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Sustainability framework

  • Definition of Sustainability Risk
  • Sustainability Risk at LGT Vestra
  • Sustainability Risk in investment process
  • Principal Adverse Impact Statement
  • Remuneration Statement

Sustainability risks are environmental, social and governance-related (ESG) events or conditions that, if they occur, could have a material negative impact on a financial product or service. For example, affecting the value of an investment or impacting a company’s assets, financial and earnings situation as well as reputation.

  • Environmental risks are defined as financial risks arising from environmental factors posed by the exposure of institutions to counterparties that may be negatively affected by environmental factors. This includes factors resulting from climate change and factors resulting from other forms of environmental degradation.

  • Social risks are risks posed by the exposure of institutions to counterparties that may be negatively affected by social factors. These relate to the rights, well-being and interests of people and communities.

  • Governance risks are risks posed by the exposure of institutions to counterparties that may be negatively affected by governance factors. These relate to governance practices including ethical considerations, sound risk management structures, the organisation and functioning of the management body and transparency.

At LGT Vestra, sustainability is an integral part of our culture and our values. Our sustainability strategy aims to further integrate sustainability into all areas of our business and across our entire service offering. With our commitment to the 10 UN Global Compact Principles in the areas of human rights, labour, the environment and anti-corruption, we have pledged to a minimum standard with regard to all ESG factors.

We consider and manage sustainability risks that may have a material negative impact on the financial return of an investment or advice by applying various methods. Examples of these methods include exclusion policies, the LGT Vestra Sustainability Rating, UNEP FI's Principles, our commitment to net-zero and the LGT Code of Conduct. 

We systematically exclude investments with significant ESG risks. Our exclusion policies apply to the entire LGT Vestra business and all mandates that we manage. To mitigate environmental risks and to combat climate change, we exclude companies involved in harmful fields as defined by LGT Group. For further information on the exclusion policies, please get in touch with your LGT Vestra contact.

The LGT Vestra Sustainability Rating sources raw data from different ESG data providers. This allows us to assess the sustainability qualities of the company, and country exposures that are derived from the underlying investments (equities, bonds, funds and ETFs). The LGT Vestra Sustainability Rating ranges from one to ten, with one indicating the lowest and ten the highest sustainability quality. We believe low sustainability quality of an investment instrument indicates high sustainability risk, which could result in negative impact on financial returns.

LGT Vestra is a signatory to the UNEP FI's Principles for Responsible Banking. This means we must measure the impact we have with our investments against the UN Sustainable Development Goals and the Paris Agreement. By developing methods to measure the impact of our activities, we will further mitigate ESG risks in our core business.

Climate change is one of the most pressing challenges we face today, LGT Vestra therefore committed to become net-zero operationally by 2030.

The LGT Code of Conduct serves as a policy for all LGT employees and the Foundation Board members. It defines cornerstones for our common value system and our ethical and professional standards. As an example, in order to mitigate social risks the LGT Code of Conduct sets out that we offer: equal opportunities for employment and promotion irrespective of gender, age, religion, nationality, ethnic background, sexual orientation, marital and family status, physical abilities or other characteristics.

Sustainability risks are environmental, social and governance (ESG) events or conditions that could potentially have a negative impact on the value of an investment. 

We consider and manage sustainability risks that may have a material negative impact on the financial return of an investment or advice by applying various methods. Examples of these methods include exclusion policies, the LGT Vestra Sustainability Rating, our commitment to net-zero and the LGT Code of Conduct.

The LGT Vestra Sustainability Rating sources raw data from different ESG data providers. This allows us to assess the sustainability qualities of the company and country exposures that are derived from the underlying investments (equities, bonds, funds and ETFs). The LGT Vestra Sustainability Rating ranges from one to ten, with one indicating the lowest and ten the highest sustainability quality. We believe low sustainability quality of an investment instrument indicates high sustainability risk, which could result in negative impact on financial return in the long term.

LGT Vestra, as an Investment Manager and Financial Adviser, considers principal adverse impacts of its investment decisions on sustainability factors. This is the principal adverse sustainability impact statement of LGT Vestra.

Description of principal adverse impacts 
Principal adverse impacts on sustainability are understood as the impacts of investment decisions that result in negative effects on sustainability factors. Investment decisions and advice might cause, contribute to or be directly linked to effects on sustainability factors that are negative, material or likely to be material.

Integration of PAI at LGT Vestra
LGT Vestra considers and manages sustainability risks that may have a material negative impact on the financial return of an investment or advice by applying various methods. Examples of these methods include exclusion policies, the LGT Vestra Sustainability Rating, our commitment to net-zero and the LGT Code of Conduct.

