Sustainability Risks

A sustainability risk is the risk that an investment will decrease in value as a result of an event or circumstance in the field of sustainability. Such events or circumstances may include climate change or human rights controversies. These can have a negative effect on the value of investments.

In managing your assets, investments are selected based on the established investment policy. When selecting investments, numerous factors that may influence this value development are taken into account. Since sustainability risks can also impact this value development, these aspects are also considered here.

Negative Effects on Sustainability

Sustainability factors include ecological, social, and employment issues, respect for human rights, and the fight against corruption and bribery. It has been explained that such factors influence (the value of) investments. Conversely, however, investments can also impact sustainability factors. For example, an investment in fossil fuels causes more environmental damage than an investment in green energy.

The management believes that there is currently insufficient reliable data available to ascertain the potential negative effects of investments with regard to sustainability. Where detailed data is available, obtaining it is often expensive, and analyzing it takes time.

At this moment, therefore, we do not explicitly consider the potential negative effects of investments on sustainability factors in our investment process. This means that when selecting investments in companies, we do not examine to what extent a company's activities may have negative effects on sustainability factors.

All in all, we believe that the costs of incorporating such effects into the investment process do not outweigh the expected benefits. For this reason, Wilton Investment Services also has no intention of explicitly considering the potential negative effects of investments on sustainability factors in its investment process.