ESG Policy

1. Introduction

In a context of a global trend towards sustainability and considering the initiatives taken by the Swiss Federal Council, the Swiss Financial Market Supervisory Authority FINMA, the Swiss Bankers Association and the Asset Management Association Switzerland (AMAS), having the goal to strengthen the position of the Swiss financial centre as a leading location for sustainable financial services, the Bank has decided to consider and integrate sustainability aspects in its procedures.

The Bank’s success is based on trust and confidence from its clients and counterparties. Sustainable business is a prerequisite to uphold both. The present Circular sets the principles for the sustainability of the Bank’s business operations aimed at establishing a long-term relationship with its customers.

Moreover, it intends to support the employees in their daily activity and in their decision-making processes by providing general principles rather than detailed rules. Specific measures are reflected in the relevant Circulars, whenever applicable.

2. Legal basis

The main sources relating to the ESG topic are:

• Swiss Bankers Association’s Guideline for the integration of ESG considerations into the advisory process for private clients;
• Sustainable Asset Management: Key Messages and Recommendations of AMAS and SSF (Swiss Sustainable Finance), June 2020;
• FINMA’s Strategic goals 2021 to 2024;
• FINMA’s Annual Report 2020.

3. Main definitions

For the purpose of this Circular the following definitions apply:

• Sustainability: balancing economic, ecological, and social goals in such a way that the people living on our planet today can meet their needs without compromising the ability of future generations to meet their own needs.
• Environmental, Social and Governance (ESG) Factors:
  • Environmental: the ecological/environmental footprint of a company or country (e.g. energy consumption, water usage, recycling, use of renewable energy);
  • Social: includes, but is not limited to, worker rights, safety, diversity, education, labour relations, supply chain standards, community relations, and human rights; and
  • Governance: refers to the system of policies and practices by which a company is directed and controlled (e.g. remuneration policies, board governance).
  ESG Factors form the basis for the different Sustainable Investment approaches.
• Sustainable Investment: investment approach integrating Environmental, Social and Governance (ESG) Factors into the selection and management of investments, such as investments in an economic activity that contributes to an environmental objective (enhancement of renewable energy, raw materials, water and land, production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy), or a social objective (in particular investments that contribute to tackling inequality or that foster social cohesion, social integration and labour relations, or investments in human capital or economically or socially disadvantaged communities).
• Green Investing: investment in businesses contributing to sustainable solutions in environmental topics, including investments in renewable energy, energy efficiency, clean technology, low-carbon transportation infrastructure, water treatment and resource efficiency.
• Impact Investing: investments intended to generate a measurable, beneficial social and environmental impact alongside a financial return.

4. Sustainability principles for the Bank

Sustainability means for the Bank taking responsibility for the impact its business has on the surroundings. Human rights, employee rights, environmental responsibility and anticorruption are overall principles of the decision-making processes to contribute to sound financial markets.

The Bank is committed to integrate sustainability into all relevant processes and when evaluating business risks and opportunities.

The scope of the sustainability principles adopted by the Bank are the following:

• create and enhance a good corporate culture;
• respect of human rights, labour rights and freedom;
• foster equal opportunities and diversity;
• care for the wellbeing of the employees;
• committed to ethics, honesty and sincerity;
• care for the environment;
• reject bribery and corruption;
• follow up and comply with relevant regulations.

Those principles shall be taken into consideration by the Bank and its employees during all business activities and decisions and, in particular, when:

• evaluating business opportunities;
• analyzing the risks of the Bank;
• providing advice to clients;
• making investment decisions and selecting financial products;
• financing any activities.

5. Sustainability initiatives

The Bank intends to support and implement sustainability in the following ways:

• Corporate governance:
  • ensure proper business practices;
  • integrate sustainability in the strategy, processes and risk evaluation;
  • discuss and involve all the stakeholders;
  • enhance transparency toward clients.
• Social:
  • protect employees and encourage equal opportunities;
  • integrate different expertise and skills;
  • promote a positive company environment through dialogue, training, and transparency;
  • provide for a positive and safe working environment.
• Environmental:
  • encourage business trips, whenever possible and reasonable, by train, instead of car;
  • introduce home working possibility;
  • facilitate contacts between Lugano Head Office and Zurich Branch via conference calls;
  • welcome employees to come to work by public transports or bike;
  • implement mass mailing with links rather than attachments;
  • promote as much as possible recycling waste (paper, coffee capsules, water bottles, etc.)
  • reduce paper consumption (payroll sent by e-mail, eco-paper, etc.)
  • commit not to finance questionable projects (e.g. deforestation, children abuse) and not to invest into clearly non-sustainable financial products (e.g. coal).

6. Advice, recommendations, investments, and products

The Bank will support clients requesting advice, investments and/or products related to sustainability and the ESG topic.

In principle, the Bank will avoid recommendations and investments (including products managed by the Bank) in financial instruments that clearly do not comply with general ESG principles. However, although the Bank is committed to integrate sustainability into all relevant processes, in certain circumstances exceptions may still exist.

Further, the Bank manages the investment fund “TL Nachhaltigkeitsfonds”, which is an equity fund with audited sustainability. Part of the management fee deriving from the fund is donated to social projects (currently two aid organisations receive the donations: The DEAR Foundation, which supports a school for financially disadvantaged children in Liberia, and the Brascri Charity, which helps disadvantaged children in Brazil). It is envisaged, when reasonably possible, to widen the support to other foundations in the future.

7. Roles and responsabilites

The General Management has the following roles and responsibilities:

• defines the Bank’s ESG policies;
• supervises the implementation of the policies and strategies;
• assesses and manages ESG risks and opportunities;
• promotes employee training on the ESG topic;
• ensures responsible and transparent communication with employees and customers.

The Employees have the following roles and responsibilities:

• promote at all levels the sustainability principles adopted by the Bank;
• adhere, when reasonably possible, to the sustainability principles.