INTEGRATION OF SUSTAINABILITY RISKS INTO THE INVESTMENT DECISION MAKING PROCESS
The below information on the integration of “sustainability risks” in the investment decision-making process is provided in accordance with Article 3 of the EU Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088) (“SFDR”).
AG Capital is a signatory of the Principles for Responsible Investment (PRI) and as such identifying environmental, social and governance (ESG) related risks and opportunities is an integral part of AG Capital’s due diligence process for all prospective investments of funds advised by AG Capital (the “Fund”). All prospective investments must be compatible with AG Capital’s responsible investment principles and commitments as stipulated in its ESG Policy, as well as in compliance with the investment restrictions and criteria of the Fund. If during the screening or due diligence phase it transpires that a potential investment will not comply with AG Capital’s ESG Policy, the investment opportunity will not be pursued.
AG Capital maintains an ESG Policy which details its consideration of sustainability risks in the decision-making process, as well as AG Capital’s monitoring and oversight of portfolio companies with regard to ESG risks and opportunities. AG Capital’s evaluation of investment opportunities will always include the identification and assessment of relevant ESG-related risks. AG Capital has nominated at least one team member as ESG Ambassador who will have an increased emphasis on ESG-related issues and developments and will be the first point of contact for the remaining investment team members for questions on ESG topics.
In the initial assessment of a potential new project, a checklist is used to determine whether there are any obvious reasons for rejecting an investment due to ESG issues. If a prospective investment progresses to the due diligence phase, a mandatory ESG due diligence is performed. A summary of any ESG due diligence findings must be included in / attached to the Investment Memorandum for a proposed investment. A mandatory ESG risk-screening and summary assessment of ESG factors relevant to an investment are mandatory aspects of the detailed presentation made to the Investment Committee before an investment decision is taken. These considerations ensure the Investment Committee is aware of and able to properly assess any potential ESG risks of a target company before determining whether to recommend an investment by the Fund. When making a decision as to whether to recommend a prospective investment, the Investment Committee will take into account, alongside other considerations, information on ESG factors presented in the Investment Memorandum and/or the ESG Due Diligence report and in the presentation to the Investment Committee. If the Investment Committee concludes that the ESG-related risks associated with a target company are too high and/or cannot be appropriately mitigated, the investment opportunity will not be pursued.
As part of its monitoring and oversight of portfolio companies of the Fund, AG Capital will track selected ESG performance indicators and thereby observe the impact of its investments on social and environmental factors, including the promotion of the Sustainable Development Goals.
STATEMENT ON PRINCIPAL ADVERSE IMPACTS OF INVESTMENT DECISIONS ON SUSTAINABILITY FACTORS
The statement for the reference period 13 December to 31 December 2022 can be found here.
AG CAPITAL REMUNERATION POLICIES AND SUSTAINABILITY RISKS
The information below regarding how the remuneration policies of AGC GmbH (“AG Capital”) are consistent with the integration of “sustainability risks” in its investment advice process is provided in accordance with Article 5 of the EU Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088) (“SFDR”).
AG Capital personnel are subject to an annual performance review, which forms the basis for any variable remuneration that may be paid to such personnel and the extent of such remuneration. Environmental, social and governance (ESG) risk management is considered as part of each relevant individual’s performance review, including the individual’s adherence to AG Capital’s ESG Policy, which details AG Capital’s consideration of sustainability risks in its decision-making process, as well as AG Capital’s monitoring and oversight of portfolio companies in relation to the management and mitigation of ESG risks and the realisation of ESG-related opportunities.
Article 8 Website Disclosures
The following information relates to Austrian Growth Capital Fund (the “Fund”).
The Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment. It has defined a set of excluded industries that it will not invest in for environmental, social or ethical reasons.
ESG due diligence has to be performed on all prospective investments of the Fund. During the investment phase, KPIs will be monitored on company and portfolio level; KPIs will take into account adverse impacts on sustainability factors. As data availability is generally limited in the segment the Fund operates in, best efforts will be used to gather required input data from portfolio companies and estimates and third party data can be used to supplement the reported data.
The Fund has not designated an index as a reference benchmark.
(b) ‘No sustainable investment objective’
This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.
(c) ‘Environmental or social characteristics of the financial product’
The Fund has in its LPA defined a set of industries that it will not invest in for environmental, social or ethical reasons. Performance of a comprehensive ESG Due Diligence is mandatory for any new investments of the Fund. ESG KPIs of portfolio companies will be collected and tracked throughout the investment period. Contributions by individual portfolio companies towards reaching the Sustainable Development Goals (SDGs) will also be monitored.
(d) ‘Investment strategy’
The Fund is a private equity fund that invests in small and medium-sized companies in Austria and other European countries, doing minority and majority investments. ESG factors will be considered along the full investment cycle from screening to due diligence to portfolio monitoring and exits.
The Fund’s LPA contains an exhaustive list of industries and business areas the Fund will not invest in for environmental, social or ethical reasons (“excluded industries”). Furthermore, the Fund’s Investment Advisor adheres to a comprehensive ESG Policy. The policy stipulates, amongst others, the need for an ESG Due Diligence to be conducted for every new investment of the Fund. In addition, there will be ongoing monitoring of governance practices, ESG KPI reporting by portfolio companies and on Fund level. The Investment Advisor is a signatory to the United Nations Principles for Responsible Investment (UN PRI).
(e) ‘Proportion of investments’
The Fund has no specified investment split regarding E/S characteristics. However, all investments of the Fund have to undergo ESG Due Diligence and are subject to ongoing ESG KPI monitoring as environmental and social safeguards.
(f) ‘Monitoring of environmental or social characteristics’
All investments will be subject to ongoing KPI monitoring which are planned to take into account adverse impacts on sustainability factors to the extent possible / practicable.
In order to measure social or environmental characteristics, relevant KPIs will be tracked for the Fund’s portfolio companies.
(h) ‘Data sources and processing’
Data will primarily be provided by the Fund’s portfolio companies to the extent available and measurable. Estimates and data by external services providers may be used where appropriate.
(i) ‘Limitations to methodologies and data’
As the Fund invests in small and small medium-sized companies, data availability may be limited. Estimates and data by external services providers may be used where appropriate. The Investment Advisor will during the investment phase work together with investee companies in order to improve ESG performance and data availability.
(j) ‘Due diligence’
For all prospective investments, a mandatory ESG due diligence has to be performed and any due diligence findings presented to the Investment Committee.
(k) ‘Engagement policies’
The Investment Advisor will be in close contact with investee companies and support them in progression on social and environmental matters. An ESG roadmap should be discussed upon investment in a company.
(l) where an index is designated as a reference benchmark to attain the environmental or social characteristics promoted by the financial product, ‘Designated reference benchmark’
No index has been designated as a reference benchmark.
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