Date of publication d.d. 02 Aug 2021
Sustainability risks in relation to hedging advice provided through Rabobank
Rabobank provides hedging advice to its clients where clients are seeking to hedge interest risks in their portfolio. This type of advice is recognized as “investment advice” under MiFID II and therefore in scope of SFDR regulations. SFDR requires Rabobank to inform its clients on the relevance of sustainability risks in the provision of investment advice. ‘Sustainability risks’ are environmental, social or governance events or conditions that, if they occurs, could cause an actual or a potential material negative impact on the value of the investment. Sustainability risks are no risks for which hedging advice is provided. As the investment advice is concerned with hedging the interest risks in the client’s portfolio, these interest risks and the related hedge are considered leading. As sustainability risks are not part of the risks Rabobank offers to hedge, they are not taken into account when providing hedging advice.
For hedging services in general (except when sustainability risks would be the specific risk to be hedged) sustainability risks are not relevant. Sustainability risks are related to possible negative impact on return in investment. Return on investment is not the goal of hedging. The goal of hedging is limiting or minimizing certain risk in the portfolio of a company or financial institution.