SFDR

GarantiBank International N.V. (LEI - L35YSDFOIH056VDJ2557) recognizes that events or circumstances of an environmental, social or governance nature (ESG), if they occur, can have an actual or potential significant adverse effect on the value of an investment. These are referred to as sustainability risks.

Here are a few examples of sustainability risks:

1. Climate change risks: These risks refer to the physical and financial impacts of climate change, such as extreme weather events, sea level rise, and regulatory changes related to carbon emissions.

2. Water scarcity risks: As freshwater resources become increasingly scarce in some parts of the world, companies and investors may face risks related to water availability, water quality, and water pricing.

3. Biodiversity risks: As ecosystems are disrupted by human activity, there are risks related to the loss of biodiversity and the resulting impacts on human health, food security, and other key factors.

4. Labor and human rights risks: Companies and investors may face risks related to labor practices, such as worker safety and working conditions, as well as risks related to human rights violations in their supply chains.

5. Corporate governance risks: Poor corporate governance practices, such as lack of transparency or conflicts of interest, can lead to financial and reputational risks for companies and investors.

These are just a few examples of the types of sustainability risks that investors and companies may face. It's important to note that these risks can vary depending on the specific industry, geography, and other factors.

GarantiBank International N.V., consistent with BBVA Group’s house view and strategy, is committed to the responsible investment principles and integrates ESG (Environmental, Social and Good Governance) factors and sustainability risks into its investment advice.

GarantiBank International N.V. advises on a non-independent basis, on a limited number of products and product types. Taking into account its nature, scale and complexity, GarantiBank may advise on products that demonstrate environment, social and governance (ESG) qualities and also on products that do not display these qualities (non-ESG).

GarantiBank International N.V. has established an Investment Committee that determines and monitors the selection of financial instruments that the bank uses for advisory services, which consists mainly of fixed income, equity and investment funds (ETFs). As part of the overall risk assessment of the investment ideas and/or proposals, the Investment Committee assesses not only all relevant financial risks, but also sustainability risks that might have a material negative impact on the performance of the investment product. While committee members are expected to take into account sustainability risks when they choose a financial instrument, these risks would not only by itself prevent an investment. An investment product with higher sustainability risks might still be acceptable if we expect these risks will be compensated by other lower risks and higher return. Unless the client specifically requests, consideration of sustainability risks does not result in a sustainability focused financial product or advisory service, but rather how sustainability risks are involved in the overall investment process or advice.

GarantiBank International N.V. performs an ESG assessment of the different assets where it provides investment advice, securities of private issuers (equities and fixed income) and governments, as well as ETFs. These analyses include information from external data providers (MSCI ESG Research, Sustainanalytics) specialized in the field of ESG / Sustainability research. Given the size of our limited investment universe, a few external providers of ESG data are used. These ESG focused tools are using various data points and metrics and provide us sustainability scores and ESG risk ratings of issuers. These information are combined within the overall investment selection process on the basis of which an assessment of different risks / opportunities of the instrument is made according to the bank’s investment beliefs, market conditions and client preferences.

GarantiBank International N.V. informs its clients about how integrating sustainability factors to investment decisions may help investors to achieve better long term risk adjusted returns. Clients are invited to share their sustainability preferences through a questionnaire. If a client chooses sustainability focused investment advice then GarantiBank International N.V. integrates sustainability risks into its investment advice by selecting Article 8 or Article 9 of SFDR (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) classified funds / ETFs according to the client’s preferences. Article 8 fund promotes environmental and/or social characteristics (light green) and an Article 9 fund has sustainable investment as its objective (dark green). External data providers furthermore provide various data metrics and risk ratings for funds/ETFs. This helps to assess sustainability risk of a fund and will allow GarantiBank International N.V. to select funds with above average ESG performance.

The assessment of sustainability risks can be complex and also may require subjective judgements or might be based on third party data that is incomplete or estimated. Thus it can be difficult to correctly assess all impacts of sustainability risks on investments. Still there are some challenges but data quality and availability is getting better each day in this space.

The Remuneration Policy is consistent with the integration of sustainability risks. Variable remuneration of each staff member is based on criteria which encompass relevant organizational, risk management and governance policies and processes of GBI, which integrate sustainability risks.

Investment decisions made by the client on the basis of our investment advice may have an adverse impact on sustainability factors, i.e., environmental, social, and employee matters; respect for human rights; and anti-corruption and anti-bribery matters.

Garanti BBVA International does not currently consider what the effects of its investment advice could be on sustainability factors.

This is for the following reasons:

• The objective of GBI as financial advisor is to provide investment advice to professional clients only in relation to financial instruments and asset allocation for clients to achieve the highest possible return at an acceptable risk on the terms and conditions as pre-agreed with its customers. Managing to avoid adverse effects on sustainability factors is not a specific priority nor requested by our clients at this moment.


• The detailed data to be obtained which would have to be taken into account in order to determine what the effects of its investment advice could be on sustainability factors are yet not available in the market to a sufficient extent and, furthermore, obtaining such data are currently not proportionate for GBI, given the type of investment services provided and the expectations of clients with respect thereto.

Reconsideration of the foregoing may become relevant in various circumstances, for example, if GBI’s Investment Services and Activities Procedure is adjusted or if its clients will request it to consider adverse impacts on sustainability factors in our investment advice.