Last update: 31/05/2023.
This financial product promotes environmental or social characteristics, but does not aim at sustainable investment.
However, the plan sets out to make sustainable investments. The plan's sustainable investments set out to further all of the Sustainable Development Goals (SDGs) outlined within the United Nations 2030 Agenda. There are 17 goals, including the following: 1) end poverty; 2) end hunger; 3) ensure health and well-being; 4) guarantee education; 5) achieve gender equality, 6) guarantee the availability and sustainable management of water; 7) guarantee access to affordable and sustainable energy; 8) promote economic growth and decent employment; 9) promote industry, innovation and infrastructure; 10) reduce inequalities; 11) achieve inclusive, safe and sustainable cities and communities; 12) guarantee sustainable consumption and production patterns; 13) take measures to combat climate change and its effects; 14) conserve and sustainably use the oceans, seas and marine resources; 15) sustainably manage forests, combat desertification and land degradation; 16) promote justice and peace through institutions and 17) contribute to the Global Partnership for Sustainable Development.
By making this type of sustainable investment, the plan intends to contribute positively to these goals defined in the SDGs. In order to identify these investments, the plan uses an indicator from an external provider, specialised in ESG analysis, with an established methodology for measuring each company's contribution to each of the 17 SDGs based on their operations, products, services, policies and practices for addressing these challenges. Based on the above, each company analysed has a positive or negative metric for each of the 17 goals. An investment must make a net positive contribution to the 17 SDGs in order to qualify as a sustainable investment.
To the extent that the plan requires that any sustainable investment make a net positive contribution to the sustainable goals, this means that the potential damage generated will not be significant, and will always be mitigated by the greater positive impact generated.
In addition to presenting a positive net contribution to the 17 SDGs, the plan's sustainable investments will comply with the principle of Do No Significant Harm to another sustainability goal, which will be achieved through combining the following management actions:
1. The very requirement of a positive net contribution to the 17 SDGs, which implies that the potential damage generated to one or several SDGs will not be significant and will always be mitigated by the greater positive impact generated to other SDGs.
2. Controversy analysis, as ESG analysis providers refer to those events or situations in which a company's operations or products may have a negative impact in environmental, social or corporate governance terms. For all plan investments, the number and seriousness of controversies detected will be continuously assessed, ensuring that no investment classified as a “sustainable investment” can cause significant harm, in ESG terms, based on those controversies.
3. The requirement of a minimum ESG rating that helps to ensure that the plan's investments meet minimum standards in managing environmental, social and corporate governance aspects, thereby eliminating the lowest-performing companies while managing these factors which, as a result, could cause significant damage to them.
4. The individual analysis of the quality of corporate governance of the investments made and the requirement that adequate standards are met in terms of ownership structure, management and control bodies, human resources management, accounting and fiscal transparency, as well as business ethics. These characteristics are assessed and scored within the breakdown of the ESG rating, and make it possible to set up an additional filter to ensure that the plan's intended sustainable investments comply with good governance practices.
5. The consideration of the Principal Adverse Impacts (PAIs) on sustainability factors.
6. When implemented, the Entity's exclusion policy, as detailed below, rules out any companies with significant exposure to economic activities with a highly negative environmental or social impact.
Consideration of the Principal Adverse Impact indicators is taken into account throughout the entire investment process, in order to manage the key indicators for the Do No Significant Harm (DNSH) assessment.
The management team will take account of the indicators listed in Table 1 and any of those listed in Tables 2 and 3 of Annex I to Delegated Regulation (EU) 2022/1288. The Do No Significant Harm principle is introduced into the investment classification process as “sustainable investments” or as “investments with other environmental or social characteristics”. The assessment of the Do No Significant Harm principle is part of the three pillars underpinning compliance with the regulatory definition of “sustainable investment”.
Given that sustainable investments also undergo sustainability analyses using the “ESG rating” indicator, which applies environmental, social and governance criteria compatible with the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights, the team analyses whether the invested companies comply with these guidelines.