At Santander TFI S.A., we realise that we can have a significant impact on society and the environment through our investment activities.
We recognise that sustainability is fundamental to the needs of our world and can require a new way of investing, while at the same time adding value to our investments.
There is consensus in the asset management industry that integrating ESG (Environmental, Social and Governance) aspects into investment decisions contributes to better risk management and the discovery of new opportunities, generating value for clients and society at large. When acting as asset managers, we are obliged as part of our fiduciary duties to always be guided by the best interest of our clients. In order to fulfil this duty, it is necessary to take into account both financial and non-financial aspects and have a more complete picture of the assets under management, which often translates into more informed investment decisions.
- climate change
- reduction of greenhouse gas (GHG) emissions
- shrinking natural resources
- waste management, pollution reduction
- working conditions, including slavery and child labour
- local communities
- humanitarian conflicts and crises
- health & safety
- diversity and social exclusion
- labour relations
- remuneration of executives
- bribery and corruption
- management structure
- fair tax strategy
In response to this increasingly important global trend, we have in our offering sub-funds promoting among other environmental or social characteristics:
- Santander Prestiż Global Responsible Investment (a sub-fund of the Santander Prestiż SFIO fund), which takes ESG criteria fully into account in the investment process and focuses on companies that demonstrate a significant correlation with high ESG standards,
- Santander Prestiż European Equity (a sub-fund of the Santander Prestiż SFIO fund), which takes ESG criteria into account in the investment process.
We strive to pursue sustainable development and responsible business by applying global and Santander Group’s best practices and standards, which are embedded in the regulations that guide our daily work. We are aware of the fact that investment activities may have a positive or negative impact on ESG aspects and we seek, where possible, to minimise the negative impact by applying the principles described, inter alia, in the following regulations:
- General Sustainability Policy which sets out the general principles and commitments pursued by the Santander Group in the area of sustainability.
- Sustainable and Responsible Investment Policy which sets out Santander Group's sustainable and responsible investment approach and defines how ESG criteria are taken into account in the investment process.
- Policy of Engagement in Companies Listed on a Regulated Market and Application of Corporate Governance Measures on the basis of this policy, we assess the responsibility of the business conducted by the companies, as evidenced by the actions taken to secure and satisfy ESG criteria. We attach great importance to the corporate governance of companies. The policy also describes the process of dialogue with companies and the rules for exercising voting rights at general meetings of shareholders.
- Sector Risk Management Policies- pursuant to these policies, we do not invest in companies from so-called "sensitive" sectors, which include, for instance, the defence sector associated with the production, trade or distribution of, for example, anti-personnel mines, cluster bombs, chemical or biological weapons, nuclear weapons or depleted uranium munitions. The Santander Group has also declared a total reduction of exposure to coal mining and coal-fired power generation by 2030.
- Conflict of Interest Management Regulations which set out detailed rules for meeting legal, regulatory and ethical obligations relating to conflicts of interest.
- Anti-Corruption Programme- its purpose is to establish the principles applicable at Santander TFI S.A. with regard to counteracting corruption, notwithstanding any additional controls that may be required under other local regulations or requirements in this regard.
- Corporate Volunteering Policy- our employees can take part in initiatives aimed at, among other things, supporting education and scientific development, working for equal opportunities and building civil society.
Bearing in mind the impact our investment activities can have on sustainability, in July 2020 we became a signatory to the UNPRI (United Nations Principles for Responsible Investment) initiative launched with the support of the United Nations to promote responsible investment. Six general Principles for Responsible Investment are encouraged:
- Incorporating ESG factors in investment analyses and decision-making processes,
- Incorporating ESG factors into ownership policies and practices,
- Seeking appropriate disclosures on issues related to ESG from the companies invested in,
- Promoting acceptance and implementation of the Principles for Responsible Investment within the investment industry,
- Working together to enhance the effectiveness in implementing the Principles,
- Reporting on our activities and progress towards the implementation of the Principles.
Signing up to the internationally recognised Principles for Responsible Investment is an expression of willingness to increase our commitment to responsible investment.
Sustainability issues are a challenge for the entire financial market. They require action on the part of financial institutions, issuers and regulators alike. We are currently in the process of developing standards, including those related to disclosure of information necessary to properly manage sustainability risks. It is our intention to continue our work and actions for the sake of sustainable development.
As of 10 March 2021, Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (SFDR Regulation) is in force in the countries of the European Union and requires financial market participants, including investment fund companies, to disclose the information detailed in the Regulation, inter alia, by publishing it on their websites.
