Sustainable Finance Disclosure Regulation

LOMBARD BANK MALTA P.L.C. (the “Bank”) falls within scope of Regulation (EU) 2019/2088 of the European Parliament of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (the Sustainable Finance Disclosure Regulation or SFDR), effective 10^th March 2021, requiring financial market participants and financial advisors, including the Bank, to make certain pre-contractual and ongoing disclosures to end investors.

Sustainability Risk Policy

The Bank’s Sustainability Risk Policy outlines its approach to integrating:

1)      environmental, social and governance (“ESG”) considerations into its discretionary management and advisory processes by assessing not only all relevant financial risks but also relevant sustainability risks, with a view to identifying, mitigating, managing and reporting on Sustainability Risks[i] whilst enhancing returns over the medium to long-term.

2)      clients’ Sustainability Preferences[ii], into the suitability assessment carried out prior to the provision of advisory and portfolio management services.

In its provision of portfolio management and advisory services, the Bank assesses the Sustainability Preferences of their Clients and takes into account these Sustainability Preferences in the selection process of the financial products that are offered to said Clients. The Bank has accordingly integrated client Sustainability Preferences into suitability assessment which are carried out prior to the provision of portfolio management and advisory services.

The Bank recognises that Sustainability Risks, could lead to outcomes that may have a negative impact on the value of Clients’ investments. To the extent that Sustainability Risks are considered relevant to the value of the Client’s investments, the Bank takes into account Sustainability Risks when implementing its risk management framework and setting its risk tolerance level.

Presently, when making discretionary management decisions and, or providing investment advice, the Bank does not consider the principal adverse impacts on Sustainability Factors[iii], due to the lack of readily available data and validated methodologies on principal adverse impacts.

To the extent that an assessment of Sustainability Risks is relevant to the value of its Clients’ investments / to the extent that the principal adverse impacts of Sustainability Factors are incorporated in the Bank’s processes in the future, the below considerations may be taken into account.

1)      ESG integration

The Bank describes its ESG integration approach as the systematic and explicit inclusion of material ESG factors into investment analysis and investment decisions and advice at varying levels. Such approach could span the breadth of the investment process - from identification of trends, analysis of investments through to portfolio construction and investment advice.

2)      Screening

The Bank may apply a set of filters for the purpose of determining which companies, sectors or activities are eligible or ineligible to be invested in or advised on based on its preferences, values and, or ethics. The Bank could implement a mix of positive and negative screens in accordance with ethical inclusion or exclusion criteria. Once invested in or advised on, the on-going eligibility of said companies, sectors or activities is likely to be revisited on a periodic basis, or if there are significant changes.

The Sustainability Risk Policy will be reviewed at least once a year to measure success and determine whether it continues to reflect the Bank’s investment beliefs.

Remuneration Policy

The Bank views its remuneration policy to be consistent with the integration of sustainability risks. Indeed, there is no component of the Bank’s remuneration structure which is geared towards creating an incentive or bias towards excessive risk taking to the detriment of environmental, social or governance matters and/or sustainability generally (“ESG Factors”). Also, the Bank’s remuneration structure has been designed to promote a sound and effective risk management culture to protect value, without any incentive or bias towards risk taking which could have a material impact on ESG Factors. Further details concerning the Bank’s remuneration policy is available from its published accounts that can be accessed here.