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Investment advice approach at your KBC Insurance agent (savings and investment-type insurance)

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Introduction

In this information document, we offer you an overview of how the investment advice provided by your KBC Insurance agent meets the insurance distribution directive, what that means to you as a customer, and precisely what you can expect from your KBC Insurance agent and when.

Contents

For which investment products can you go to your KBC Insurance agent for advice?

Your KBC Insurance agent, as a tied agent of KBC Insurance, only provides advice on savings and investment products offered by KBC Insurance. The main benefit of this approach is that they only provide advice on products they know well. More specifically, you can turn to your KBC Insurance agent for unit-linked life insurance (class 23) and guaranteed-interest life insurance (class 21) products.

What data does your KBC Insurance agent use when providing advice with regard to savings-linked and investment-type insurance products?

Your KBC Insurance agent is required to gather all the necessary information about you that enables them to provide you with suitable advice. This is done in various ways.

What does product advice from your KBC Insurance agent consist of?

The advice your KBC Insurance agent will provide you on savings-linked and investment-type insurance products always takes the form of product advice.
Product advice consists of the following:

How your KBC Insurance agent integrates sustainability risks and takes due account of the principal adverse impacts on sustainability factors in their advice

Sustainability or ESG has never been more topical. ESG stands for ‘Environmental, Social and Governance’ and covers a number of areas, including climate, energy use, availability of raw materials, health, security, human rights, labour laws and corporate governance. KBC has updated its business strategy to pursue sustainability in all the activities it conducts as a bank-insurer. Our sustainability policy is firmly embedded in KBC’s wider business strategy.

KBC Insurance aims to systematically expand the range of responsible savings-linked and investment-type insurance products as well as second pillar pension products. Sustainability is therefore an important theme in the advice with regard to these products. Your KBC Insurance agent also takes into account the potential adverse impact of sustainability risks in the selection of the products they provide advice on.

What are sustainability risks? These are environmental, social or governance situations and events that, if they were to occur, could have a negative impact on the value of the product. The nature of these risks varies over time:

Your KBC Insurance agent also considers the principal adverse impacts on sustainability factors when providing advice. By sustainability factors, we mean environmental, social and employment matters, respect for human rights and the fight against corruption as well as bribery. They do this by carefully selecting the products they provide advice on.

The specialised research team from KBC Asset Management NV is supported by the Responsible Investing Advisory board, an external advisory board of independent experts (www.kbc.be/responsible-investing > Three reasons to invest responsibly with KBC > Support from independent experts).

KBC Insurance takes into account the sustainability risks and the principal adverse impacts on sustainability factors in its range of products, and that is reflected in the advice provided by the KBC Insurance agent:

More information on how KBC Insurance takes into account sustainability risks and the principal adverse impacts on sustainability factors can be found at www.kbc.be/investment-legal-documents > Transparency on sustainability risks and adverse impacts on sustainability.

Responsible funds that your agent provides advice on have the Towards Sustainability Label, or an application process for this label is pending. This label is an initiative of Febelfin. Funds that have been awarded this label:

See www.towardssustainability.be/en/quality-standard for more details.

Glossary

Sustainability preferences for investing: to keep up with the changing demands of society, we – and by extension the entire financial sector – must make a significant contribution to achieving the European climate targets, one of which is to be climate-neutral in Europe by 2050. The bar is set high with ambitions focusing on Environmental, Social and [good] Governance issues

or ‘ESG’. Whenever we refer to ESG, we are referring not only to the environment (E = Environmental), but also to how a company treats its staff and customers and its role in society (S = Social) and how well a company is run (G = Governance).

European sustainability targets are regulated by legislation, including the Sustainable Finance Disclosure Regulation – or SFDR – (see term) and the EU Taxonomy Regulation (see term). Your sustainability preferences for investing will be assessed based on these two pieces of legislation and the Principle of Adverse Impact (PAI) (see term).

EU Taxonomy Regulation: the EU Taxonomy is a classification system for determining which economic activities are environmentally sustainable. The taxonomy currently uses six environmental objectives for this purpose, namely:

Environmentally sustainable activities must make a substantial contribution to at least one of them and not do significant harm to any of the other five environmental objectives.

Although the EU is currently preparing a directive that would require companies to publish sustainability information (the Corporate Sustainability Reporting Directive), this legislation is still a work in progress. Consequently, there is currently a lack of sustainability data available. This element will, therefore, not be included in KBC's ‘responsible investing’ methodology (just yet).

Financial buffer: this constitutes part of the investment profile. This financial reserve is money you set aside not only to cover unexpected expenses, but also to give you financial peace of mind and security. KBC suggests a minimum buffer of 5 000 euros.

Level of knowledge and experience: your level of knowledge and experience concerning the investment product in which you want to invest. Our ‘product knowledge and experience assessment’ is based on your answers to our questions on savings-linked and investment-type insurance products as well as your experience based on the transactions you have carried out in the relevant products during the past four years.

Overview of advice: a written statement of suitability you receive when advice is provided. That document specifies how the advice provided meets your preferences, needs and other characteristics.

Principal Adverse Impacts (PAI): the SFDR also specifies the extent to which adverse impacts on sustainability factors (or Principal Adverse Impacts – PAI) must be excluded and how the investor can explicitly opt for this.
Economic activities can have not only a positive, but also a negative impact on sustainability factors. Principal Adverse Impacts (PAI) refer to the adverse impact of investment decisions on sustainability factors such as the environment, social matters, respect for human rights and anti-corruption.
As an investor, you can choose environmental and social themes, so that your investments can limit the adverse impacts on sustainability factors under these themes.

Product rating: this is the rating of each investment product, determined on the basis of six parameters. These parameters provide a broad approach for assessing risks and result in a rating from 1 to 7. The higher the product rating, the higher the risk associated with the product.

Profile approach: the product rating of each investment may not be higher than the maximum rating permitted by your investment risk preference.

Product advice: the product rating of each investment may not be higher than the maximum rating permitted by your risk preference.

Sustainable Finance Disclosure Regulation (SFDR): the SFDR is a European regulation which stipulates that, for each investment product, a percentage of ‘sustainability’ has to be calculated which then has to correspond with the customer’s preferences. SFDR also imposes transparency and disclosure requirements on financial institutions to prevent greenwashing, i.e. the pretence by a company or organisation to be greener or more socially responsible than it really is.

According to SFDR, sustainable investments are investments in economic activities that help achieve an environmental objective (such as limiting the use of fossil fuels) and/or a social objective (such as a gender-neutral remuneration policy), while always adhering to good corporate governance practices (for instance, complying with tax laws). In addition, the contribution of an economic activity to one target may not have an adverse impact on any of the other targets.