Sustainability in individual portfolio management

Sustainability-related disclosure

The Bank is aware of the serious consequences of climate change and the important role of the financial sector in promoting sustainable development. Therefore, the Bank undertakes to support and promote sustainable economic development in its activities.

The Bank's goal is to promote the positive environmental impact of its products and services by adhering to the European Green Deal's 2050 climate goals, which include increasing countries' capacity to adapt to the adverse impacts of climate change by channelling financial and capital flows into green investments and prioritising the path towards low greenhouse gas emissions and climate-resilient development.

The Bank recognises the importance of sustainable environment, social responsibility and governance and intends to support and promote the development of Latvian and Baltic economies in a sustainable way by providing support to medium and large enterprises in the areas of lending and operational infrastructure.

The Bank is also committed to aligning its activities with the objectives of the Paris Climate Agreement. To achieve this objective, the Bank commits to achieving climate neutrality by 2050 (net-zero emissions target).

The Bank's sustainability approach and sustainability performance

Asset management

The bank offers an individual portfolio management service that provides an opportunity for the client to entrust their investment portfolio to professionals who will carefully adapt the investment strategy to the client's unique investment goals and risk tolerance. The bank offers solutions to achieve financial goals and at the same time manage sustainability risks. Before entering into a portfolio management agreement, clients have the opportunity to state their preferences with regard to sustainability risks. Clients are able to make adjustments to the sustainability preferences over the course of service provision.

The portfolio manager integrates sustainability risks into the overall risk assessment process with the goal of achieving the client's sustainability preferences without compromising the portfolio’s risk and return profile.

Once a quarter, the Bank provides a report on the portfolio to ensure transparency by integrating sustainability factors into the portfolio management process and providing sustainability-related information.

The individual portfolio management service does not promote environmental and social characteristics, and sustainable investing is not the goal.

When providing the individual portfolio management service, the Bank does not make investments aligned with the EU Taxonomy.

Investment strategy

The Bank manages the portfolio, taking into account the client’s preferences in the field of sustainability.
The client can express their preferences with regard to:

  1. Environmentally sustainable investments;
  2. Investments contributing to the achievement of an environmental and social objective;
  3. investment decisions that take into account the most important negative impacts on sustainability factors;
  4. investments that do not cause significant harm to any of the sustainable investment objectives mentioned in EU Taxonomy.

The Bank offers its clients a possibility to include financial instruments in their portfolio that do not adhere with the Bank's approach to sustainability in the individual portfolio management. The Bank informs the client that such portfolio may have a high sustainability risk.

The Bank discloses information on the methodology used to integrate the client’s sustainability preferences inside the Information summary on the integration of sustainability risks in individual portfolio management.

The Bank uses external supplier data on sustainability factors used in the methodology (e.g., Bloomberg) and, with the help of a model developed by the Bank, translates this data into sustainability risk scores for the individual portfolio.

The most important impact of investment decisions on sustainability factors

The Bank takes into account the principle adverse impact of its investment decisions on sustainability factors (PAI factors). The Bank has prioritised the following PAI factors:

  1. the greenhouse gas intensity (carbon intensity);
  2. human rights violations;
  3. controversial weapons.

Due diligence

The Bank performs due diligence by reviewing all sustainability-related scores in the individual portfolio.

Once a year, the Bank performs a random verification of the compliance of portfolios’ sustainability characteristics with the client’s sustainability preferences.

The Bank states its values, impacts, and objectives in the areas of environment, social responsibility and governance in a sustainability report prepared in line with the standards of the Global Reporting Initiative (GRI).

The Bank implements a sustainability strategy, taking into account international standards related to sustainability, in order to align its activities with the European Union's Green Deal, the objectives of the Paris Climate Agreement and the UN Sustainable Development Goals.

Engagement Policy

In accordance with Article 126.3 of the Financial Instrument Market Law of the Republic of Latvia, the Bank does not develop an engagement policy.

The remuneration policy’s link with sustainability risks

In its remuneration policy, The Bank implements best practices in environmental, social and governance or in short ESG aspects, including strict adherence to the principles of gender equality, as well as fairness, by offering remuneration according to the experience and competences of the employee.

The Bank is committed to integrating sustainability objectives into the assessment of the annual performance of its employees in order to improve the Bank's remuneration system and ensure compliance with the applicable regulatory frameworks.

The reference benchmark

When providing the individual portfolio management service, no reference benchmark is chosen.

Information last updated: 08.08.2024.