Disclosure for the purpose of Article 5 of SFDR
Information about policies on the integration of sustainability risks in the remuneration policy
This disclosure is made for the purposes of Article 5 of SFDR by Optimum. Article 5 requires relevant firms to:
- include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks, meaning “an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of [an] investment”; and
- publish that information on their websites.
This disclosure comprises such information. Accordingly, it is being published on Optimum’s website, and included in our remuneration policies and procedures as relevant.
Optimum has a risk governance framework in place to provide oversight of our monitoring and management of risks, ensuring that our risk profile is well documented and managed. We also have robust policies and procedures in place on remuneration. These remuneration policies and procedures are consistent with the integration of sustainability risks based on the following:
- Alignment of long-term interests – A key element of our overall approach to compensation is to align compensation structures and decisions of key employees with stakeholder interests and take a long-term strategic approach. This better links the interests of key employees to long-term sustainable value creation, enhances alignment with risk outcomes and discourages them from taking unduly risks that may arise from a short-term perspective.
- Balanced scorecard – Employees are assessed based on financial and non-financial criteria that take into account their approach towards compliance with internal policies and procedures – including those relating to sustainability issues. In particular, employees are encouraged to perform their duties with the maximum respect for the environment and key social and governance values, and are encouraged to suggest improvements to our operations, business conduct and management of relationships with third parties to reflect sustainability considerations.
- Risk function – Optimum’s Board of Directors oversees our remuneration policies and practices, with input from the control functions, including risk management. This structure ensures that the risk function is able to contribute to the overall approach Optimum takes towards remuneration, providing comfort that key risk inputs are properly taken into account. This includes ESG, and climate change risk in particular, to the extent they become increasingly key risk inputs from the perspective of asset managers.
- Values – Our compensation philosophy is closely linked to our fiduciary duty towards Optimum’s stakeholders aimed at creating sustainable growth and wealth preservation over the long-term.
Overall, these values and principles create an environment in which:
- to the extent sustainability risks are material risk inputs from time to time, and in particular, as climate change presents an increasing risk over time to the value of investments, they are considered in our approach to remuneration; and
- to the extent that ESG factors are recognised as increasingly important risk inputs from a systemic perspective, they will be taken into account appropriately.
Review and monitoring
We recognise that climate change and sustainability are amongst the defining issues of our time, and the subject of increasing focus by regulators, governments, and central banks. For these reasons, Optimum is keeping the matters set out in this disclosure (and related policies) under review, recognising that the integration of sustainability risks is an evolving and dynamic area. As such, this disclosure may be edited from time to time to ensure it accurately reflects our practices. This disclosure is therefore likely to be updated periodically.
This page was last updated on 10 March 2021.2
(1) Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector.
(2) Optimum reserves the right to update this disclosure from time to time at our discretion.