- Information on strategies to incorporate sustainability risks in the investment decision-making process (Article 3 of the SFDR)
Sustainability risks include environmental risks (e.g. exposure to climate change risks), social risks (e.g. issues of inequality, health, social inclusion, labour relations, etc.) and corporate governance risks (e.g. lack of oversight of material sustainability issues or lack of adequate business ethics policies and procedures). The occurrence of sustainability risks may lead to financial risks that have a negative impact on the value of the sub-funds' assets. These may include market risks (e.g. reduced demand for products and services due to changes in consumer preferences), operational risks (e.g. increased operating costs) or litigation risks. These risks may consequently affect the return or availability of capital to the issuer of the financial instruments constituting the sub-funds' assets and, ultimately, result in the revaluation / impairment of these assets.
Risks to sustainability can have a significant impact on the value of assets in the medium to long term.
Incorporating sustainability risks in the investment process is reflected in Santander TFI’s Sustainable and Responsible Investment Policy. This policy defines the approach to sustainable and responsible investment and sets out the principles to be considered when taking ESG criteria into account in the investment process.
Complementing the above policy is the Policy of Engagement in Companies Listed on a Regulated Market and Application of Corporate Governance Measures. On the basis of this policy, we assess the responsibility of the business operations conducted by companies, as evidenced by the actions taken to secure and satisfy the ESG criteria. We attach great importance to the corporate governance of companies. The policy also describes the process of dialogue with companies and the rules for exercising voting rights at general meetings of shareholders.
Santander TFI continuously monitors its policies, procedures and risks to sustainability, reviewing the potential impact of such risks on sub-fund portfolios. Where a material adverse impact on a sub-fund's portfolio is identified, a review of the relevant asset will be carried out to assess its potential impact on the sub-fund's performance and the investment process and identify its weaknesses.
The types of ESG criteria taken into account in the investment process are aligned with the specific nature of the asset under analysis, so as to capture as fully as possible all elements that affect the business model and the potential for value growth of the issuer. It is worth noting that already at the stage of admitting the issuers' financial instruments to the investment process, the compatibility of the potential investment with the Santander Group's current policies on sensitive sectors is checked. On this basis, it is possible to exclude a company from the investment spectrum based on the nature of its business. In addition, the employees of the Investment Department periodically monitor the ESG composition of Santander TFI's investment portfolios based on the Group's internal ratings and data from external providers. The way sustainability risks are taken into account is largely subjective and depends on the investment strategy of the sub-fund. With the ongoing development of legal requirements for non-financial information disclosure by issuers in the coming years, the increasing availability and standardisation of this information is expected to contribute to an even better analysis.
- Information on due diligence strategies with regard to the impacts of investment decisions on sustainability factors (Article 4 of the SFDR)
Sustainability factors mean environmental, social and labour issues, human rights and anti-corruption and anti-bribery.
With the exception of the subfunds Santander Prestiż Global Responsible Investment and Santander Prestiż European Equity, Santander TFI does not consider principal adverse impacts of investment decisions on sustainability factors. This is dictated by the existing, noticeable at the moment, lack of sufficient disclosure data of portfolio companies as well as by the still undeveloped market practice in the area of principal adverse impacts. In the future, Santander TFI plans to consider adverse impacts of investments decisions on sustainability factors for a higher number of products - Santander TFI’s strategy in this respect adequately takes into account its size, nature and scale of activity, as well as the types of offered financial products.
- Information on ensuring consistency of remuneration policies with the integration of sustainability risks into business operations (Article 5 of the SFDR)
Santander TFI has adopted a remuneration policy in order to properly and effectively manage risk and to prevent taking risks that are inconsistent with risk profiles, investment policies, investment strategies, investment fund statutes or Santander TFI’s internal regulations. The policy is also intended to support the implementation of the strategy pursued by Santander TFI and to prevent conflicts of interest and ensure consistency with the strategy for incorporating sustainability risks in the decision-making process.
The award of variable remuneration is based on the assessment of individual performance and the performance of the business unit concerned. The assessment of individual performance results shall take into account financial and non-financial criteria, including the person's impact on incorporating sustainability risks into the business operations. The appraisal is carried out using the periodic appraisal system in force at Santander TFI.
The rules and regulations applied by Santander TFI provide for a possibility of depriving an employee of a bonus (including deferred bonuses) in the event of a breach of the employee's duties (which includes acting contrary to the applicable internal regulations), as well as in the event when the Employee is found to have engaged in unethical activities in order to obtain benefits in connection with his/her employment with Santander TFI (conflict of interest).