration of sustainability risks by Metagestión, SGIIC, S.A.
At Metagestión, SGIIC, S.A., we consider sustainability risks in the overall risk management framework of the Management Company. The Management Company integrates sustainability risks in their investment decision-making process, where relevant, as they consider that this integration could help enhance long-term risk adjusted returns for investors, in accordance with the investment objectives and policies of the investment funds and clients’ portfolios.
When it comes to the integration of sustainability risks into the investment management processes, we believe that the baseline is a product governance framework. In this context, Metagestión, SGIIC, S.A., has initiated the development of new policies as well as the adaptation of existing processes to enhance the screening of sustainability risks and to include them into its investment decision-making process. To do so, the investment decisions of the Management Company observe the sustainability risks considering internal and external information from third party providers and certain minimum ESG thresholds. This minimum threshold consists of the incorporation of investments whose ratings meet the ESG ratings provided by third party ESG data providers.
The management team has the vocation to make sustainable investments, but this is not the main priority, as they do not have a specific department to carry out the analysis of these companies.
At the present time, Metagestión, SGIIC, S.A. does not consider sustainability risks in the management of Spanish investment funds but is planning to consider sustainability risks in the investment management of the Luxembourgish fund which is in process of incorporation. In the future, Metagestión, SGIIC, S.A will consider sustainability risks for all the investment funds under management and its prospectus will be amended accordingly.
No consideration of sustainability adverse impacts
Metagestión, SGIIC, S.A., trough its investment funds and clients’ portfolios, does not promote environmental or social characteristics, nor does it have sustainable investment as its objective.
In addition, Metagestión, SGIIC, S.A. does not consider principle adverse impacts for its investment funds and discretionary portfolio management mandates or publish a consolidated report on the adverse impacts of its investment decisions on sustainability factors.
Should the approach to the consideration of sustainability factors and the related risks change, either following finalisation of the regulatory and legal framework, Metagestión, SGIIC, S.A. will re-evaluate this position on a periodic basis.
Information about our remuneration policy
Metagestión, SGIIC, S.A. recognize the importance of ESG sustainability elements throughout our business activities, including its remuneration systems.
The remuneration schemes are designed to ensure compliance with global rules and regulations, including applicable ESG considerations and particularly location-specific guidelines, in support of a sound risk culture.