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Sustainability-related disclosures for our discretionary portfolio management mandates and UCITS fund management
Integration of sustainability risks
At Julius Baer Gestión, SGIIC, S.A.U. Madrid, we consider sustainability risks (risks arising from environmental, social or governance events or conditions that could have a material negative impact on the value of an investment) as critical aspects in the overall risk management framework of the Bank. Rather than managing sustainability risk on a standalone basis, our internal processes foresee that ESG risk factors and assessments are reflected in the individual assessment of the existing risk categories.
When it comes to the integration of sustainability risks into the investment management processes (for clients that have entered into a discretionary portfolio management mandate), we believe that the baseline is a sound product governance framework. In this context, Julius Baer Gestión, SGIIC, S.A.U. Madrid, has initiated the development of new policies as well as the adaptation of existing processes to enhance the screening of sustainability risks. Today, the Bank already adheres to a group-wide policy pertaining to the prohibition to finance companies that are active in the development, manufacture or acquisition of prohibited war material, which ultimately results in the exclusion of affected companies from the investment universe. Furthermore, a dedicated governing body of the Bank continuously monitors investee companies, taking into account ESG data from third party vendors and publicly available information, in order to screen for (but not automatically exclude) controversially rated instruments.
For our sustainability discretionary mandates and sustainability UCITS fund, sustainability risks, measured by sustainability ratings and controversies are integrated into the investment management processes. The objective of this integration is to ensure that sound and holistic investment decisions can be made for our clients’ portfolios. In this context, the available investment universe for our investment managers also depends on the expressed preferences and discretionary portfolio management mandate selected by our clients.
No consideration of sustainability adverse impacts
Julius Baer Gestión, SGIIC, S.A.U. Madrid does not consider principle adverse impacts for its discretionary portfolio management mandates and UCITS funds or publish a consolidated report on the adverse impacts of its investment decisions on sustainability factors. These factors refer inter alia to impacts on the climate, on social and employee matters or on human rights.
Due to the lack of clear, reliable and structured data on principal adverse impacts from investee companies as well as data providers at this point in time, we do not believe there is currently enough maturity on this topic to consider such factors in a comprehensive and coherent manner. However, we are monitoring, and we will continue to monitor, developments in this area and re-evaluate this position on a periodic basis.
Information about our remuneration policy
At Julius Baer Gestión, SGIIC, S.A.U. Madrid, recognize the importance of environmental, social and governance (“ESG”) sustainability elements throughout our business activities, including our remuneration systems. In accordance with the Julius Baer Group standards, ESG is reflected, directly or indirectly, in various aspects of our remuneration systems at regional, divisional and individual levels through proper governance, performance measurement standards (around values, client satisfaction and employee development) and risk management considerations.
Our 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. Group-wide remuneration decisions include assessments of financial-, market-, legal-, risk-, and compliance-related metrics to ensure remuneration properly reflects both, internal and external factors. We also employ a remuneration deferral mechanism, with risk-adjusted performance metrics, to deter excessive risk-taking. Socially, the Bank operates various initiatives related to talent management, workforce diversity, and employee satisfaction, which we strengthen each year to help us attain our Employer of Choice goals and support our sustainability aspirations. At the individual level, all employees are held to high conduct standards via our Code of Ethics and Business Conduct (redefined in 2020) and are specifically measured on their ability to reflect our core Values (Care, Passion, and Excellence) and Risk Behaviours in their business activities.