HSBC Life Assurance (Malta) Ltd. Sustainable Finance Disclosure Regulation (SFDR)
HSBC Life Assurance (Malta) Ltd., (hereafter to be referred to as ‘HSBC Life’).
HSBC Life as a manufacturer of insurance-based investment products (IBIPs) qualifies as a financial market participant pursuant to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (hereinafter “SFDR”). Inter alia, the SFDR obliges financial market participants to publish, on its website, information regarding its policy/ies on the integration of ‘sustainability risks’ in its investment decision‐making process, as well as information on whether they consider principal adverse impacts of their investment decisions on ‘sustainability factors’, and how their remuneration policies are consistent with the integration of sustainability risks.
The SFDR defines ‘sustainability risks’ and ‘sustainability factors’ as follows:
‘sustainability risk’ – an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment; and
‘sustainability factors’ – environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
A. Sustainability risks in investment decisions
HSBC Life adheres to a Sustainability Policy set out at the level of HSBC Group Insurance in order to ensure that sustainability risks are considered in relation to its products, investment decision-making and day to day operations in the manner further explained below.
For certain investments, where HSBC Life or any other entity acting on behalf of HSBC Life is directly involved in the investment-decision making and security selection process, sustainability risks and the associated impact(s) of these risks are considered as part of the financial analysis. In addition, where HSBC Life exercises discretion on the underlying asset portfolio, restrictions may be imposed on the investment/s to be chosen. For example, HSBC Life follows the HSBC Group Energy policy (which is available for download through this Link) whereby HSBC Life would be prohibited from making any investment/s in securities of companies or other assets which are not in line with such policy.
Where HSBC Life or any other entity acting on behalf of HSBC Life is not directly involved in the investment-decision making and security/asset selection process, HSBC Life seeks to primarily, but not necessarily exclusively, engage and work with those asset managers who are signatories to the Principles for Responsible Investment (PRI) and/or others who have sustainability integration and investment stewardship practices in place. These asset managers need to be able to demonstrate the adoption and implementation of sustainability principles.
B. Impacts of investment decisions on sustainability factors
Our sustainability standards and principles are set out in the Sustainability Policy set out at the level of HSBC Group Insurance, as well as in our product governance and approval process. In accordance with these standards and principles, HSBC Life considers the principal adverse impacts of its investment decisions on sustainability factors to the extent that it (or any entity acting on its behalf) is directly involved in the investment decision-making process.
HSBC Life does not currently consider the principal adverse impacts of investment decisions on sustainability factors when these investment decisions are not undertaken by HSBC Life, or by an entity acting on behalf of HSBC Life. This is because HSBC Life does not have any discretion over those investments being carried out exclusively by asset managers.
HSBC Life does not currently have sustainable funds linked to its products. No decision has as yet been taken as to whether HSBC Life should have such sustainability funds linked to its products. If and when in the future it decides to have sustainable funds linked to the products, HSBC Life will consider the principal adverse impacts of investment decisions on sustainability factors for such funds.
To the extent that HSBC Life considers principal adverse impacts of its investment decisions on sustainability factors, the Sustainability Policy sets out specific restrictions which prohibit an investment in securities of companies or governments that do not meet its sustainability standards. We consider the appraisal and assessment of such aspects as key components of our pre-investment analysis. As part of the due diligence process, where pre-investment analysis highlights any inadequate practices which contradict HSBC Life’s and/or the asset managers’ own sustainability standards, the risk and potential impact of those inadequacies are considered and, where appropriate, relevant actions are taken.
HSBC Life has due diligence processes in place with respect to the asset managers it engages and works with. As part of this due diligence process, the asset managers’ own sustainability standards and practices form part of such review. Where, as part of this review, poor sustainability practices, ratings or governance are identified, an escalation process is triggered by the asset manager to further assess the findings and take the necessary actions which could include, where appropriate, engagement with the investee company. As regards shareholder engagement, the details of this can be found on our Insurance Forms page under the General Information section.
In order to bring in more positive climate and societal impact, HSBC Group has also been actively looking for investment opportunities that support the United Nations Sustainable Development Goals (UN SDGs) and the Paris Agreement. As part of HSBC Group, HSBC Life has committed to the United Nations Environment Programme’s Principles of Sustainable Insurance (PSI). Progress updates are published as part of an annual report which is published on the ESG Reporting and Policies page and the UN Environment Programme’s Finance Initiative external website.
C. Sustainability risks in remuneration policies
Our remuneration policy is consistent with the integration of sustainability risks. HSBC Life, being a subsidiary of HSBC Bank Malta p.l.c., adopts the same remuneration policy of HSBC Bank Malta p.l.c. and therefore, the remuneration policy of HSBC Bank Malta p.l.c. also applies to the employees of HSBC Life. This remuneration policy can be found on the investor relations page of HSBC Bank Malta p.l.c.
Moreover, HSBC Life employees which qualify as "key/critical function holders" in terms of Solvency II requirements are also subject to a Supplement to the HSBC Bank Malta p.l.c. remuneration policy adopted by HSBC Life, which also takes into consideration the integration of sustainability risks in line with the remuneration policy of HSBC Bank Malta p.l.c.
A review of the above HSBC Life sustainability website disclosure has been undertaken on 22.12.2022. This disclosure has been enhanced to provide further clarifications on how HSBC Life considers sustainability risks in investment decisions as well as the impacts of the investment decisions on sustainability factors.