The Citadele Group believes that sustainability means developing business in line with social, environmental, and economic (ESG) goals. This includes respect for the environment and responsible and ethical practices in the decisions we make, the products we offer and the services we provide. CBL Life supports this kind of approach and acts within the business framework to achieve the Citadele Group`s goals on the domain of ESG.
CBL Life provides information on the sustainability of insurance products, while Citadele Group provides information on sustainability at company level.
Citadele Group’s Sustainability Strategy
Citadele Group has committed to align its operations and portfolio with the goals and the timeline of the Paris Agreement. To achieve this, Citadele Group has set the goal of becoming climate neutral by 2050, achieving net zero emissions, including financed emissions. To reach the ambition, the Citadele Group will be focusing on:
- reducing financed emissions,
- achieving carbon-neutrality in own office operations, and
- continuing to finance the transition by providing green financing and investment options.
Citadele Group’s largest environmental impact comes from financing and investing activities. At the same time, we believe that it is no less important to ensure that our own consumption is sustainable, and we work actively to reduce our own environmental footprint. In 2023, Citadele Group has continued to reduce the environmental impact of its operations, e.g. all three Citadele Group headquarters in the Baltic States - the largest contributors of total energy consumption, are now operating on 100% renewable energy. Citadele Group, including CBL Life, follows green office principles and is climate-neutral in its office operations from 2023, having offset the unavoidable own emissions. In 2024 we continue taking further steps to minimize the carbon footprint of our office operations.
We are mindful of how Citadele Group's business decisions can impact the environment and society, both directly through its operations and indirectly through the projects it finances, so we aim to minimise the negative and maximise the positive non-financial impacts on the environment and society while managing Citadele Group's environmental risks and opportunities.
The Citadele Group’s sustainability strategy is structured around UN Sustainable Development Goals (SDGs) framework. We have prioritised five of the SDGs that are linked to business strategy and sustainability work, and which are in the areas where the Citadele Group have the largest opportunity to make an impact.
The five prioritised goals include:
- Good health and well-being (SDG 3),
- Affordable and clean energy (SDG 7),
- Decent work and economic growth (SDG 8),
- Industries, innovation and infrastructure (SDG 9),
- Climate action (SDG 13).
Citadele Group regularly monitors changes in the business environment and regulatory enactments in order to provide up-to-date disclosure. CBL Life's Management Board member responsible for ESG risk management is actively involved in Citadele Group working groups related to sustainable initiatives, contributing to the development and implementation of strategic frameworks. This provides an opportunity for CBL Life to be involved in the action plan to achieve the objectives set at Citadele Group level.
Further relevant information regarding the Citadele Groups sustainability strategy and its relevant aspects is disclosed in Sustainability Report 2023 (ENG) and in ESG policy 2024. CBL Life supports the Citadele Group’s sustainability strategy contributing to its realization through investment activities.
Citadele Group’s Sustainability Report has been prepared in accordance with the Global Reporting Initiative Sustainability Reporting Standards (GRI Standards) GRI 1: Foundation 2021, and the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).
Sustainability Risk Integration into Insurance Products
Sustainability risk refers to the potential risk of additional costs or losses arising fot nor paying proper attention to ESG factors. Sustainability factors are defined as an immediate or permanent change in environmental, social or governance conditions that have an economic impact on the value of financial assets and can have a significant impact not only on the current situation but also on the quality of life and opportunities of future generations.
ESG factors have become a significant factor in investment decisions and CBL Life believes that ESG factors may affect the value of CBL Life's insurance products over time.
CBL Life shares the view that by integrating the ESG factors in asset management, the return on investment grows or the impact is neutral at a lower overall risk level, as demonstrated by academic research as well. Moreover, integrating ESG factors into the asset management of insurance products contributes to global sustainable development as well.
CBL Life has entrusted the management of the funds to IPAS CBL Asset Management (hereinafter referred to as the "Asset Manager"). CBL Life has adopted the Asset Manager's "Sustainability and Engagement Policy" (February 2024, version 5.0) as its binding document for sustainability risk management, thus integrating sustainability risk management processes at Citadele Group level. At the same time, CBL Life has appointed a responsible member of the Management Board to manage ESG risks within the company.
This decision is based on the specific nature of CBL Life's investment business, assessing that the sustainability risks inherent in CBL Life's business are not significant, as in practice CBL Life's insurance investment product offering provides its clients with the opportunity to invest only in the investment funds of the Asset Manager, while CBL Life itself does not participate in the investment decision-making. The Asset Manager manages ESG-related factors. This is done through negative or exclusion selection and positive or best selection, depending on the choice of investment product.
The Asset Manager has signed up to the United Nations-backed Principles for Responsible Investment declaration, improving governance processes and including ESG factors in the investment process.
The Asset Manager's "Sustainability and Engagement Policy" and details of the integration of ESG factors into the Asset Manager's investment management process, including material adverse impacts (within the meaning of Regulation (EU) 2019/2088) mitigation, methods used, sources of information and data, limits, if any, and monitoring of compliance, available here. The Asset Manager also discloses information on the implementation of the engagement policy on an annual basis - available here (2022, version 1.0).
It should be considered that there is a risk of greenwashing due to application and integration of ESG criteria. Greenwashing is creation of a false impression or provision of misleading information that causes or may cause an investor to believe that the relevant investment products are environmentally friendly or have a greater positive impact on the environment than they actually have. To avoid the risk of greenwashing, the CBL Life and Asset Manager both strictly complies with legal and regulatory requirements as well as the risk management standards and policies.
Investment decisions do not take into account negative impacts on sustainability factors
Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (SFDR) is an EU-wide regulation aimed at increasing transparency on the environmental and social impacts of financial products.
The SFDR requires investment fund managers to classify each investment fund they manage as a product under Articles 6, 8 or 9 of the SFDR and disclose certain information in accordance with this instruction to provide investors with greater transparency before making an investment.
The SFDR requires insurance undertakings to classify each of their insurance products as a product under Article 6, 8 or 9 of the SFDR and disclose certain information in accordance with this designation with the aim of providing greater transparency to members before investing:
- An insurance product under Article 6 of the SFDR – an insurance product without a sustainable investment objective and without a commitment to invest in assets with environmental and/or social benefits, i.e., an insurance product that is not classified as an insurance product under Articles 8 or 9 of the SFDR.
- An insurance product under Article 8 of the SFDR – an insurance product that promotes investments with a beneficial/positive impact on environmental and/or social performance insurance product. Such promotion may include assessment of certain environmental and social harm or consideration of a relevant rating when making investment decisions.
- An insurance product under Article 9 of the SFDR – an insurance product, the purpose of which is sustainable investments that contribute to achievement of environmental and/or social goals.
In order to comply with the existing regulatory requirements, the Asset Manager prepared the description of the integration of ESG risks into decision-making processes managing a number of products. Pre-contractual disclosures on investments in funds that can be selected in a funded life insurance contract are available here.
The Asset Manager does not make investments consistent with the taxonomy and does not take into account significant negative impacts on sustainability factors when managing the insurance products developed by CBL Life. Such risks are not and will not be reflected in the periodic report given that the insurance products offered by CBL Life do not aim at sustainable investments within the meaning of the SFDR.
Information updated 31 May 2024.