Strategy for managing sustainability risks
The rate of global warming is increasing – and we can all take preventive measures. This is why most of the world’s countries have decided to sign an agreement whose prime objective is to keep the global rise in temperature at well below 2 degrees Celsius: the purpose of the Paris Climate Agreement1 is to ensure the livelihood of future generations on a healthy planet.
With a view to achieving the goal of 2 degrees, the European Commission has published an extensive Action Plan to finance sustainable growth2 and the European Green Deal3.
The key strategic goal of the EU’s Green Deal is the achievement of climate neutrality from 2050. The Action Plan for financing sustainable growth focuses on financing sustainable growth with the objective of channeling capital primarily into environmentally, socially and economically responsible companies, countries and projects. The Action Plan is also designed to address financial risks which arise through climate change, destruction of the environment, scarcity of resources, social conflict and poor corporate governance (known as sustainability risks)4.
Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR) also requires financial market participants and financial advisers to disclose strategies on the integration of sustainability risks.
According to the “SFDR” a sustainability risk is an event or a condition (environmental, social or governance) which, if it occurs, could cause an actual or a potential material negative impact on the value of an investment.4
Climate risks, in particular, are becoming more prominent given the acceleration of the climate change process. Those are risks which either arise or increase as a result of climate change.5
There are physical risks and transition risks. Physical risks are a direct result of climate change. Transition risks are risks which arise through the transition to a climate-neutral and resilient economy and society, thereby leading to a possible depreciation of assets. Examples of sustainability risks are: an increase in natural disasters, the loss of biodiversity, snow cover decline, extreme aridity, etc. In an investment, sustainability risks may be discerned in the familiar risk categories such as creditworthiness risk, the risk of the total loss of funds and the price risk.
But sustainability risks are not the only consideration. Sustainability factors also need to be integrated into investment decisions. The SFDR defines sustainability factors as environmental, social and employee matters, respect for human rights and anti-corruption and anti-bribery matters. This includes climate protection, the protection of biodiversity, compliance with recognised labour legislation standards, appropriate remuneration, measures to prevent corruption etc.
There is a strong correlation between physical risks and transition risks5. Physical risks are for example likely to increase in the absence of any transition to a climate-neutral and resilient economy. On the other hand, physical risks can be reduced if effective measures aimed at protecting the climate are implemented in a timely manner.
More recently, the list has been expanded to include nature-related risks – biodiversity risks as an additional sustainability risk category.5
A country’s economy and financial system are highly dependent on nature and its ecosystem performance; biodiversity is vital for the conservation of healthy ecosystems. According to the Taxonomy Regulation, biodiversity “means the variability among living organisms arising from all sources including terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part and includes diversity within species, between species and of ecosystems”.6
January 2025
UniCredit Bank Austria is a financial market participant/financial adviser and its investment decision processes consider sustainability risks; this constitutes part of the bank’s sustainability strategy. UCBA offers services such as asset management and investment and insurance advice.
UniCredit Bank Austria’s product offering includes sustainable financial products as well as products whose underlying investments do not take the EU criteria for environmentally sustainable economic activities into account.
When selecting the various products, UniCredit Bank Austria pursues a broad investment diversification approach, wherever this is feasible, with a view to taking advantage of opportunities offered by the various economic segments while reducing sustainability risks as these can affect the specific sectors, regions, currencies and asset classes to varying degrees.
UniCredit Bank Austria’s efforts are moreover geared to minimising sustainability risks for the bank’s entire product offering with the aid of exclusion criteria.
For this purpose UniCredit Bank Austria has, for the exclusion criteria, defined minimum criteria for selecting financial instruments (e.g. shares, bonds, funds, structured products). Different exemption limits may vary for specific financial instruments (such as funds or special structured products).
Exclusion criteria:
- Companies which very seriously violate the UN Global Compact principles7
- Production or distribution of controversial weapons such as anti-personnel mines, cluster munitions, chemical and biological weapons
- Production or haulage of coal, or energy generation from thermal coal, where these exceed 25% of turnover Fossil fuel production methods which are particularly problematic, such as fracking, oil sands and Arctic oil where these exceed 25% of turnover
- Countries which fail to meet the minimum standards of the anti-money laundering provisions (catalogue of measures of the global Financial Action Task Force – FATF)
- Countries which have not signed the Paris Climate Agreement.
Investment and insurance advice
In its investment and insurance advisory activities relating to financial instruments within the meaning of the SFDR (e.g. investment funds, alternative investment funds, fund-linked insurance policies, structured products), UCBA takes sustainability risks into account as follows:
Sustainability risks of financial instruments are identified by the product manufacturer (financial market participant). The information supplied by the product manufacturer is used when providing investment and insurance advice.
The information on the product manufacturer’s sustainability risks is made available and explained in greater detail to the customer in the advisory talk.
The customer is informed of the anticipated impact of sustainability risks on the yield of the financial products offered to the customer.
