Information required under the Sustainable Finance Disclosure Regulation
Adverse impacts on sustainability factors not taken into account when providing investment advice
(Information on investment advice provided, supplied in accordance with Articles 3 and 4 of the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/20881) and Article 13 of Commission Delegated Regulation (EU) 2022/12882)
Articles 3 and 4 of Regulation (EU) 2019/2088 (the Sustainable Finance Disclosure Regulation or SFDR) set out transparency requirements regarding entities' policies for dealing with sustainability risks and regarding adverse sustainability factors relating to investment advice provided. In this context, sustainability risks are defined as environmental, social or governance events or conditions that, if they occur, could cause an actual or a potential negative material impact on the value of the investment.
In those cases, in which Aareal Bank AG enters into financial instruments with its borrowers in connection with an associated underlying (i.e. a loan agreement with interest payments based on a reference interest rate plus periodic rate adjustments), such instruments merely serve the purpose of mitigating an interest rate risk stemming from the underlying. Sustainability risks are not relevant for these purely interest rate-related financial instruments offered by the Bank and are, therefore, not the subject matter of an investment advice, if any.
By contrast, ESG aspects such as information on the property's energy efficiency or any green building certification that has been obtained play an increasingly important role in relation to the underlying – i. e. the loan agreement. Please contact your Aareal client account manager if you have any questions about this.
Remuneration policy in relation to the integration of sustainability risks
(Information supplied in accordance with Article 5 of the SFDR)
Aareal Bank also includes sustainability risks – so-called ESG risks (environmental, social and governance) – in its risk management. Aareal Bank considers sustainability risks to include multi-type risks or risk drivers that are influenced directly or indirectly by the environment, social issues or governance processes. All material sustainability risks were able to be classified as a form of existing financial and non-financial risks. In line with this, they are managed implicitly as part of the risk types under which they are classified. As a result, the Bank's remuneration system also reflects sustainability risk.
Additional information on Aareal Bank's remuneration systems can be found here in the section entitled "Fair remuneration systems".
1 Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosure obligations in the financial services sector
2 Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’, specifying the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in precontractual documents, on websites and in periodic reports