Sustainable investments

Growth and sustainability are distinctive features of the Mediobanca Group. Promoting people, serving the society in which we operate, and reducing the direct and indirect impact on our environment are all an integral part of our growth objectives.

In order to achieve responsible growth at Group level, a Group Sustainability Policy and a Group ESG Policy[1] have been adopted. The former describes the approach used to identify, assess, prevent and reduce potential direct impact in reputational and operational terms, while the latter defines the general principles and guidelines for evaluating Environmental, Social and Governance (ESG) factors as part of the Mediobanca Group's financing, investment and advisory activities.

The Group has set itself sustainability targets as part of the 2019-23 Strategic Plan, with the intention of contributing to the achievement of 6 of the 17 macro objectives described by the Sustainable Development Goals. The Group has also agreed to and signed the 10 Global Compact principles.

As part of its client individual portfolio management and investment advisory services policies and processes, Mediobanca Private Banking uses a system for monitoring investment funds’ and issuers’ sustainability factors, in order to identify the instruments that have unsatisfactory ESG levels or that operate in sectors considered too controversial under the Group's Sustainability Policies.
These assessments are carried out based on ESG ratings provided by specialist external info-providers, where available, or through proprietary methods for issuers and funds for which no ESG rating is available.

Mediobanca, through its Private Banking division, has developed a product known as Global ESG Thematic, to complement the Global Portfolio Selection products. The product is distinctive for its principle exposure is to equity financial instruments and its focus on innovative sectors and investment themes, such as innovative technologies, sustainable mobility and clean energy.

According to the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088), the new product falls within the definition provided in Article 8 (i.e. “light green”), because it promotes good environmental, social and governance factors.[2]

With reference to investment decisions taken in connection with the Global ESG Thematic product, the delegated manager (Mediobanca SGR) applies ESG criteria that include both negative screening (i.e. criteria which rule out certain issuers from the investment universe) and positive screening (i.e. assessing issuers based on their ESG rating and the seriousness of any controversies in which they have been involved). For further details please see the section entitled “SUSTAINABILITY CRITERIA AS AN INTEGRAL PART OF MEDIOBANCA PRIVATE BANKING'S POLICIES FOR PROVIDING INVESTMENT SERVICES".

Investments are also assessed on the basis of precise ESG inclusion criteria. In particular, in order to limit the exposure to issuers or UCIs that do not meet the above characteristics, upper limits have been instituted for the maximum exposure to the following categories.

• Absence of a rating: company or UCI which is not assigned an ESG rating;
• Low level ESG rating: company or UCI which is assigned an ESG rating below an established threshold;
• Involvement in serious controversies (issuers only).

The benchmark for this product is consistent with the one commonly used by investee UCIs which promote ESG characteristics or have making sustainable investments as their objective.

The sustainability risk for the product is measured in accordance with the qualitative and quantitative methodology adopted by the Bank (cf. “SUSTAINABILITY CRITERIA AS AN INTEGRAL PART OF INDIVIDUAL PORTFOLIO MANAGEMENT POLICIES”).

As part of the provision of portfolio management services on an individual basis and investment advisory services, Mediobanca, inter alia through the delegated manager, takes negative effects for sustainability[3] (“Principal Adverse Impact”, or ”PAI”) into consideration in making  investment decisions.

In line with the approach established at Group level, Mediobanca has defined the principles on the basis of which the PAIs and related indicators are taken into consideration, ensuring compliance with the principles of management responsibility towards its stakeholders.

Mediobanca has also adopted specific internal regulations aimed at governing the methods and methodologies used in consideration of the PAIs as part of the investment process.