What are sustainability preferences and why are clients asked about them?

Sustainability preferences refer to your personal choices regarding how sustainability factors are taken into account in your investments. Sustainability factors relate to environmental, social and employee matters, respect for human rights and the fight against corruption and bribery. Your preferences can influence whether your portfolio includes socially or environmentally sustainable investments, or investments that consider principal adverse impacts on sustainability factors. We ask for your sustainability preferences to recommend products and services that are aligned with your investment objectives and preferences. Additionally, we aim to raise awareness of investment options that promote specific sustainability characteristics or objectives.

How is responsibility integrated into Mandatum’s investment activities?

Mandatum invests client assets in accordance with its Responsible Investment Policy, where the consideration of sustainability risks is a key part of the risk management process. Addressing climate change and managing climate-related risks are among the core focus areas of Mandatum’s investment activities. You can read more about Mandatum’s responsible investment practices here: Mandatum’s Responsible Investment Policy.

What is a sustainable investment?

A sustainable investment, as defined under the SFDR (EU 2019/2088), is an investment that contributes to an environmental or social objective, without significantly harming any other such objective. Sustainable investment objectives may relate, for example, to the use of renewable energy, the promotion of biodiversity, social inclusion or investment in human capital. Furthermore, investee companies must follow good governance practices, particularly with regard to sound management structures, employee matters, staff remuneration and tax compliance.

What is an environmentally sustainable investment under the EU Taxonomy Regulation?

Environmentally sustainable economic activities are defined in the EU Taxonomy Regulation (EU 2020/852). The Taxonomy is a classification system that applies only to certain sectors and includes strict sustainability criteria. Due to the narrow scope and high threshold, the number of Taxonomy-aligned investment opportunities remains limited.

To qualify as environmentally sustainable under the Taxonomy, an activity must make a substantial contribution to at least one of the six environmental objectives, do no significant harm to the other objectives, and comply with minimum safeguards, such as the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights and the ILO core labour standards.

What are principal adverse impacts of investment decisions on sustainability factors and how are they considered by Mandatum?

Principal adverse impacts refer to material negative effects of investment decisions on sustainability factors, including the environment, society, employees, human rights and anti-corruption efforts. These adverse impacts are monitored using indicators defined by regulation (PAI indicators under the SFDR).

In line with its Responsible Investment Policy, Mandatum seeks to consider and mitigate the principal adverse impacts of its investment decisions. The policy also outlines Mandatum’s commitments to responsible investing, the integration of sustainability factors into investment processes, exclusion principles for sensitive sectors and engagement practices. In addition, Mandatum publishes an annual statement on principal adverse impacts on sustainability factors on its website.

Why was there no investment product available that matched my sustainability preferences?

Mandatum invests its clients' assets in accordance with its Responsible Investment Policy, where the consideration of sustainability risks is an integral part of the risk management process. You can find more information here: Mandatum’s Responsible Investment Policy.

However, the level of sustainability integration varies between products. For example, some products consider sustainability risks but do not have defined sustainability characteristics or objectives. A significant number of our products promote environmental or social characteristics but are not classified as sustainable investments as referred to in sustainability preferences.

The sustainability preferences you provide may limit the range of suitable investment products available to you, alongside other suitability criteria such as investment experience and risk tolerance. Strict sustainability preferences may result in a situation where no investment products in our offering meet your criteria.

For more information about the sustainability-related features of our investment products, please consult your adviser or visit our website.