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ESG - Environmental Social Governance Solution
ESG - Environmental Social Governance Solution

Sustainability Risk Policy

Bank of Valletta p.l.c. (the “Company”) 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 came into force on the 10th March, 2021 requiring financial market participants, including the Company, to make certain sustainability-related disclosures to end investors.

The Company is required under the SFDR to publish on its website information about its policies on the integration of sustainability risks in its investment decision‐making process.

The transition towards a greener and more sustainable economy is becoming a priority for the BOV Group. The Company aims to integrate, where possible, environmental, social and governance (ESG) factors across the products and services being manufactured and distributed thus integrating these sustainability factors in the assessment. The Company did not develop a stand-alone sustainability risk policy but rather has incorporated elements of sustainability in the existing BOV Sales Policy.

BOV Wealth Management’s objective is to enhance your financial situation through its wealth investment services.  With an informed insight of the markets, an extensive range of financial services and products, and a reputation for managing the complexities of financial needs, we can tailor-make and manage your investment portfolio designed specifically around your requirements.

BOV Wealth Management is now incorporating elements of sustainability when recommending investments to you and will steer recommendations into making socially and environmentally responsible investment decisions. Therefore, investment advice or portfolio management will not only take into consideration factors such as risk profile, potential return, diversification to determine the suitability of investments but will also take into account 

  • the ESG rating. We will choose investments having ESG rating up to 'C-' when the rating is available.
  • your personal ESG preferences. 

What is ESG? 

ESG stands for Environmental, Social, and Governance and is a non-financial factor which is being taken highly into consideration as part of an investment solution to identify material risks and growth opportunities. 

Environmental, social, and governance (ESG) criteria are a set of standards for a company’s ethical operations that socially conscious investors use to screen potential investments.

  • Environmental – Take into consideration how the company performs whilst being environmentally conscious.
  • Social – Take into consideration how relationships with internal and external stakeholders are managed.
  • Governance – Take into consideration a company’s leadership, executive pay, audits, internal controls, and shareholder rights.

The ESG factor can impact the risk and return of the investment as well as the pricing of the financial asset and the valuation and performance of companies.

Environmental, Social and Governance (ESG) Solutions

Investment Advice and Portfolio Management Service are of a medium to long term nature, this implies that long term risks and opportunities have to be taken into consideration.   We will steer our recommendations into making socially and environmentally responsible investment decisions.  Our investment advice or portfolio management will be taking into consideration the ESG rating, taking into consideration your (the client) ESG preferences, which can ultimately impact the long term risks and opportunities when investing in the selected company. 

ESG integration describes an approach where the material ESG factors are considered as part of the broader investment process. Such an approach does not automatically exclude financial products from investment purely on ESG grounds. Its purpose is to ensure that the investment decision-makers are aware of and take informed investments decisions with knowledge of key ESG risks. In this way, ESG factors are an input into the investment process, though they are not necessarily the key determinant in the final investment decision, which ultimately takes also into consideration the view of an investment’s risk or return and other related factors.

We will continue developing our investment decision approach along the coming months so as to comply with our regulatory obligations.

Currently, the investments underlying our financial products do not take into account the EU criteria for environmentally sustainable economic activities.

What is Sustainable Investing and how do we intend to achieve this?

Sustainable investing is the process of incorporating environmental, social and governance (ESG) factors into investment decisions. Investment decisions are therefore more inclined towards investments with good ESG ratings and are also based on one’s values and priorities. Our investment decisions are reviewed to determine the impact Sustainability Factors have on our approach. We will thus look at the potential impact ESG risks will have on the investment value chosen

In our investment proposition we will take into consideration a company’s ESG rating which has recently increased in popularity and demand, thus we will not only assess the potential return of the investment but also the impact from an environment, social and governance aspect thus improving long-term outcomes.  To do so, we will rely on the ESG rating as being quoted by REFINITIV.  A document detailing the ESG rating methodology implemented by Refinitiv (which presently applies to Equities and Equity Funds/ETFs only) can be found by accessing the website here.

