Sustainability statements

Disclosures under Article 3 of Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (SFDR)

Having regard to

Article 3 of Regulation (EU) No 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (SFDR), and

the guidelines of the Magyar Nemzeti Bank, and

on the European Commission’s guidelines on non-financial reporting: Supplement on climate-related information (2019/C 209/01)

KBKB Fund Management Ltd.[1] fulfils its disclosure obligations by publishing the following.

Article 3 of the SFDR sets out mandatory disclosure requirements for fund managers in relation to sustainability, requiring them to disclose their policies for integrating sustainability risks into their investment decision-making processes. The Paris Agreement on climate change of 2015, the UN Sustainable Development Goals and the Intergovernmental Panel on Climate Change Special Report of October 2018 call for urgent and decisive action to reduce greenhouse gas (GHG) emissions and to create a low-carbon and climate resilient economy. Business and financial institutions have a crucial role to play in the transition to a low-carbon and climate resilient economy.

The Fund Manager interprets sustainability risk as a risk that investment returns may be negatively affected by environmental, social or governance (“ESG”) risks. By integrating sustainability risks into investment decision-making and increasing transparency in this regard, the Fund Manager seeks to contribute to the achievement of long-term objectives that can deliver benefits that go beyond financial markets. These benefits, resulted from investment decisions, can enhance the resilience of the real economy and the stability of the financial system, and thus ultimately affect the risk/reward profile of financial products. The Fund Manager strongly believes that the integration of sustainability risks and the systematic consideration of ESG aspects in decision making will lead to more complete analyses and more informed investment decisions, and thus support the achievement of the above objectives.

Environmental risk is the risk that investment returns may be negatively affected by certain environmental factors, including those arising from climate change and other environmental degradation. Social risk include risks where investment returns may be negatively impacted by social factors (e.g. labour disputes). Governance risk is the risk where investment returns may be negatively affected by corporate governance factors (e.g. lack of a transparent corporate structure).

According to the interpretation of the Fund Manager, sustainability risks are part of the risk categories it takes into account and considers them as an integral part of its existing investment decision-making and risk management, taking into account its climate objectives. The Fund Manager pays increased attention to ESG considerations in its investment decisions, in particular as follows:

  • the use of exclusion lists in the selection of investees,
  • ESG rating of investees during due diligence,
  • Integrating ESG considerations into remuneration policies,
  • building and operating a sustainability compliance system.

The Fund Manager applies exclusion rules to all the investment funds under its management, and does not invest in certain sectors of the economy on the basis of moral criteria rather than economic or financial criteria. The Fund Manager calculates ESG score for the target companies in the course of their due diligence, covering the full range of ESG indicators (where available), including, among others, corporate carbon emissions and respect for fundamental labour rights. The Fund Manager assesses the environmental, social, corporate governance and ethical aspects of the investees. The Fund Manager monitors the sustainability performance of the managed investment funds, which forms part of the report prepared for its Investment Meetings.

In addition to the above, the Fund Manager attaches great importance to ensuring ethical and responsible operations and has therefore developed a Code of Conducts to ensure ethical treatment of employees and clients.

[1] Hereinafter referred to as the “Fund Manager”.

Disclosures under Article 4 of Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-realted disclosures in the financial services sector (SFDR)

With regard ro

Article 4 of Regulation (EU) No 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (SFDR), and

the guidelines of the Magyar Nemzeti Bank, and

on the European Commission’s guidelines on non-financial reporting: Supplement on climate-related information (2019/C 209/01)

on compliance with internationally recognised reporting standards and internationally recognised standards for due diligence and reporting and, where relevant, the degree of their alignment with the objectives of the Paris Agreement,

the purpose of this disclosure is to comply with the obligation under Article 4 of the SFDR Regulation.

The Fund Manager declares that it takes into account the main adverse effects of its investment decisions on sustainability factors in accordance with Article 4(1)(a) of the SFDR Regulation and that it is mindful of this in its due diligence policy.

In making its investment decisions on behalf of the funds it manages, the Fund Manager takes into account the main adverse effects on sustainability factors, i.e. environmental, social and governance aspects, and incorporates their assessment into the operating rules of the funds, taking into account their size, the nature and scale of their activities, and applying the proportionality criteria, and also has established a separate Sustainability Policy.

In addition to the above, the Fund Manager supports the achievement of the social, societal, environmental and ethical objectives of the investees.