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Sustainability framework

  • Definition of Sustainability Risk
  • Sustainability Risk at LGT Private Banking
  • Sustainability Risk in investment process
  • Principal Adverse Impact Statement
  • Remuneration Statement

Sustainability risks are environmental, social and governance-related (ESG) events or conditions that, if they occur, could have a material negative impact on a financial product or service, such as affecting the value of an investment or impacting a company’s assets, financial and earnings situation as well as reputation.

  • Environmental risks are defined as financial risks arising from environmental factors and risks posed by the exposure of institutions to counterparties that may potentially be negatively affected by environmental factors, including factors resulting from climate change and factors resulting from other forms of environmental degradation.

  • Social risks are risks posed by the exposure of institutions to counterparties that may potentially be negatively affected by social factors, which relate to the rights, well-being and interests of people and communities.

  • Governance risks are risks posed by the exposure of institutions to counterparties that may potentially be negatively affected by governance factors, which relate to governance practices including ethical considerations, sound risk management structures, organization and functioning of the management body, and transparency.

At LGT Private Banking, sustainability is an integral part of our culture and our values. With the Sustainability Strategy 2025 we aim to further integrate sustainability into all areas of our business and across our entire product range. With our commitment to the ten UN Global Compact Principles in the areas of human rights, labor, the environment and anti-corruption, LGT Private Banking has committed to a minimum standard with regard to all ESG factors. 

LGT Private Banking considers and manages relevant sustainability risks that could have a relevant material negative impact on the financial return of an investment or advice, by applying various methods. Examples include exclusion policies, the LGT Sustainability Rating, UNEP FI's Principles for Responsible Banking, our commitment to net-zero emissions and the LGT Code of Conduct. 

We systematically exclude investments with significant ESG risks. Our exclusion policies apply to LGT Private Banking as a whole, to its trading book and to all mandates managed by LGT Private Banking. To mitigate environmental risks and combat climate change, LGT Private Banking excludes companies involved in harmful fields defined by LGT. More information on the exclusion policies can be found here Sustainable investing at LGT.

In addition to our exclusion policies, we manage sustainability risks by applying minimum ESG standards based on the LGT Sustainability Rating in our investment decision-making process. With our proprietary LGT ESG Cockpit, which sources raw data from different ESG data providers, we apply the LGT Sustainability Rating to assess the sustainability quality of companies, countries and supranational organizations (equities, bonds, funds and ETFs). The LGT Sustainability Rating ranges from one to five stars, with one star indicating the lowest and five stars the highest sustainability quality. We believe that a low sustainability quality of investment instruments is an indicator of high sustainability risk, which could have a negative impact on financial returns.

In addition, LGT Private Banking is a signatory to the UNEP FI's Principles for Responsible Banking, according to which we have to measure the impact of our investments on the Sustainable Development Goals and the Paris Agreement. By developing methods to measure the impact of our activities we will further mitigate ESG risks in our core business.

Climate change is one of the most pressing challenges we face today, and LGT Private Banking has therefore committed to becoming operationally net zero by 2030.

The LGT Code of Conduct serves as a policy for all LGT employees and the Foundation Board members. It defines cornerstones for our shared value system and our ethical and professional standards. For example, to mitigate social risks, the LGT Code of Conduct stipulates that we offer equal opportunities for employment and promotion irrespective of gender, age, religion, nationality, ethnic background, sexual orientation, marital and family status, physical abilities or other characteristics.

Sustainability risks are environmental, social and governance (ESG) events or conditions that could potentially have a negative impact on the value of an investment. 

At LGT Private Bank, we manage sustainability risks by applying exclusion policies and minimum ESG standards in our investment decision-making process based on the LGT Sustainability Rating. For further details, please refer to Sustainable investing at LGT.

With our proprietary LGT ESG Cockpit, which sources raw data from different ESG data providers, we determine the LGT Sustainability Rating to assess the sustainability quality of companies, countries and supranational organizations as underlying of investment vehicles (equities, bonds, funds and ETFs). The LGT Sustainability Rating ranges from one to five stars, with one star indicating the lowest and five stars the highest sustainability quality. We believe a low sustainability quality of investment instruments indicates high sustainability risk, which could result in a negative impact on financial returns in the long term.

For certain products, specific disclosure requirements regarding sustainability must be met. Further information can be found under the following links: 

Portfolio Management Mandate "Focus Sustainability"

LGT Private Banking, as a financial market participant and financial advisor, considers principal adverse impacts (PAI) of its investment decisions and investment advice on sustainability factors. The present statement is the consolidated principal adverse sustainability impacts statement of LGT Private Banking.        

Description of principal adverse impacts 
Principal adverse impacts on sustainability are understood as the impacts of investment decisions that result in negative effects on sustainability factors. Investment decisions and advice might cause, contribute to or be directly linked to effects on sustainability factors that are negative, material or likely to be material.

Integration of PAI at LGT Private Banking
LGT Private Banking considers and manages relevant principal adverse impacts of its investment decisions and advice that might have a relevant material impact on sustainability factors, by applying various methods. Examples include exclusion policies, the LGT Sustainability Rating, UNEP FI's Principles for Responsible Banking, our commitment to net-zero emissions and the LGT Code of Conduct. 

