What are sustainability risks?

Sustainability risks (ESG risks) are events or conditions arising from the three areas of environment, social and governance whose occurrence could have an impact on the value of an investment. These risks can affect individual companies as well as entire industries or regions.

Examples of sustainability risks that could arise from the three areas

  • Environment: As a result of climate change, an increase in extreme weather events could pose a risk. This risk is also called physical risk. An example of this would be an extreme drought in a particular region, floods or floods.
  • Social affairs:  In the social sphere, risks could arise, for example, from non-compliance with human rights, equal rights or health protection.
  • Management:  Examples of risks in the area of corporate governance include non-compliance with tax compliance or corruption in companies.

Strategy for the inclusion of sustainability risks in investment or insurance advice

The handling of sustainability risks in investment and insurance consulting at DVAG, Allfinanz Deutsche Vermögensberatung AG, Allfinanz Aktiengesellschaft DVAG and the respective advisors affects different levels: the selection of our product partners, their product portfolio, which we offer our customers, and the investment advice and insurance advice itself.

Cooperation with product partners in the field of investment and insurance products:

Parts of our product partners are in constant contact with the management of the companies in order to discuss, challenge and influence ESG-relevant topics with them.

Our product partner Generali Deutschland Lebensversicherung AG selects companies for its own cooperations/investments that show improvements in their ESG-related behaviour and best practices.

Furthermore, our investment fund product partners must at least be signatories to the United Nations Principles of Sustainable Investment (UN PRI). It also applies to the brokered products that ESG criteria and aspects for sustainable investing are incorporated into the investment analyses and taken into account in the investment decisions of our product partners.

The procedure in investment advice itself:

In investment advice, our clients have a variety of investment alternatives at their disposal. This takes into account the need of our customers to be able to invest in products that have a stronger focus on sustainability. Accordingly, our clients have a large number of investment funds at their disposal, which are to be classified according to Art. 6 of the EU Disclosure Regulation and in which a fundamental ESG research of the product providers is taken into account.

In addition, a selection of explicitly sustainable funds is available in accordance with Article 8 of the EU Disclosure Regulation. Here, certain investments are excluded and a dedicated investment strategy is pursued with a focus on environmental and/or social and/or societal aspects.

The investments may be suitable in the context of investment advice, depending on the investment objectives, the investment experience or the risk-return profile of the clients. In investment advice, however, the discussion of clients' sustainability preferences is currently not mandatory.

The procedure in insurance consulting itself:

Products with a focus on sustainability are also available to our customers when advising on insurance-based investment and pension products. This takes into account the need of our customers to be able to purchase products that meet certain environmental and/or social and/or societal aspects.

These insurance-based investment and pension products may be suitable for insurance advice, depending on clients' investment objectives, investment experience or risk tolerance. 

Product details:

The details of the products are available on the following websites:

Return impact 

Sustainability risks can have both positive and negative influences on future performance. It is therefore important that attention is paid to the risks. 

The details of the products can again be found (see above) on the above-mentioned websites.

Statement on adverse impacts on sustainability factors

Sustainability risks for financial products are identified by the product manufacturer (financial market participant). In investment and insurance consulting, the information provided by the product manufacturer is used.

The information provided by the product manufacturers on sustainability factors and sustainability risks is made available to customers by DVAG's sales companies (as described above) and in the course of the consultation, these are taken into account at the special request of the customers on the basis of the currently available data.

The DVAG sales companies do not classify and select financial products themselves on the basis of sustainability indicators (e.g. via a ranking and selection method), as this classification can only be carried out by the product manufacturers.

As a result, DVAG's sales companies do not have their own criteria or threshold values with regard to sustainability indicators that are used to select financial products or for advice.

Remuneration policy and sustainability risks

In principle, remuneration for the brokerage of financial products is not influenced by sustainability risks.