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By offering sustainable structured products, Erste Group is setting a sign – because protecting natural resources and upholding universal human rights are fundamental principles of our business operations.
Erste Group as a sustainable issuer
For more than 200 years, we have made it our social responsibility to provide access to basic financial products for all people in our region, including those affected by poverty. This commitment is still part of our DNA and continues to generate prosperity in our region.
Erste signs the UN Global Compact
Erste Group achieves the status of a sustainable company from at least one rating agency
e.g. MSCI ESG Research, Sustainalytics
Erste Group considers ESG standards for products and transparency
Meets the standards of the German Structured Securities Association (BSW) and of the Association of Austrian Investment Fund Management Companies (VÖIG)
Erste Group considers standard PAIs throughout its business operations
All 14 standard PAIs
Regulatory framework: Types of ESG products
The legislative changes implemented under the MiFID II update have established a clear legal framework for classifying sustainable investment products.1 Based on these legal requirements, German financial sector associations have established a set of minimum standards to define the target market for securities addressed to investors who prioritise sustainability.2 This “ESG target market concept” has become established in German-speaking countries and has also been adopted by Erste Group. At the same time, the German Structured Securities Association (BSW) has defined a Sustainability Code for sustainable structured securities, which is also applied and considered by Erste Group.3 Additionally, Erste Group has committed to comply with the Sustainability Code of Zertifikate Forum Austria, a forum of leading Austrian certificate issuers.4 This Code defines product and transparency standards for structured securities with sustainability features.
Within the ESG target market concept, ESG product types are categorised as follows5:
Principal Adverse Impact (PAI) approach
Structured bonds of Erste Group which may be addressed to customers with sustainability-related objectives in line with the MiFID Directive are marked with the ESG logo. Erste Group applies the PAI (Principal Adverse Impact, also referred to as “special criteria” in the savings bank sector) approach, which ensures that adverse effects of sustainability factors are considered in the selection of underlying assets and with regard to the ordinary business activities of the issuer.
The following PAI factors are considered:
The process of selecting sustainable underlyings
The selection process is a cooperation between Erste Group and the Responsible Investment Team of Erste Asset Management.6 All underlyings are thoroughly reviewed in a three-step process.
Step 1: Review of absolute exclusion criteria (for all products)
Step 2: Review of ESG exclusion criteria (for ESG products)
Step 3: Review of ESG rating: underlying must score at least 50 points on the “ESGenius” scale
1 Delegated Directive (EU) 2017/565
2 https://bankenverband.de/files/2022-08/migration/files/Anl_1_210521_DK_BV_DDV_Zielmarkt_aktualisiert_final_Clean.pdf
3 https://www.derbsw.de/DE/MediaLibrary/Document/Code%20of%20Conduct/Final_DDV_ESG_Kodex_A4quer_DE_AUSDRUCK_01.pdf
4 https://www.zertifikateforum.at/transparenz/zfa-nachhaltigkeits-kodex/
5 https://www.bvi.de/service/muster-und-arbeitshilfen/mindeststandard-zur-zielmarktbestimmung
6 For indices that we use as underlyings for ESG products, the criteria governing individual securities apply analogously