Sustainable Finance Disclosure Regulation SFDR

Sustainability Factors

When proving advice, Nelson Life considers the adverse impact of investment decisions on sustainability.

As part of our research and assessment of products, Nelson Life will examine Product Providers literature to compare financial products and to make informed decisions about ESG products. Nelson Life will at all times act in the clients best interests and keep clients informed accordingly.

The consideration of sustainability risks can impact on the returns of financial products. 

Remuneration Policy 

We are remunerated by commission and other payments from product producers.

When assessing products, we will consider the different approach taken by product providers in terms of them integrating sustainability risks into their product offering. This will form part of our analysis for choosing a product provider.

WHAT ARE SUSTAINABILITY PREFERENCES?

REGULATORY BACKGROUND

Regulators in the EU have created policies aimed at establishing sustainability risk assessment at the heart of firms’ investment decisions, governance, and risk management processes. Sustainability risk is defined as “an environmental, social, or governance event that if occurs, could cause an actual or a potential negative impact on the value of the investment due to its harmful sustainability impact. One aim of this is to harness the preferences of investors in directing the flow of capital towards investments that support carbon sustainability and away from fossil fuel activity.

SUITABILITY ASSESSMENT

During the financial advice process, your Nelson Life advisor will carry out a suitability assessment. A suitability assessment requires consumers to answer questions about their financial circumstances, personal circumstances, and objectives in order for the us to be able to give appropriate advice. Nelson Life are now also required to ask questions about sustainability preferences when advising on Insurance Based Investment Products (IBIPs). It is important to note that your preferences may affect the risk profile and/or expected return of your selected financial investment.

SUSTAINABILITY PREFERENCES

“Sustainability preferences” can be defined as whether you want consideration to be given to the possible negative impact that your savings, investment portfolio or asset management may have on people, the environment or society.

QUESTIONS YOU WILL BE ASKED

Your Financial Broker will establish sustainability preferences by seeking consumers preferences in the following areas and you may specify a minimum part of your portfolio (10, 20, 30% etc. ) that will be invested with these objectives:

Do you want a certain minimum of your investment in economic activities that contributes substantially to one or more of the environmental objectives such as climate change mitigation and adaption, pollution prevention and control, the sustainable use and protection of water and marine resources?

Do you want a certain minimum of sustainable investments to be included in your product recommendation? These are funds/products that are invested in economic activity that contributes to an environmental goal, investments in economic activity that contributes to a social objective and investments that contribute to tackling inequality, fostering social cohesion, social integration or labour relations, and investments in human capital or economically or socially disadvantaged communities.

Do you want the possible negative impact on people, the environment or society of the investment to be considered? For example, carbon emissions, damage to biodiversity and ecosystems, and pollution prevention and control.

Do you want consideration to be given to the possible negative impact that your savings, investment portfolio or asset management may have on people, the environment or society?

PRINCIPAL ADVERSE IMPACTS EXAMPLES

SOCIAL AND EMPLOYEE MATTERS

  • Insufficient whistleblower protection

  • Incident of discrimination

HUMAN RIGHTS

  • Lack of human rights policy

  • Operations and supliers at significant risk of incidents of child labour

SOCIAL AND EMPLOYEE MATTERS

  • Lack of anti-corruption and anti-bribery policies

  • Cases of insufficient action taken to address breaches of standards of anti-corruption and anti- bribery

SOCIAL

  • Average income inequality score

  • Average freedom of expression score.

Summary

Nelson Life will provide you with financial planning and product recommendations based all the information gathered in respect of financial circumstances, personal circumstances, attitude to risk and sustainability preferences.

Sustainability preferences are only a part of your profile, and do not dictate product choice. Where you do not answer the question whether you have sustainability preferences or answers “No”, Nelson Life may consider you as “sustainability neutral” and recommend products both with and without sustainability-related features.

Given that sustainable investments are relatively new to the market, there may not be products available that suit your ‘sustainability preferences’ which are in line with personal and financial circumstances. Where this is the case, Nelson Life will advise you of this and you will be given the option to amend your ‘sustainability preferences’.

Products that have some sustainability features but are not matching your specific sustainability preferences, cannot be recommended to you unless you adapt your preferences

Last edit 06 June 2024