Sustainable Finance Disclosure Regulation (SFDR)
As part of the United Nations 2030 Agenda for Sustainable Development, Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector lays down a set of rules for financial market participants in the European Union with a view to increasing transparency in relation to the integration of sustainability risks and the consideration of adverse sustainability impacts in their investment processes, and the disclosure of sustainability-related information on financial products.
‘Sustainability risk’ means “an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.”
Regulation 2019/2088 aims to improve transparency regarding information on the degree of sustainability of financial products in order to direct investment flows toward truly sustainable investments while preventing ‘greenwashing’.
The SFDR gives the end investor a better understanding of how environmental, social and governance (ESG) factors are taken into account and integrated into their investments, and how financial market participants integrate sustainability risks into their investment decisions.
Our management approach
At Createrra Finance, we adapt our investment policy to the expectations of our clients.
We focus on implementing an investment policy that is truly in line with the wishes of our clients, instead of blindly relying on ESG ratings provided by the major external contributors today.
No standardisation has been introduced as yet for these ratings, such that there may be contradictory ratings from one agency to the next.
In practice, for equities and bonds, we use an ESG score calculated by our external financial data provider as a reference while, for investment funds such as ‘SICAV’, we refer to the SFDR classification of the fund as communicated by the manager.
Article 6 covers funds which do not systematically incorporate a form of sustainability into their investment process and which might include equities in companies that are currently excluded by ESG funds, such as tobacco companies or thermal coal producers. Although such funds may continue to be sold in the EU, provided they are clearly labelled as unsustainable, they may face considerable marketing difficulties when they are held up against more sustainable funds.
A financial product is classified under Article 8 where it promotes, inter alia, environmental or social characteristics, or a combination thereof, provided that the undertakings in which the investments are made follow good governance practices.
Article 9 covers products that target tailored sustainable investments and applies where a financial product has a sustainable investment objective.
Sustainability is an integral part of our investment strategy and our investment processes at Createrra Finance. With this in mind, we have implemented a responsible investment policy to build a portfolio that takes ESG considerations into account using a sector exclusion policy.
We will identify sustainability risks in the investment decision-making process and, should such a risk arise, we will take appropriate measures to minimise the impact on our clients’ investments.
Responsible investment practices are constantly evolving, along with the emergence of new risks, changing public opinion and the introduction of new market standards. We will therefore be re-examining our sustainable investment framework on a regular basis to reflect these changes, if necessary.
Createrra Finance employees are encouraged to take sustainability considerations into account wherever possible and to perform their duties in a sustainable manner that is geared towards the client.
We seek to minimise ESG risks arising from exposure to certain sectors and activities characterised by high reputational risk and unsustainable business models. With that in mind, we have drawn up a list of such sectors and activities, which are automatically excluded from our investment universe.
We have undertaken to review our exclusion criteria in line with societal trends and priorities.
The Createrra Finance exclusion list includes the following:
- companies with particularly high emissions levels that have not set clear improvement targets within acceptable timeframes;
- manufacturers, intermediaries and distributors of non-conventional weapons (chemical and biological weapons, nuclear weapons, anti-personnel mines, cluster munitions, depleted uranium and white phosphorus munitions);
- companies that produce tobacco;
- companies that do not uphold fundamental ethical standards, thereby violating human and individual rights (companies which use forced labour, earn their income from illicit activities such as prostitution, human trafficking, etc.).
We apply our exclusion policy based on the information that is available to us. The exclusion list is prepared based on information from external data providers and is reviewed regularly. Although the data undergoes qualitative analysis, Createrra Finance shall accept no responsibility for its accuracy.
The exclusion policy allows us to align the interests of our investors with those of the company.