As of March 10th 2021, Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088) seeks to introduce rules for Financial Market Participants (‘FMP’s’) and Financial Advisers (‘FA’s’) with regards to the integration of sustainability risks into their processes, as well as the provision of sustainability-related information in financial products.
The regulation will require FMP’s and FA’s to consider sustainability risks across various aspects of their operations, including disclosures, integration into policies, investment process, product governance and wider internal processes and systems.
The term ‘sustainability risk’ refers to an environmental, social or governance (‘ESG’) event or condition that could cause an actual or a potential negative impact on the value of a product recommended to you.
Sustainability Factors are defined as environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters. FMP’s and FA’s have an option to consider the principal adverse impacts of investment decisions on sustainability factors in their advice processes.
Conexim has two primary service models, each of which will be treated individually for the purposes of this disclosure.
|Model 1: Execution-Only Service
An 'execution-only' service is a term that is used for a platform that does not offer advice when allowing investors to select which products or funds to invest in. By nature of the execution-only service model, Conexim does not consider the principal adverse impacts on sustainability factors of investment decisions or investment advice provided by external regulated investment intermediaries. Conexim does not provide investment advice or investment recommendations, therefore are not placed to influence the integration of ESG products into an investors portfolio.
|Model 2: Portfolio Management Services
Conexim provides portfolio management services, in conjunction with discretionary investment managers. Under this arrangement, we do seek to integrate ESG (Environmental, Social and Governance) considerations into the investment process.
In practise, this means we endeavour to:
- Evaluate the responsible investment policies and processes of the funds used in client portfolios
- Use only those funds who demonstrate adequate levels of Stewardship
- All else equal, prefer funds who demonstrate better levels of ESG integration in their investment processes
To conclude, clients can find information in relation to both sustainability risks and the principal adverse impacts of investment decisions on sustainability factors on their FA’s website, or by engaging with them directly.