Disclosure pursuant to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on the disclosure of sustainability in the financial services sector.
The Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019, concerning the information on sustainability in the financial services sector (hereinafter referred to as SFDR), was adopted in November 2019 and amended in June 2020 with the adoption of the Regulation (EU) 852/2020 (c.d. Taxonomy of eco-sustainable activities). The SFDR introduces a series of disclosure requirements on the integration of sustainability risks and the consideration of the negative effects on sustainability in investment processes. Disclosure obligations have a dual scope: subject-level and product-level and different ways of implementation, namely by publishing information on the company’s website, pre-contractual product information and periodic communications. The disclosures are of two types: those related to sustainability risks and those related to the main negative effects of investment decisions on sustainability factors (c.d. Principal Adverse Impact or PAI). The SFDR also provides important definitions, including sustainability risk, namely the risk that environmental, social or governance (ESG) factors adversely affect the value of the financial investment. The SFDR, therefore, requires a progressive integration of these risks in the investment processes and in the assessment in these processes of the negative effects on sustainability.
Identification and Assessment of Sustainability Risks
Through the Group Policy on Sustainability Risk Management, Reale Group establishes guidelines for identifying, assessing, monitoring, and mitigating sustainability risks, in line with the Group's risk appetite and its broader Risk Management Policy. Sustainability risks pertain to potential negative impacts stemming from environmental, social, or governance (ESG) matters—such as financial or reputational losses arising from sustainability factors, including environmental, social, and personnel issues, respect for human rights, and anti-corruption and anti-bribery matters.
Sustainability risks refer to an environmental, social, or governance event or condition that, if it occurs, could cause an actual or potential negative impact on the value of the investment or liability. Sustainability risks affect the risk categories identified and classified within the risk management framework set out in the aforementioned Group Risk Management Policy, as they can alter their frequency and/or impact.
Sustainability Risk Mapping in the Integrated Report and Alignment with Group Risk Assessment
Reale Group follows a structured approach to managing sustainability risks associated with ESG factors. Through a synergistic collaboration between the Group Chief Risk Management Officer, Group Compliance, and Group Sustainability functions, and with the involvement of the various business lines, sustainability risks have been mapped in the Risk Catalog at different levels of granularity. Specifically, sustainability risks are identified across the environmental (E), social (S), and governance (G) dimensions. Each risk has been mapped based on ESRS standards for each sustainability topic identified in the Group's double materiality assessment, conducted as part of the broader integrated reporting process. The risks listed in the catalog are then integrated into Reale Group’s overall risk assessment.
Among the risk assessment methodologies used by the Group, a Risk Assessment tool with both a current and forward-looking horizon is adopted; its results are presented in both the Consolidated Integrated Report and the ORSA (Own Risk and Solvency Assessment) process. This is complemented by the Macro Check List (a top-down risk assessment), a self-assessment tool used to analyze the high-level risk profile from a strategic perspective. This tool helps identify potential updates to be made to the Group’s risk map, including those arising from the launch of new products, entry into new markets, or significant technological or organizational changes. Finally, Reale Group integrates qualitative assessments with quantitative analyses, specifically through scenario analyses designed to evaluate the Group's exposure to physical and transition risks related to climate change across its assets and liabilities.
ESG Factors and Related Risks in the Group Responsible Investment Policy
The Group Responsible Investment Policy formalizes commitments to integrating and evaluating ESG factors in investment management, aiming to complement financial analysis with environmental, social, and governance information.
When selecting and managing securities investments, Reale Group adopts an approach designed to integrate environmental, social, and governance (ESG) criteria through several strategies: exclusion criteria, ESG integration, the Best-in-Class approach, impact investing, and thematic investing, applied based on portfolio types and financial instruments.
Reale Group believes that integrating these strategies into investment processes complements and expands traditional financial analysis, enabling a more comprehensive assessment of risks and opportunities over the medium-to-long term, including risk-adjusted returns. Furthermore, this approach can contribute to generating positive societal impacts and supporting sustainable development goals.
Reale Group incorporates sustainability risks into its investment decisions and evaluates their potential impact on portfolio value. Indeed, ESG factors can influence investment risks and lead to price fluctuations.
Specifically, when defining ESG integration criteria and Best-in-Class strategies, each issuer is evaluated using the ESG rating provided by the external provider MSCI. Reale Group uses this metric to assess issuers' ability to manage sustainability risks and capture financially material opportunities, favoring issuers with higher ESG ratings.
The ESG rating considers each issuer's management of sustainability risks, potential exposure to those risks, and the quality of management systems and governance in place to mitigate them. The methods for integrating ESG risks into investment decisions, alongside the results of assessing how sustainability risks impact financial product returns, are detailed in pre-contractual and periodic disclosures. Analysis results are updated with every review of the contractual disclosure documents.
For further details, please refer to the “Group Responsible Investment Policy”.
Statement on the main negative effects of investment decisions on sustainability factors
Article 4 of Regulation (EU) 2019/2088 (hereinafter "SFDR") requires financial market participants with an average of at least 500 employees to publish on their website a "Statement on the main negative effects of investment decisions on sustainability factors" (hereinafter "Statement" or "PAI Statement"), with which they provide information about:
The value and calculation methodology for measuring indicators that determine the impact of investments on sustainability factors, including 18 mandatory indicators common to all financial market participants, and 2 selected from those made available, chosen at the discretion of each company;
The actions taken to mitigate or reduce the negative impact generated on such factors;
The policies for identifying and prioritizing PAIs;
The engagement policies adopted by the companies pursuant to European Directive 2017/828 (known as SRD II);
The codes of conduct and international standards to which Reale Group adheres or refers in the identification, prioritisation and calculation of PAI;
the reference to the Paris Agreement.
This Statement is issued by June 30 of each year with reference to the previous fiscal year. In addition to Reale Mutua and Italiana Assicurazioni, which are required by law to consider PAIs, the Statement is also issued by two other Group companies, Banca Reale and Reale Vida. Although not obligated to prepare the PAI Statement, they choose to consider PAIs in line with the transparency the Group wishes to extend to its stakeholders regarding the commitment to pursuing sustainability goals and reducing the adverse impacts generated by its activities on sustainability factors.
Each Company therefore prepares its own PAI Statement.
Below you can view the PAI Statement for each company
Integrating Sustainability into Remuneration Policies
Sustainability is permanently integrated into Reale Group's Remuneration Policies, in line with the principles of transparency and proper corporate governance. The Group has structured an evaluation system that links variable remuneration to the achievement of specific ESG targets. In particular, the new "ESG Index" indicator has been operational since 2025; moving beyond purely reputational metrics, it introduces quantitative impact parameters.
Group Responsible Investment Policy
When selecting and managing securities investments, Reale Group adopts an approach designed to integrate environmental, social, and governance (ESG) criteria through several strategies: exclusion criteria, ESG integration, the Best-in-Class approach, impact investing, and thematic investing, applied based on portfolio types and financial instruments.
Reale Group believes that integrating these stategies into investment processes complements and expands traditional financial analysis, enabling a more comprehensive assessment of risks and opportunities over the medium-to-long term, including risk-adjusted returns. Furthermore, this approach can contribute to generating positive societal impacts and supporting sustainable development goals.