Insurance advisory services are provided through an exclusive cooperation with ERGO Versicherung AG and insurance-based investment products (IBIP) are sold. Further information on sustainability is available at ERGO-Versicherung.at/Verantwortung. Information on funds available for selection (factsheets) can be viewed at https://ergo-versicherung.at/verantwortung. When providing investment advice, UCBA only recommends those financial instruments as being sustainable if they are commensurate with the sustainability criteria outlined in the separate document “Investing Sustainably” https://www.bankaustria.at/files/nachhaltiges_investieren.pdf. Additional sustainability criteria are taken into consideration for these financial instruments.
Asset management
In the context of our asset management activities, sustainability risks are integrated into our investment decisions as follows:
Identification of sustainability risks depends primarily on the type of financial instrument which is to be included in the portfolio.
In the active management of sustainability risks, our portfolio managers take care to ensure that only financial instruments of companies with internally defined minimum criteria are added to a portfolio. With the help of the defined minimum criteria we exclude what we believe to be the key factors for sustainability risks from the investment universe.
Sustainability data from various data sources (e.g. external rating provider, company data etc.) are used for the purpose of evaluating the sustainability risks of financial instruments.
Additional sustainability criteria are taken into consideration in the management of sustainable asset management mandates. Details are contained in the pre-contractual information to the sustainable asset management’s investment approach.
The degree of sustainability increases with the stringency and the extent of the criteria, while the potential sustainability risks of an investment decrease.
It is not possible to entirely exclude sustainability risks from an investment in financial instruments and they can have a decisive impact on the market price of the investment. This may be the case if the financial profile, profitability, reputation or significant circumstances of a company or country underlying the investment should deteriorate appreciably.
Implementation and controlling measures
Responsibility for sustainability risks is integrated within the bank’s current structures. In particular, decisions regarding new products are taken by the product committees and changes in the investment strategy by the investment committee, with due consideration always being given to any sustainability risks.
It is essential for employees to be well-versed in sustainability risks and sustainability factors. This is why training courses have been introduced for these topics, which are now a part of the regular training programme for UCBA employees.
Developments at the European and national levels concerning sustainability risks and sustainability factors, and the related requirements for the financial industry, are constantly monitored. Changes to the legal framework and improvements in data availability and the available methods result in an ongoing review of the strategy.
„Since the last publication of this Disclosure pursuant to Article 3 of Regulation (EU) 2019/2088 in 2021 climate risks have been expanded to include biodiversity risk on the basis of the updated 2025 FMA Guide, and the inclusion of sustainability risks in conjunction with minimum criteria is explained in greater detail.”
As of January 2025
Overview of sustainability criteria – comparison of Bank Austria over time:
Comparison of ESG criteria version 5 as at October 1, 2024 (PDF)
Comparison of ESG-criteria version 4 as of April 1, 2024 (PDF)
Comparison of ESG-criteria version 3 as at January 29 (PDF)
Comparison of ESG-criteria version 2 as at October 30, 2023 (PDF)
Comparison of ESG-criteria version 1 as of February 1, 2022 (PDF)
Disclosure pursuant to Article 5 Regulation (EU) 2019/2088*
At UniCredit value creation means more than just generating financial value. It also means ensuring sustainability is at the heart of all that the Group does.
In 2024, UniCredit announced its 2030 target for the steel sector, which forms part of the bank’s commitment to reach its 2050 goal of Net Zero on its lending portfolio and enhances its own 2030 targets for the three most carbon intensive sectors which include Oil & Gas, Power Generation and Automotive sectors, communicated to the market in 2023. This is in line with the Net Zero commitment the bank signed in October 2021 and its continued support for a more sustainable global economy.
The Remuneration Policy contributes to the UniCredit strategy, the pursuit of long-term interests and sustainability over time. UniCredit has a remuneration structure in place that is based on risk-adjusted/related performance and does not encourage excessive risk-taking, including with respect to sustainability risks.
Further, one of the pillars of the Group Remuneration Policy addresses sustainable pay for sustainable performance, by maintaining consistency between remuneration and performance, and between rewards and long-term stakeholder value creation, as well as enhancing both the actual results achieved and how they are achieved.
Several processes and initiatives support the link between the remuneration policy and sustainability.
The Group Incentive System is supported by the annual performance management process assuring coherence, consistency, and clarity of performance objectives and behavioral expectations aligned with business strategy. The setting of annual objectives (known as Goal Setting) is the initial phase of this process and is supported by a structured framework that includes a catalogue of performance indicators (the “KPI Bluebook”), annually reviewed by relevant Group key functions (e.g. People & Culture, Finance, Risk Management, Group Strategy & ESG), and guidelines. The framework is in line with regulatory provisions and Group standards as verified by Compliance. In particular, among other things, this is characterized by:
- the use of risk-adjusted/related goals (e.g. at least one KPI in the goals cards);
- the link with ESG and Diversity, Equity & Inclusion (“DE&I”) strategies (e.g. at least one ESG KPI for all Group Material Risk Takers with a particular focus on DE&I KPIs for staff reporting to Group Executive Committee and their direct reporting line);
- the use of sustainability goals for value creation over time (e.g. about half of the goals shall be related to sustainability). For selected individuals (see chapter 5.1.4) ESG goals are included as additional long term conditions;
- the use of goals related to business, corporate values, conduct and compliance/risk culture, with a focus on:
- adherence to and spreading of Group culture, values and purpose;
- setting the proper tone from the Top and tone from the Middle on Compliance culture and Risk mindfulness.
