Statement on principle adverse impact of investment decisions on sustainability factors

Financial market participant:

Saxo Bank Group

Summary

Saxo Bank A/S (549300TL5406IC1XKD09) considers principal adverse impacts of its investment decisions on sustainability factors. The present statement is the consolidated statement on principal adverse impacts on sustainability factors of Saxo Bank A/S, including fully or partly owned subsidiaries, namely BinckBankNV (BinckBank NV has branches in France and Belgium)¹ .

This statement on principal adverse impacts on sustainability factors covers the reference period from 1st of January 2022 to 31st of December 2022. Saxo Bank reports at entity level the principal adverse impacts of clients’ total investments on sustainability factors, i.e. the aggregated negative impact of investment decisions, on the basis of and covering 18 mandatory principal adverse impact indicators as defined by SFDR. In addition, Saxo Bank has to report on a minimum of 2 PAI indicators taken from a set of 46 optional PAI indicators as stated in Appendix II of SFDR. Those investments acquired by clients through execution only services are not included as part of this statement. 

Saxo Bank does not presently have company level targets for the prioritisation of PAIs. Saxo Bank has not taken nor intends to take any actions during the reference period or during the next reference period. As the understanding of the interplay between indicators and investment decisions is expected to deepen and evolve over time, Saxo Bank intends to continue to make considerations of possible improvements to the PAI framework, including through updates to this statement. 

Description of the principle adverse impacts on sustainability factors

Principal adverse impacts are described as the negative material effects on sustainability factors, such as environmental and social matters, caused by or directly linked to the bank’s investment decisions in clients’ portfolios. 

Description of policies to identify and prioritise principle adverse impacts on sustainability factors 

Saxo Bank offers discretionary portfolio management services in partnership with third party model portfolio service providers (MPS providers). Saxo Bank has developed associated policies, procedures and a scorecard template that measures all the relevant aspects of a potential MPS providers, including how the MPS provider identifies and prioritises PAI indicators. Therefore, Saxo Bank’s approach to the identification of principal adverse impacts on sustainability factors is explained in the Due Diligence of Asset Management Model Providers Policy (“Due Diligence Policy”). This policy is used for selecting and as well as for ongoing monitoring and review of the MPS providers. This policy is approved by the Saxo Bank Group Asset Management Committee, which consists of senior management stakeholders, and is subject to regular reviews, minimum annually. The Due Diligence Policy and its commitments to identify and prioritise principal adverse impacts are operationalised via internal supporting procedures as outlined below. 

Identification of principal adverse impacts on sustainability factors

Saxo Bank identifies principal adverse impacts of investment on sustainability factors during its due diligence exercise of MPS providers, both prior to establishing any formal relationship or partnership with these and afterwards (ongoing due diligence). Saxo Bank partners with third-party MPS providers to develop the portfolios and products that are offered to clients through Saxo Bank’s discretionary model portfolio management services. 

The due diligence framework used by Saxo Bank to evaluate MPS providers, assesses a number of quantitative and/or qualitative factors, including if principal adverse impact indicators are considered in the portfolios offered. 

This information is gathered into a scorecard. A single score is then assigned to the MPS provider according to how it identifies and communicates the prioritization of PAI indicators on sustainability factors into their investment process, including how clear and robust their PAI framework is. The findings from the scorecard are reviewed by the Group Investment Committee, before sending the materials for approval to the Group Asset Management Committee, which includes members of senior management in Saxo Bank.

When investing into funds (ETFs and/or mutual funds), Saxo Bank sources PAI data using the self-declared figures from the European ESG Template file (EET file). For instruments that are not funds (for instance, stocks), Saxo Bank requests that PAI data is supplied by the MPS providers. Saxo Bank is currently in the process of acquiring data to meet reporting obligations under the SFDR. As more relevant data will become available, Saxo Bank will enhance current methodologies to measure and monitor principal adverse sustainability impacts in Saxo Bank’s current investments.

Prioritisation of principal adverse impacts on sustainability factors

Saxo Bank does not presently have company level targets for the prioritisation of PAIs. Saxo Bank first and foremost invests to meet the discretionary mandates of clients. Such mandate may or may not include PAI preferences. Saxo Bank conducts a suitability assessment of the clients’ priorities and preferences before offering any products. The prioritisation of PAIs is considered at the product level when identifying model portfolios provided by MPS providers that meet these mandates.

Therefore, at product level Principal Adverse Impact considerations can lead to or influence the decision-making of the MPS provider to either buy/increase weighting, hold/maintain weighting, decrease weighting, or sell/divest. 

The prioritisation of the voluntary PAIs is done in accordance with Saxo Bank’s clients preferences that have been assessed via a survey. Saxo Bank Group does not currently have a position on these impacts, nor actively engages to reduce these principle adverse impacts on sustainability factors, however strives to partner with MPS providers that offer investment strategies with PAI considerations in line with clients’ preferences and risk appetite.  

Engagement Policies

Saxo Bank offers discretionary portfolio management services in partnership with third party model portfolio service providers (MPS providers). Therefore, any active engagement is done through these MPS providers. The impact Saxo Bank has starts with their selection. Saxo Bank has developed associated procedures and a scorecard template that measures all the relevant aspects of a potential MPS providers, including stewardship efforts.  

Therefore, during the due diligence phase, Saxo Bank will assess if the MPS providers have engagement and voting policies to meet the goals or targets established for specific strategies. Saxo Bank continues to check stewardship efforts throughout the partnership. The due diligence is used for selecting as well as for ongoing monitoring and review of the MPS providers. Saxo Bank engages on a quarterly basis with its MPS providers about how they influence the impact that investee companies’ have on sustainability-related matters in accordance with specific strategies’ mandates. This dialogue provides Saxo Bank with greater insight into individual companies or funds. However, since Saxo Bank does not currently have positions on minimising PAI impacts on sustainability factors, the dialogue is centred on obtaining information on how a particular strategy is performing against established goals and targets. Currently, the dialogue is not directed towards any specific effort to reduce PAI impact, unless the specific investment strategy has PAI consideration at the product level. Further information can be found in the “Engagement Policy” available on the website.   

Reference to international standards

Saxo Bank is in the process of developing sustainability-related commitments at the Group level. At the moment, there is no current reference to international standards other than what Saxo Bank is legally required to uphold. The Asset  Management Product department will prioritise the management of principal adverse impacts in accordance with Saxo Bank position and other sustainability-related strategies and commitments when these will be made available. 

Historical comparison

Information on impact compared to previous year will be reported by 30 June 2024, and continuously on an annual basis thereafter. This information will be gathered on a best-effort basis and to the extent that data is available from providers.