We systematically exclude investments that have significant adverse impacts on sustainability factors. Our exclusion policies apply to all of LGT Vestra's investment processes and investment mandates. LGT Vestra excludes companies involved in harmful fields defined by LGT Group. In order to avoid or reduce any PAIs identified, where these are considered material (taking account of the size, nature and scale of our activities), we may exclude such companies from further consideration for investment or advice.

Identifying and prioritising PAIs

The LGT Vestra Sustainability Rating sources raw data from different ESG data providers. This allows us to assess the sustainability qualities of the company andcountry exposures that are derived from the underlying investments (equities, bonds, funds and ETFs). The LGT Vestra Sustainability Rating ranges from one to ten, with one indicating the lowest and ten the highest sustainability quality. We believe low sustainability quality of an investment instrument indicates high sustainability risk, which could result in negative impact on financial return. We monitor the investments according to the ESG Sustainability Rating and our exclusion policies.

Engagement policy summary
LGT Vestra also supports clients (or third parties authorised by clients) in exercising their voting rights. As a custodian, LGT Vestra provides clients with information on ordinary or extraordinary general meetings and voting intention.

References to international standards
At LGT Vestra, sustainability is an integral part of our culture and our values.  Our sustainability strategy aims to further integrate sustainability into all areas of our business and across our entire service offering.

With the commitment to the 10 UN Global Compact Principles in the areas of human rights, labour, environment and anti-corruption, we have pledged to a minimum standard with regard to all ESG factors.

LGT Vestra is a signatory to the UNEP FI's Principles for Responsible Banking. This means we must measure the impact we have with our investments against the UN Sustainable Development Goals and the Paris Agreement. By developing methods to measure the impact of our activities, we will further mitigate material principal adverse impact on sustainability factors in our core business.

Climate change is one of the most pressing challenges we face today, LGT Vestra therefore committed to become net-zero operationally by 2030.

The LGT Code of Conduct serves as a policy for all LGT employees and the Foundation Board members. It defines cornerstones for our common value system and our ethical and professional standards. As an example, to mitigate social risks the LGT Code of Conduct sets out that we: offer equal opportunities for employment and promotion irrespective of gender, age, religion, nationality, ethnic background, sexual orientation, marital and family status, physical abilities or other characteristics.

Additional clarifications
LGT Vestra has developed internal strategies for the consideration of principal adverse impacts pursuant to Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector. This consideration is dependent on and is limited by the availability of the required information in the market.

The required data quality and availability is not necessarily given for all assets within managed funds, mandates and investments of LGT Vestra. This PAI statement is not applicable to cases in which portfolio management has been delegated to a third party or in which LGT Vestra is obliged to adhere to regulations or instructions that hinder it from adhering to this PAI statement (e.g. if client instructions contradict the PAI statement).

Sustainability is an integral part of our culture and our values at LGT. Our sustainability strategy aims to further integrate sustainability into all areas of our business and across our entire service offering.

With the commitment to the 10 UN Global Compact Principles in the areas of human rights, labour, environment and anti-corruption, we have pledged to a minimum standard with regard to all ESG factors. We define the strategic direction and guidelines for what we classify as sustainability.

LGT Vestra manages sustainability risks by various methods. Examples include the LGT Vestra Sustainability Rating, exclusion policies, UNEP FI's Principles, our commitment to net-zero emissions and the LGT Code of Conduct.

The LGT Code of Conduct serves as a policy for all LGT employees. It defines cornerstones for our common value system and our ethical and professional standards. As an example, to mitigate social risks the LGT Code of Conduct sets out that we: offer equal opportunities for employment and promotion irrespective of gender, age, religion, nationality, ethnic background, sexual orientation, marital and family status, physical abilities or other social/ personal characteristics.

It highlights our ambition to contribute to society and the environment, including that we consider sustainability criteria in our business activities and in our service offering.

The LGT Group Remuneration Policy reflects the importance of the Code of Conduct, including the sustainability risks it mitigates, by stipulating that failures or breaches of the LGT Code of Conduct or internal directives and instructions can – amongst others things – result in a reduction of variable compensation.

Adherence to the LGT Code of Conduct is reviewed during the annual assessment review meetings and regular conduct committee meetings.  During these meetings, which are chaired by Senior Management, input from the control functions (Risk, Compliance and Internal Audit), and Human Resources is discussed, and impacts on variable compensation are considered. The outcome of these conduct review meetings is reported to the LGT Vestra Remuneration Committee.