Sustainable Finance Disclosure Regulation
LOMBARD BANK MALTA P.L.C. (the “Bank”) falls within scope of Regulation (EU) 2019/2088 of the European Parliament of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (the Sustainable Finance Disclosure Regulation or SFDR), which will come into force on the 10th March, 2021 requiring financial market participants and financial advisors, including the Bank, to make certain sustainability-related disclosures to end investors.
No consideration of sustainability adverse impacts
The Bank currently provides (amongst others) advisory services and discretionary management services, to a number of clients. Presently, when making discretionary management decisions and, or providing investment advice, the Bank does not consider the adverse impacts of its investment decisions and investment advice on sustainability factors in terms of the SFDR as this is not relevant to: (1) the composition of its clients’ portfolio; and (2) the investment strategies and/or policies of its clients. The Bank may possibly consider such adverse impacts in respect of future mandates in line with its Sustainability Risk Policy (further details of which are set out below).
Sustainability Risk Policy
In line with the requirements imposed on in-scope financial market participants and financial advisors, the Bank has formulated its Sustainability Risk Policy outlining the approach that the Bank will take to integrating ESG considerations into its discretionary management and advisory processes by assessing not only all relevant financial risks but also relevant sustainability risks, with a view to mitigating risks and enhancing returns over the medium to long-term.
Although the Bank does not currently integrate sustainability risks in its discretionary management and advisory processes, the Bank will, in respect of other clients which may be onboarded in future, incorporate ESG considerations and make an assessment of sustainability risks to the extent relevant to: (i) the nature of the clients’ mandates; and (ii) the appetite of the Bank’s advisory and discretionary management clients.
To the extent that ESG considerations and, or assessment of sustainability risks are relevant to future mandates, the below approaches may be undertaken.
1) ESG integration
The Bank describes its ESG integration approach as the systematic and explicit inclusion of material ESG factors into investment analysis and investment decisions and, or advice at varying levels. Such approach could span the breadth of the investment process - from identification of trends, analysis of investments through to portfolio construction and investment advice.
2) Screening
The Bank could apply a set of filters for the purpose of determining which companies, sectors or activities are eligible or ineligible to be invested in or advised on based on its preferences, values and, or ethics. The Bank could implement a mix of positive and negative screens in accordance with ethical inclusion or exclusion criteria. Once invested in or advised on, the on-going eligibility of said companies, sectors or activities is likely to be revisited on a periodic basis, or if there are significant changes.
The Sustainability Risk Policy will be reviewed at least once a year to measure success and determine whether it continues to reflect the Bank’s investment beliefs.
Remuneration Policy
The Bank views its remuneration policy to be consistent with the integration of sustainability risks. Indeed, there is no component of the Bank’s remuneration structure which is geared towards creating an incentive or bias towards excessive risk taking to the detriment of environmental, social or governance matters and/or sustainability generally (“ESG Factors”). Also, the Bank’s remuneration structure has been designed to promote a sound and effective risk management culture to protect value, without any incentive or bias towards risk taking which could have a material impact on ESG Factors. Further details concerning the Bank’s remuneration policy is available from its published accounts that can be accessed here.