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Policies and Disclosures

Sustainable Finance Disclosure Regulation (SFDR) Disclosures

Our Responsible Investment Policy sets out our ambitions and our approach to responsible investment, how we implement our commitment to the UNPRI across our business, and describes how we meet the requirements of the EU Sustainable Finance Disclosure Regulation (SFDR). In addition, our Responsible Investment Implementation Procedures set out the approach we take to identify and respond to principal adverse sustainability impacts and how we consider ESG sustainability risks as these can adversely impact the securities our funds invest in.


Article 4 - Statement on principal adverse impacts of investment decisions on sustainability factors

Summary

HSBC Investment Funds (Luxembourg) S.A., (LEI - 213800KNC1J1NJ1IYR95) considers principal adverse impacts of its investment decisions on sustainability factors. The present statement is the consolidated statement on principal adverse impacts on sustainability factors of HSBC Investment Funds (Luxembourg) S.A.

This statement on principal adverse impacts on sustainability factors covers the reference period from 1 January 2022 to 31 December 2022.

We (HSBC Investment Funds (Luxembourg) S.A.) recognise that sustainability risks can lead to outcomes that have adverse impacts on the value of the financial products and on society.

Our integration of environmental, social and governance factors as set out in our Responsible Investment Policy addresses material principal adverse impacts in our fundamental research and contributes to investment decisions in our investment process. We consider these impacts in our voting and engagement, and in further policies which express our sustainability objectives and set out the actions we take to reach them. This approach helps us to manage these adverse impacts and sustainability risks in our investments. The relevant principal adverse impacts include the full range of mandatory climate, environmental, social, employee and human rights impacts for which mandatory indicators have been identified, as well as impacts related to carbon emissions and human rights for which optional indicators have been identified and for which we explain our actions taken, actions planned, and targets set.

As a large asset manager, offering a range of active and passively managed products, relevant principal adverse impact indicators may be included in our investment process through integration, engagement and/or exclusion.

For our investment products, principal adverse impact indicators may be reflected in portfolio construction through screening, tilting and other techniques.

For our sustainable investment definition under the Regulation, relevant principal adverse impacts are considered amongst Do No Significant Harm criteria.

We explain our approach to voting at company meetings in our Voting Guidelines; companies which do not adequately manage principal adverse impacts may face voting sanctions.

Due to lack of data availability, Private Assets are not included in this PAI statement.

Our Engagement Policy sets out our approach to engagement, including escalation of engagement where companies do not respond adequately to concerns raised regarding adverse impacts.

We give further details on our expectations for companies in their management of adverse impacts in our Stewardship Plan.

Further details of our approach for screening, investment process and engagement are set out in specific policies, including Banned Weapons, Climate Change and Biodiversity. On climate change issues in particular, the net zero ambition and interim emissions reduction target of our parent entity HSBC Global Asset Management Ltd are the most important expression of our ambition.

The Consolidated Statement and all of the policies mentioned are available further down this page.

The net zero interim emissions reduction target is available at: www.netzeroassetmanagers.org/signatories/hsbc-asset-management

Click here to view the full Entity Report for HSBC Investment Funds (Luxembourg) S.A, which includes all of the global funds

Article 3 - Transparency of sustainability risk policies

Our Purpose is to help our stakeholders prosper – our clients, shareholders, the societies in which we operate, and our planet. We aim to deliver value by focussing on clients’ investment needs, delivering on our philosophy of investment excellence and supporting the transition to a sustainable future.

HSBC Asset Management is committed to be a leader in responsible investment. This means our investment decisions as a Fund Manager take account of material environmental, social and corporate governance (ESG) risks. If ESG risks are not managed well by the companies and Governments we invest in this could impact their profitability and therefore the investment returns for our clients. As we only provide guidance as a Financial Adviser to investors in our own funds, the guidance we provide already factors in the ESG risks our fund managers have considered.

Our Responsible Investment Policy outlines our approach to responsible investing, focussing on the ten principles of the UN Global Compact (UNGC). The UNGC sets out key areas of non-financial risk: human rights, labour, environment and anti-corruption. We use third party screening providers to identify companies with a poor track record in these areas and, where potential non-financial risks are identified, we also carry out our own due diligence.

We also consider it our responsibility to be active, long-term stewards of the businesses we invest in on behalf of our clients. We meet with companies we invest in regularly as part of our on-going monitoring. This helps us to:

  • improve our understanding of their business and strategy;
  • signal support or concerns we have with management actions; and
  • communicate with them to clearly explain our expectations and objectives.

We recognise collaborative engagement as an effective tool to promote change, in particular where individual investor action may be less effective. We therefore participate in investor-led joint engagement initiatives that align with our thematic priorities and holdings especially where we believe we can have a positive influence in improving the companies in which we invest.

We strongly believe in the impact and effectiveness of engagement in improving corporate practices. However, we recognise that in some cases engagement is unlikely to be successful or the risk in holding the company is too great. If we see that our engagement with the companies we invest in is not delivering sufficient progress in reducing sustainability risks, we apply selective exclusions and review them on an ongoing basis.

Finally, we believe transparency and disclosure are an integral part of good governance. We expect it from the companies we invest in because it allows us to make better-informed investment decisions but we believe it is equally as important for us to be transparent with our clients and relevant stakeholders and to communicate with them clearly.

Policies, Methodologies and User Guides

Coal policy

Coal policy

Energy policy

Responsible Investment Policy

Responsible Investment Policy

Biodiversity Policy

Biodiversity Policy

Voting Guidelines

Voting Guidelines

Engagement Policy

Engagement Policy

Stewardship and Conflicts of Interest

Stewardship and Conflicts of Interest

Banned Weapons Policy

Banned Weapons Policy

Sustainable Investment Methodology

Sustainable Investment Methodology

Alternatives Responsible Investment Policy

Principal Adverse Impacts - User Guide

Principal Adverse Impacts - User Guide

Change Log

Date
Change
March 2024 Responsible Investment Policy, Alternatives Responsible Investment Policy, Global Voting Guidelines and Responsible Investment Review updated
November 2023 Energy Policy newly published and Coal Policy updated
September 2023 Responsible Investment Implementation Procedures removed from website
July 2023 User Guide on Principal Adverse Indicators newly published and Sustainable Investment Methodology updated. The HSBC Investment Funds (Luxembourg) S.A. Entity report (Article 4) from 30 June 2023 has been re-published on the website, as we adjusted the calculation in PAI 5a, PAI 9 & PAI 16 and the data in PAI 6 & PAI 12. These figures have therefore been updated within the report. To accommodate these changes we have also amended the explanation in PAI 6 (coverage) & PAI 9 (with regard to the explanation of the calculation methodology). The explanation for PAI 13 has also been slightly modified.
June 2023 Biodiversity Policy, Banned Weapons Policy, Climate Change Policy, Global Voting Guidelines, Responsible Investment Policy and Responsible Investment Implementation Proceduresupdated during annual review.
January 2023 Sustainable Investment Methodology newly published and Article 4 disclosure updated
September 2022 Coal Policy and Alternatives Responsible Investment Policy newly published
August 2022 Green Impact Investment Guidelines updated
June 2022 Responsible Investment Implementation Procedures, Biodiversity Policy, Banned Weapons Policy, Climate Change Policy and Global Voting Guidelines updated during annual review
January 2022 Responsible Investment Policy updated during annual review