Disclosure according to Regulation (EU) 2019/2088

1. General information on the strategies for dealing with sustainability risks

By ratifying the Paris Agreement [1], the participating states committed themselves to limiting global temperature increases to well below 2 ° C or, if possible, to 1.5 ° C compared to pre-industrial levels. To achieve these goals and to reduce the effects of climate change, the European Commission has published a comprehensive action plan to finance sustainable growth [2] and the European Green Deal [3]. Part of this action plan provides for the reduction of information asymmetries in the relationships between customers and financial market participants or financial advisors with regard to the inclusion of sustainability risks, the consideration of negative sustainability effects, the promotion of ecological or social characteristics and with regard to sustainable investments. These information asymmetries are to be eliminated through mandatory pre-contractual information and ongoing disclosures by financial market participants and financial advisors to end investors. Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (in short: Disclosure Regulation) also obliges financial market participants and financial advisors to publish written strategies for the inclusion of sustainability risks.

According to the Disclosure Regulation, sustainability risk is understood to be an event or condition in the environmental, social or corporate governance fields, the occurrence of which could actually or potentially have significant negative effects on the value of the investment. [4]

Due to the ongoing change in the climate, in addition to the other sustainability risks, the focus is increasingly on climate risks. Climate risks include all those risks that arise as a result of climate change or that are exacerbated as a result of climate change [5]. When it comes to climate risks, a distinction is made between physical risks, which result directly from the consequences of climate change, and transition risks, which arise from the transition to a climate-neutral and resilient economy and society and can thus lead to a devaluation of assets. Examples of sustainability risks are: increased occurrence of natural disasters, loss of biodiversity, decline in snow cover, extreme drought, …. Sustainability risks can manifest themselves in an investment in the known risk categories such as credit risk, total loss risk and price risk.

In addition to sustainability risks, sustainability factors can also play a role in an assessment or investment decision. In the Disclosure Regulation, sustainability factors are defined as environmental, social and employee issues, respect for human rights and the fight against corruption and bribery. This includes, for example, climate protection, the protection of biodiversity, compliance with recognized labor law standards, appropriate remuneration, measures to prevent corruption, etc.

2. Declaration on the negative impact on sustainability

a. Use of the information published by financial market participants in accordance with the Disclosure Regulation

We include sustainability risks in investment advice for financial products within the meaning of the Disclosure Regulation in the following way: At the customer’s request, the goals “sustainable investments” and “ethical investments” can be selected in the advisory process. For the portfolio construction, only those products can then be selected which have been classified as suitable by the product manufacturer. The information on sustainability risks provided by the product manufacturers is made available to the customer by us and in the course of the consultation this is explained in more detail and the customer is informed of the expected effects of sustainability risks on the return on the financial products offered.

b. Selection and classification of financial products on the basis of the indicators in Annex I, Table 1 of the Implementing Regulation for the Disclosure Regulation (if applicable, a description of the classification and selection methodology used)

The identification of sustainability risks for financial products in the sense of the Disclosure Regulation is carried out by the product manufacturer (financial market participant). The information provided by the product manufacturer is used for investment advice. Financial products that aim for sustainable investments or that take sustainability risks and indicators into account when making investment decisions are also used in the advisory service. Since the provisions of the Disclosure Regulation have only been in effect since March 10, 2021, MFC Mikulik Finance Consulting GmbH has not yet classified the financial products. The specific selection of financial products in the consultation is therefore still based on the suitability criteria according to WAG 2018 or MiFID II as well as the specific interests and wishes of the customer.

c. Criteria or thresholds used to select financial products.

Since the provisions of the Disclosure Regulation have only been in effect since March 10, 2021, MFC Mikulik Finance Consulting GmbH has not yet defined any specific criteria for sustainability factors or threshold values for the impact of sustainability risks for the selection of financial products in investment advice.

Since MFC Mikulik Finance Consulting GmbH does not design any financial products itself and therefore does not control the application of sustainability factors itself, the information published by financial market participants is first observed in accordance with the Disclosure Regulation. Particular attention is paid to whether certain sustainability criteria and threshold values for sustainability risks develop as a minimum standard or as market practice. The definition of threshold values and criteria will take place at a later point in time based on the results of this development.

3. Consideration of sustainability risks in the remuneration policy

MFC Mikulik Finance Consulting GmbH has currently not explicitly stipulated the effects of sustainability risks as part of its remuneration policy. The remuneration of the employees is basically variable only to a small extent – also taking qualitative characteristics into account – which also includes acting in accordance with the applicable statutory provisions. Insofar as compliance with sustainability risks is provided for by law, they are therefore taken into account when measuring the variable part of the remuneration.

[1] https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

[2] https://ec.europa.eu/info/publications/sustainable-finance-renewed-strategy_en#action-plan

[3] https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en

[4] See Art 2 no 22 sustainability-related disclosure regulation

[5] See FMA guidelines for dealing with sustainability risks (01/2020)

OFFICE in WIEN

Stubenring 14/14 A-1010 Wien T: +43 1 361 98 80 F: +43 1 361 98 80 ext. 123 E: office@mf-consulting.at

OFFICE Vienna

Stubenring 14/14
A-1010 Wien
T: +43 1 361 98 80 200
F: +43 1 361 98 80 ext. 123
E: office@mf-consulting.at

OFFICE in GRAZ

Leechgasse 25/2
A-8010 Graz
T: +43 1 361 98 80
F: +43 1 361 98 80 ext. 123
E: office@mf-consulting.at

OFFICE GRAZ

Leechgasse 25/2
A-8010 Graz
T: +43 1 361 98 80 100
F: +43 1 361 98 80 ext. 123
E: office@mf-consulting.at



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