NO CONSIDERATION OF SUSTAINABILITY ADVERSE IMPACTS
Disclosure requirements for CCGM Pensions Administrators Ltd. as the Retirement Scheme Administrator (the “RSA”) to the Lifetime Pensions Scheme - Private Pension Scheme (the “Scheme”) pursuant to Regulation of the EU 2019/2088 on sustainable-related disclosures in the financial services sector (the “SFDR” Regulation).
Dated 10 March 2021
The SFDR requires specific disclosures by manufacturers of pension schemes, namely the RSA, on the assessment of pre-defined metrics on environmental (E), social (S) and governance (G) (together referred to as “ESG”) outcomes on its investment process of the Scheme and its investment Strategies outlined in Annex 1 of the Scheme Particulars.
‘sustainable investment’ an investment in an economic activity that contributes to an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy, or an investment in an economic activity that contributes to a social objective, in particular an investment that contributes to tackling inequality or that fosters social cohesion, social integration and labour relations, or an investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives and that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance;
‘sustainability risk’ 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;
‘sustainability factors’ environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
‘Principal Adverse Impacts’
(“the PAI”) impacts of the investment decisions and advice that result in negative effects on sustainability factors, that include granular ESG Indicators applicable to investments in ‘investee companies’ which are of (i) mandatory type relating to E(nvironmental) indicators, and (ii) at least one additional Indicator related climate or other environment, and (iii) at least a further additional indicator related to social, employee, human rights, anti-corruption or anti-bribery, as well as (iv) optional other indicators used to identify and assess additional principal adverse impacts on a sustainability factor.
- Transparency of adverse sustainability impacts
The SFDR requires the RSA to disclose on its website whether Principal Adverse Impacts of investment decisions are considered.
Accordingly, No consideration of the principal adverse impacts (PAI) on its investment decisions on sustainability factors are considered by the RSA in respect of the Scheme and its strategies.
PROSPECTIVE MEMBERS ARE URGED TO NOTE THAT CCGM DOES NOT CONSIDER THE ADVERSE IMPACTS ON ITS INVESTMENT DECISIONS ON SUSTAINABILITY FACTORS.
2.1 The reason why CCGM does not consider PAI on its investment decisions of the Scheme and its strategies on sustainability factors is deemed due to the following:
- The RSA may, when instructing the Investment Manager, take into account any directions received in writing from a Member in which the Member indicates his or her preference for one or more of the investments (“the Preferred Investments”) contained in a portfolio selected from time to time by the Retirement Scheme Administrator or by the Investment Manager for the purpose of the Scheme and notified to the Member in writing. To date, the RSA is not in receipt of any preferences in relation to Preferred Investments from its members in relation to invest in underlying investments that either promote environmental or social character tics, and investment in underlying investments targeting sustainable investment as its investment objective;
- The Investment Strategies including the current underlying investments of the Scheme are currently specified in Appendix 1 of the Scheme Particulars;
- Disclosures to end investors on integration of sustainability risks are to date insufficiently developed and not yet subject to harmonised disclosures. Unless divergent measures and approaches are harmonised, it remains difficult to compare difficult financial products with respect to their environmental, social, and governance risks and sustainable objectives. While the requirements in the SFDR relating to the entity-level disclosure of principal adverse impacts apply from 10 March 2021, the earliest information relating to a reference period to be disclosed in accordance with would not be made until 2023 in respect of a reference period relating to 2022.
2.2 Whether and when CCGM intends to consider such principal adverse impacts of its investment decisions on sustainability factors
CCGM may consider whether to apply principal adverse impacts (PAI) on its investment decisions on sustainability factors, after having regard to:-
- the nature and scale or assets under management of the Scheme,
- any Preferred Investments by its Members,
- after having reviewed relevant disclosures under SFDR including inter alia by an investment universe of UCITS that promote environmental or social characteristics or target sustainable investments as its objective.
- Remuneration policy
The RSA has a remuneration policy in place pursuant to rule MFSA Pension Rules for Occupational Retirement Schemes. In line with our Remuneration Policy, no variable remuneration is paid to our staff unless it is determined to be justified following a performance assessment based on quantitative (financial) as well as qualitative (non-financial) criteria. We deem that there is no risk of misalignment with the integration of the sustainability risks, if any, in our investment decision making process with respect to our investment decisions in lieu of the Schemes. As such, we believe that our existing structures are sufficient to prevent excessive risk taking in respect of sustainability risks, if any.
- Extracts from ESG Policy
CCGM maintains an ESG policy (the “ESG Policy”) which integrates sustainability risks into the identification, analysis, selection, and investment decision-making processes in respect of the Scheme, where applicable. The ESG Policy forms an integral part of the investment process and seeks to mitigate ESG and sustainability risks by ensuring that the Scheme only invests in companies and/or assets that are operated in an environmentally responsible manner, with respect for human and labour rights and providing good, healthy and safe working conditions and promote good governance conduct, always to the extent applicable and appropriate. Where applicable, consideration of potential ESG and sustainability risks related to a company or asset is integrated in the Scheme’s investment process, from identification, analysis, selection to approvals and execution. The ESG policy forms part of the further internal risk management controls and restrictions that apply to the Investment Manager, always to the extent applicable and appropriate.
A copy of the full ESG Policy may be made available upon request from the RSA.
This disclosure have been issued by CCGM pursuant to the requirements of the SFDR Regulation.