Unless otherwise instructed by you (the client), we will recommend investing in securities and funds with a REFINITIV ESG Rating of C- or better i.e. in companies or funds which invest in companies with a “satisfactory relative ESG performance and moderate degree of transparency in reporting material ESG data publicly.”

Nevertheless, the unavailability of an ESG rating (due to, for example, lack of available data for Malta Stock Exchange listed securities) will not prevent BOV Wealth Management from investing in such securities or funds. Any investment made in securities or funds lacking an ESG score must however respect the spirit of ESG investing in general.

We will also take into consideration your preferences and include them in our investment solution proposed to you.

BOV Wealth Management reserves the right of amending the ESG scoring methodology in the future.

Principal Adverse Impact Statement

BOV believes in the importance of taking a responsible approach to investment. Part of this approach includes considering how the investment decisions we make for our end clients might have material negative effects on environmental, social and governance factors (“Sustainability Factors” or just “ESG”). Any investment decision we take might have a negative effect on the sustainability factors.

Under the SFDR the Company is required to identify  principal adverse sustainability impacts and indicators This Principal Adverse Impact statement covers the period from 17 December 2021 to 31 December 2022.

Making good sustainable decisions will help to support long-term returns and increase the growth and stability of the financial system. Our investment decisions are reviewed to determine how our decisions will have an adverse impact on Sustainable Factors.

The principal adverse impact will have an important role in determining the exclusion of some investments.  We use, where available, the breadth and depth of the Refinitiv Environmental, Social and Governance platform.

Our ESG investment process framework factors in various criteria which fall under Environmental, Social and Governance pillars:

Refinitiv empowers us to make ESG-led decisions based on ESG data for over 9,500 companies globally covering over 450 ESG metrics. The end result is a responsible approach to investment that does not compromise longer-term sustainability.

We also use other publicly available information, internal dashboards, tools and frameworks and the expertise of our investment team to identify the principal adverse impacts on sustainability factors.

Disclosure SheetVersion 1 dated 9th March 2021
Disclosure Sheet

Version 2 dated 30th December 2021

The core changes in the disclosure version 2 cover the following areas being highlighted hereunder:
  1. Outlining the transition towards a greener and more sustainable economy and how this is becoming a priority for BOV Group;
  2. How BOV Wealth Management is incorporating elements of sustainability when recommending investments to its clients;
  3. Details about the approach for ESG integration is also provided in the revised disclosure;
  4. An update on the period covered for the Principle Adverse Impact is also provided;
  5. Finally, the revised disclosure provides information about the various factors in the various criteria which fall under the Environmental, Social and Governance pillars.

DS ESG - 20 DEC 2021

This Disclosure Sheet provides information on the features of shares and background to the risks inherent in shares. However, it is not intended to, and cannot disclose or analyse all the risks and aspects of shares. Shares carry varying risks brought about by the performance of world markets, interest rates, taxes on income and capital, foreign exchange rates, liquidity (the ease with which a security can be traded on the market) and the financial performance of the issuing companies. You should ensure that you fully understand the nature of such investments and the potential risks relevant to them before investing. Consequently, you should not deal in shares unless you understand the nature of the shares you are interested in and the extent of the exposure to risk. You should also be satisfied that the shares are suitable for you, for your circumstances and financial position. In this Disclosure Sheet the Bank does not take into consideration your particular investment objectives, attitude to risk, special investment goals, financial situation and specific needs or demands. This Disclosure Sheet is intended for information purposes only and should not be construed as financial advice.

Past performance is not a reliable indicate of performance. You should remember that the value of an investment and the income received, if any, can go down as well as up, and that you may not get the amount invested. Changes in exchange rates or taxation may have an adverse effect on the price, value or income of the investments. Investment returns may be constrained by charges levied and inflation may reduce the value of investments. Bank of Valletta p.l.c. is licensed to provide investment services by the Malta Financial Services Authority.

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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).