Locally, UC Bank Austria follows Group processes and initiatives in order to support the link between the remuneration Policy and the sustainability strategy.
Focus – Diversity, Equity and Inclusion (DE&I)
At UniCredit Diversity, Equity and Inclusion are strategic assets for our business, growth, innovation, and performance, acting as an integral part of our corporate culture and firmly engrained in our ESG roadmap.
We are building a culture that puts our Values of Integrity, Ownership and Caring at the heart of our decision-making and in everything we do. Our Culture and these Values embody what we stand for, determine how we act, and shape the decisions that we make every day, guiding all our actions and behaviours.
This also helps ensure a more sustainable growth in the long-term and new business opportunities, a strong drive for innovation and creativity, as well as a general improvement of the work environment with positive impact on productivity, well-being, and engagement of our people.
To further promote a culture of inclusion based on equal opportunities and non-discrimination, UniCredit has a dedicated DE&I Global Policy in place that sets clear guidelines and principles for employees as well as third parties. The Policy applies to every key moment of the employee journey, from recruiting and onboarding, to learning and development, performance management and compensation, ensuring bias-free, merit and competency-based decisions as well as pay equality, regardless of diversity traits.
Our Code of Conduct highlights the principles of inclusion encompassing the criteria of objectivity, competence, professionalism, and equal opportunities both in people-related processes laying down the procedures by which any instances of discrimination, mobbing or bullying are dealt with, and in external relations with counterparties.
Within the framework provided by the Group Remuneration Policy, UniCredit is committed to an equal pay principle, ensuring fair treatment in terms of remuneration based on the role covered, the scope of responsibilities, performance outcomes and the overall quality of the contribution to business results, regardless of gender identity, age, race, ethnicity, sexual orientation, ability, and cultural background. UniCredit adopts gender-neutral Remuneration and Incentive policies that contribute to pursuing true equality among staff. They ensure that equal work is matched by equal pay, giving people the same access to opportunities, regardless of their diversity strands.
By signing the CEO Champion Commitment “Towards the Zero Gender Gap”, the Group is affirming its corporate commitment with concrete objectives and a framework to move towards greater gender equality, diversity and inclusion in our Bank.
UniCredit is committed to promote gender parity across all organizational levels, ensuring balanced gender distribution in talent pools, hiring and recruiting, appointments and promotions, with a wider ethnic representation as well as guaranteeing a diverse and sustainable Succession Pipeline.
Further testifying to our extensive collective efforts to fostering a more diverse and sustainable workplace, UniCredit is the first pan-European bank to win a Global EDGE Certification for gender equity and inclusion, involving more than 80% of our population in the countries where the bank is present.
The Group has long underscored the importance of gender pay equality and several initiatives have been implemented across the Group to address pay differences, including guidelines for our compensation process, allocation of salary budgets as well as specific ambitions related to DE&I (i.e. promote gender parity across all organizational levels, in talent pools, hiring and recruiting, ensure equal pay for equal work, increase cultural and ethnic diversity in our staff) assigned to senior leaders within the annual goal setting process.
Focus – ESG – Environmental, Social & Governance
Sustainability is a key lever for our future business strategies and a critical component of our success. Indeed, we have set ambitious ESG targets as part of the 2022-2024 Strategic Plan, as the Group continues to make progress on its Net Zero commitments and embed ESG in all areas of the business while strengthening corporate culture under the common purpose of empowering our communities to progress.
Our remuneration policy has been developed to support UniCredit’s sustainability strategy. A core set of our ESG targets are embedded in the CEO performance scorecard to foster the alignment of management with the Group’s current and future ESG ambitions.
* Since the last publication of the herewith Disclosure pursuant to Article 5 Regulation (EU) 2019/2088 in 2021, the commitment to Sustainability and integration of sustainability risks into its remuneration policies have been further developed, the information updated and explained in more detail in November 2024.
| 1 | https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement |
| 2 | EUR-Lex - 52018DC0097 - EN - EUR-Lex |
| 3 | A European Green Deal - Consilium |
| 4 | A sustainability risk is considered to be an event or condition relating to sustainability factors which, if it occurs, could have an actual or a potential material negative impact on the value of a company’s financial assets or its financial situation, income position or reputation (cf. FMA Guide for Managing Sustainability Risks, 2025) |
| 5 | cf. FMA Guide for Managing Sustainability Risks, 2025 |
| 6 | cf. Art. 2 (15) Taxonomy Regulation |
| 7 | Website of the UN Global Compact |
