What are sustainability risks?
Sustainability risks (ESG risks) are events or conditions from the three areas of environment, social affairs and governance, the occurrence of which could have a negative impact on the value of the investment. These risks can affect individual companies as well as entire industries or regions.
What are some examples of sustainability risks in the three areas?
As a result of climate change, increased occurrences of extreme weather events could be a
pose a risk. This risk is also called physical risk. An example of this would be an extreme dry spell in a particular region. This could cause levels of transport routes such as rivers to drop to such an extent that the transport of goods could be impaired.
In the social area, risks could arise, for example, from non-compliance with labor law standards or health protection.
Examples of risks in the area of corporate governance include non-compliance with tax honesty or corruption in companies.
Information on the inclusion of sustainability risks in consulting activities (Art. 3 TVO)
In order to include sustainability risks in the advice provided, the information provided by providers (financial market participants) and their financial products is taken into account when selecting providers. Providers who do not have a recognizable strategy for including sustainability risks in their investment decisions may not be offered. In the context of the consultation, it may be presented separately if the consideration of sustainability risks in the investment decision has discernible advantages or disadvantages for the customer. The respective provider provides information on the consideration of sustainability risks in investment decisions in its pre-contractual information. The customer can raise questions about this in the run-up to a possible conclusion.
Information on the consideration of adverse effects on sustainability factors (Art. 4 TVO)
As part of the consultation, the main adverse effects of investment decisions on sustainability factors are taken into account. The consideration is based on the information provided by the providers on their sustainability and, if applicable, the sustainability of the respective financial product. Any sustainability preferences of the customer are identified