ESG Policy for Investment Advisory

 Mizrahi-Tefahot Bank attributes importance to the integration of environmental, social, and corporate governance considerations (hereinafter – ESG), and for this purpose has   formulated a policy for incorporating the subject into the field of investment advisory.

•  The Bank views ESG as an additional decision-support tool, as part of the overall set of parameters for evaluating investment viability. Accordingly, the Bank makes use of outsourcing services that rate publicly traded companies based on their approach to and activities in the ESG domain.
  
  
•  The Bank has a model that examines companies it covers based on defined professional parameters. Within this model, when reviewing companies, the Bank’s Investments and Strategy Department may, inter alia, assign weight to ESG considerations in determining the level of risk. As part of this, ESG ratings assigned to the reviewed companies are incorporated, where available, into the analyses distributed to the Bank’s investment advisors.
  
  
•  As part of providing investment advice to clients, the ESG rating is presented to advisors as a decision-support tool. Advisors may use the ESG rating as part of the overall set of parameters for evaluating an investment, in accordance with the alignment of expectations with the client. If found that the client is interested in receiving information on the subject and wishes to assign material weight to the ESG rating determined for companies, the client may inform the advisor accordingly within the needs-assessment process, and the advisor will adjust the weight of ESG within the set of parameters considered in their recommendations to the client, as well as align the risk derived from the company’s ESG rating with the risk level of the client’s portfolio. This is a parameter that may constitute part of the overall set of parameters in assessing the risk inherent in an investment.
  
  
•  Within ESG rating, the Bank uses outsourcing services that also rate managed products and index-tracking products in Israel, such as mutual funds and exchange-traded funds. The information is integrated into the materials provided to advisors and also serves as a decision-support tool for investment decisions. Beyond ESG ratings, the Investments and Strategy Department in the Client Assets and Advisory sector continuously monitors this subject within company coverage, and as needed may issue updates to investment advisors as well as guidelines for updating the Bank’s advised clients.
  
  
•  From time to time, training on this subject is provided to advisors.

It should also be noted that the Bank presents on its website an ESG Corporate Responsibility Report, which includes reference to the integration of ESG aspects in investment advisory.