We systematically exclude investments that have significant adverse impacts on sustainability factors. Our exclusion policies apply to LGT Private Banking in its entirety, pertain to its trading book and all LGT Private Banking mandates managed by LGT Private Banking. LGT Private Banking excludes companies involved in harmful fields defined by LGT. In order to avoid or reduce any PAIs identified, where these are considered material (taking account of the size, nature and scale of our activities), we may exclude such companies from further consideration for investment or advice. More information on the exclusion policies can be found here Sustainable investing at LGT.

In addition to our exclusion policies, LGT Private Banking applies minimum ESG standards based on the LGT Sustainability Rating in our investment decision-making process. The LGT Sustainability Rating ranges from one to five stars, with one star indicating the lowest and five stars the highest sustainability quality. The ESG Cockpit evaluates the sustainability of companies and countries on the basis of ESG criteria. For this purpose, it uses a wide range of sustainability data and indicators provided by specialized providers such as Refinitiv or Inrate. The cockpit enables customized evaluations according to a wide range of requirements. Among other things, the set of indicators used and their weighting are tailored to the company's industry when evaluating companies. LGT uses the ESG Cockpit to analyse over 6500 companies and around 200 countries. Since its launch in 2009, the ESG Cockpit and its rating method have been continuously developed. The three main elements of the ESG Cockpit are: the ESG rating of the operating business, i.e. how environmentally and socially responsible a company conducts its business, the consideration of controversies, i.e. any negative incidents that occur in connection with a company's business operations/production or the use of its products/services and the so-called impacts of a company's products and services based on the 17 SDGs.

Identifying and prioritizing PAIs
With our proprietary LGT ESG Cockpit, which sources raw data from different ESG data providers, we determine the LGT Sustainability Rating to assess the sustainability quality of companies, countries and supranational organizations as underlying of investment vehicles (equities, bonds, funds and ETFs). We monitor the investments according to the ESG Sustainability Rating and our exclusion policies.

Engagement policy summary
In line with an active engagement policy, LGT Private Banking also supports its clients (or third parties authorized by clients) in exercising their voting rights, e.g. by ordering admission cards to attend general meeting or by issuing deposit confirmations. Furthermore, as a custodian bank, LGT Private Banking provides its clients with information in connection with ordinary or extraordinary general meetings. This means that clients will receive fully automated invitations to the general meetings of listed companies domiciled in the EU/EEA whose shares are held in their custody account.

References to international standards
At LGT Private Banking, sustainability is an integral part of our culture and our values. With the Sustainability Strategy 2025 we aim to further integrate sustainability into all areas of our business and across our entire product range. With the commitment to the ten UN Global Compact Principles in the areas of human rights, labor, the environment and anti-corruption, LGT Private Banking has committed to a minimum standard with regard to ESG factors. 

In addition, LGT Private Banking is a signatory to the UNEP FI's Principles for Responsible Banking, according to which we have to measure the impact we have with our investments on the Sustainable Development Goals and the Paris Agreement. By developing methods to measure the impact of our activities, we will further mitigate material principal adverse impact on sustainability factors in our core business.

Climate change is one of the most pressing challenges we face today, and LGT Private Banking has therefore committed to become net-zero operationally by 2030.

The LGT Code of Conduct serves as a policy for all LGT employees and the Foundation Board members. It defines cornerstones for our common value system and our ethical and professional standards. The LGT Code of Conduct stipulates that we offer equal opportunities for employment and promotion irrespective of gender, age, religion, nationality, ethnic background, sexual orientation, marital and family status, physical abilities or other characteristics.

Additional clarifications
LGT Private Banking has developed internal strategies for the consideration of principal adverse impacts pursuant to Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector. This consideration is dependent on and is limited by the availability of the required information in the market. The required data quality and availability is not necessarily given for all assets within managed funds, mandates and investments of LGT Private Banking. This PAI statement is not applicable to cases in which portfolio management has been delegated to a third party or in which LGT is obliged to adhere to regulations or instructions that hinder it from adhering to this PAI statement (e.g. if client instructions contradict the PAI statement).

Sustainability is an integral part of our culture and our values at LGT. With the Sustainability Strategy 2025 we aim to further integrate sustainability into all areas of our business and across our entire product range. With our commitment to the ten Principles of the UN Global Compact in the areas of human rights, labor, environment and anti-corruption, LGT Private Banking has committed to a minimum standard with regard to all ESG factors. The Group Sustainability Board defines the strategic direction and guidelines for what we understand as sustainability.

LGT Private Banking manages sustainability risks using various methods. Examples include the LGT ESG Cockpit, exclusion policies, UNEP FI's Principles for Responsible Banking, our commitment to net-zero emissions and the LGT Code of Conduct. 

The LGT Code of Conduct serves as a policy for all LGT employees. It defines cornerstones for our shared value system and our ethical and professional standards. For example, to mitigate social risks, the LGT Code of Conduct stipulates that we offer equal opportunities for employment and promotion irrespective of gender, age, religion, nationality, ethnic background, sexual orientation, marital and family status, physical abilities or other social/personal characteristics. It highlights our ambition to contribute to society and the environment, which includes taking sustainability criteria into account in our business activities and in our product range.

The LGT Group Remuneration Policy reflects the importance of the Code of Conduct, including the sustainability risks it seeks to mitigate, by stipulating that failures or breaches of the LGT Code of Conduct or internal directives and instructions can – among others things – result in a reduction of variable compensation.

Adherence to the LGT Code of Conduct is assessed at the annual conduct review meetings. During these meetings, input from the control functions (Risk, Compliance and Internal Audit) and Human Resources is discussed, and impacts on variable compensation are considered. The outcome of these conduct review meetings is reported to the Group Compensation Committee.