List of activities in conflict with LHV credit policy

  1. Environmental and social responsibility

    LHV cares about the business and living environment, and in its activities and processes, strives to proceed from the principle of reducing negative environmental impacts. The goal of LHV is to promote a sustainable and responsible economy, supporting progress toward a more sustainable environment. Through its business activity, LHV can expedite progress toward solutions to key environmental and climate problems, by motivating clients to make more sustainable choices in their business activities and investment decisions. LHV’s goal is to be on the cutting edge when it comes to developing such credit products.

    LHV expects clients to abide by the local laws and regulations in their jurisdiction as well as international law, and to hold the necessary authorisations and licences required in their field of activity.
    LHV acts in a socially responsible manner, seeking to be a role model for its employees and the public.

    1. Environmental risks
      Besides direct, unacceptable harm to the environment, financing of projects that incur environmental risks also leads to higher risks in regard to the respective credit recipients.

      Potential credit risks arising from environmental risks:

      Market riskchanging consumer behaviours, rise in price of commodities, uncertain market situation
      Political and regulatory riskprices of carbon emissions, increased compliance costs, increased environmental reporting obligations, fines, etc.
      Technology riskunsuccessful investment into new technologies, costs for switching to lower-emission technologies, R&D expenses etc.
      Reputational riskchanges in consumer preferences, stigmatization of the sector, negative and heightened coverage of interest groups etc.
      Physical riskdirect damage from climate and environmental risks, resulting in lower production capability, higher expenses on raw materials, damage to assets, higher labour costs and capital expenses, etc.

      Table 1. Potential credit risks arising from environmental risks.

    2. Social responsibility
      Corporate social responsibility means not only the obligations stemming from legislation but voluntarily taking into account social factors in business processes.

      Social responsibility at LHV is goal-oriented, consistent and voluntary, a contribution to serving society’s interests that goes beyond what is required by legislation.

      The goal of adherence to CSR principles is to create long-term value for LHV’s parties. Human rights and internationally recognized labour protection standards and agreements must also be honoured.

  2. Transactions in conflict with credit policy

    Areas of activity that are in conflict with the principles of environmental and social responsibility. LHV will refrain from knowingly offering credit products to clients whose activities bear clear evidence of human rights violations and serious environmental harm.

    Based on the principles of sustainable and responsible activity, it is against credit policy to credit clients whose volume of credit products from LHV exceeds 500,000 euros and whose operating activity is related to any of the areas listed in Table 2.

    General principles

    • production and trading of all goods that are illegal under the laws and regulations of the Republic of Estonia or international conventions and agreements;
    • use of forced labour or human rights violations;
    • facilitation of prostitution or production of pornographic material;
    • distribution of prohibited substances and trading without required export or import licences;
    • activities that have a negative impact on UNESCO World Heritage sites;
    • activities that have a negative impact on national parks and natural protection areas or wetlands covered by the Ramsar Convention;
    • activities prohibited under the legal acts of the Republic of Estonia or international conventions related to protection of biological diversity resources or cultural heritage;
    • illegal forced expulsion of persons, groups of communities
    Field of activityDescription
    Forestrythose engaged in illegal logging;
    Well-being of endangered plant and animal species, animals
    • those engaged in trading in endangered or Red List plant and animal species or whose activity has a negative impact on these species;
    • those engaged in illegal animal testing as defined by European Union legal acts;
    • activities related to the forcible feeding of ducks and geese;
    • keeping of animals for the purpose of fur production;
    Arms industrythose whose area of activity is the production or distribution of weapons or weapons components prohibited under international law (cluster bombs, infantry mines, biological and chemical weapons, nuclear weapons, laser weapons designed to cause permanent blindness);
    Energy industry
    • coal and oil shale mining and generation of electricity from them;
    • activities in the preliminary phase of the oil production chain;
    Hazardous materials
    • asbestos mining and production, marketing and use of asbestos fibres and products and compounds containing these fibres;
    • export of mercury and mercury compounds and the production, export and import of many mercury containing products;
    Tobaccodistribution of tobacco products or e-cigarettes if It is the primary area of activity for the company (>50% of revenue);
    Fishingpractising ecologically unsustainable fishing methods, such as drifting nets, deep sea bottom trawls, use of explosives or cyanide;
    • transport of oil or other hazardous materials on ships that do not meet the requirements of the International Maritime Organization;
    • financing new diesel-powered passenger cars in 2030 and later;

    Table 2. Areas of activity in conflict with LHV credit policy.