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More than

396 extracts

from 38 regulatory texts

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4. Stewardship : It is good practice to be an active owner and integrate active ownership mechanisms into the asset management process.
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Based on SFAMA’s Specialist Recommendation on Risk Management regarding the creation of a risk profile for a collective investment scheme or an asset management mandate, ESG risks and the approach to manage them at product level should be documented in the risk profile.
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An asset manager should inform about how it deals with ESG risks and opportunities in its investment process. It informs clients about the factors considered relevant and how they influence respective decision-making. The investment strategy should clarify the company’s general approach(es) applied to its different products and services, and also describe the tools and data used in the organisation.
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If an asset manager claims to provide impact investment products, regular reporting is crucial for the intention, the respective management processes and the achieved impact, based on relevant KPIs.
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The best-in-class approach can support the focus on companies that have a reduced financial risk due to higher sustainability standards. Asset managers can rely on external sustainability ratings when applying a best-in-class approach, as the preparation of ESG ratings for a large universe is quite resource-intense. Using ESG benchmarks that are based on a best-in-class approach can also help an asset manager to implement such a strategy.
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In practice, FINMA regards the following scenarios as greenwashing (deception) in the area of Swiss collective investment schemes or at least sees a potential greenwashing risk due to the lack of transparency vis-à-vis investors if the collective investment scheme makes reference to sustainability: • although no sustainable investment strategy/policy is actually pursued. • and information about the sustainability approach used is provided in the investment strategy/policy (e.g. best-in-class approach, approach integrating ESG considerations, stewardship), but the stated approach is not implemented. • but the investment policy allows for a significant proportion of nonsustainable investments, which are not in line with the sustainability approach pursued or are even inconsistent with it. • but the investment strategy/policy is only deemed to be sustainable because of exclusionary criteria that are already widespread, without there being a specific sustainability component going beyond this. • by using terms such as “impact” or “zero carbon” without the stated impact or savings being capable of being measured or verified. • but the fund documents do not provide or only provide very general information about the corresponding investment strategy/policy and/or the selection of permitted investments, along with how sustainability considerations are integrated into the investment decision process. Investors are not able to gain an impression of how sustainability is taken into account due to the lack of detail or transparency.

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