Statement in relation to the Transparency of Sustainability Risk Policies and Adverse Sustainability Impacts pursuant to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on Sustainability-Related Disclosures in the Financial Services Sector (“SFDR”).
Integration of sustainability risks
AIFCAP Managers Ltd (the “AIFM”) qualifies as a financial market participant under the Sustainable Finance Disclosure Regulation (SFDR). Accordingly, the AIFM publishes on its website information regarding its policies on the integration of sustainability risks into its investment decision-making process, in line with Article 6 of the SFDR.
The AIFM does not promote environmental or social characteristics, nor do any of the AIFM’s funds under management have sustainable investment as their objective within the meaning of Articles 8 or 9 of the SFDR.
However, the AIFM recognises that sustainability risks—defined as environmental, social, or governance events or conditions that could cause a material negative impact on the value of an investment—can affect the financial performance of investments. Therefore, the AIFM integrates sustainability risks into its investment assessment and decision-making process, to the extent they are relevant and identifiable. These risks are considered alongside traditional financial and operational risks such as market risk, liquidity risk, credit/counterparty risk, and reputational risk, and are factored into the overall risk assessment of each fund under management.
The AIFM’s approach does not involve the application of specific ESG screening criteria or sustainable investment goals, but it does ensure that material sustainability risks are evaluated for their potential financial impact. Further details on the AIFM’s approach to sustainability risk integration can be found in the AIFM’s Sustainability Risk Policy, available here.
No consideration of adverse impacts of investment decisions on sustainability factors
In accordance with Article 4 of the Sustainable Finance Disclosure Regulation (SFDR), AIFCAP Managers Ltd (the “AIFM”) hereby discloses that, at this time, it does not consider the principal adverse impacts (PAIs) of its investment decisions on sustainability factors.
The AIFM has assessed the requirements associated with considering PAIs and, given its current size, scale of activity, and resource limitations, it has determined that it does not have the necessary infrastructure or access to sufficiently robust and consistent data to perform the assessment required by the SFDR’s PAI regime in a meaningful manner. Furthermore, it’s important to note that many of the companies and projects in which we invest do not have clear obligations to disclose the necessary information for such evaluations.
The AIFM will keep this decision under regular review, particularly in light of evolving market practices, the availability of data, and any future growth in the scale or nature of its activities.
Notwithstanding the above, the AIFM recognises the potential for sustainability risks to impact the value of investments and takes such risks into account in its investment decision-making process, as described in its sustainability risk policy.
Transparency of the AIFM’s remuneration policy in relation to the integration of the sustainability risks
The AIFM confirms that it integrates sustainability risks into its remuneration framework to ensure that risk-taking behaviour is consistent with its overall risk profile and obligations under Article 6 of the SFDR. In particular:
- The Company considers the potential impact of material sustainability risks — i.e., environmental, social, or governance events or conditions — on the financial performance of the AIFs when assessing individual and firm-wide performance;
- Remuneration structures are designed so that staff are not incentivized to take on sustainability risks that could have a material adverse impact on the value of the AIFs’ investments;
- Variable remuneration may be adjusted to reflect risk management failures, including those related to the oversight or mismanagement of sustainability risks, where such risks are likely to affect the financial outcomes of the AIFs.
This approach is consistent with the Company’s fiduciary duty to manage financial risks prudently and transparently in accordance with applicable regulatory obligations.
Transparency in pre-contractual disclosures
Where required by SFDR, all funds under management shall include relevant descriptions in its pre‐contractual disclosures i.e. Private Offering Memorandums, prospectuses or art. 23 AIFMD disclosures, on how sustainability risks are integrated into investment decisions; as well as the results of the assessment of the likely impacts of sustainability risks on the financial returns of the funds. Where sustainability risks are not to be deemed relevant, a clear and concise explanation of the reasons therefor shall be included. Further, where required, all funds under management shall include in their pre‐contractual disclosures a statement on how Principal Adverse Impacts (PAI) are considered or a statement that PAIs are not considered and the reasons therefor.