ESG disclosures in accordance with EU Sustainable Finance Disclosure Regulation (SFDR)
Date of publication: 06th of September 2022
Last reviewed 06th of September 2022
At Change Ventures (CV), consideration of environmental, social and governance (ESG) principles is an integral part of our operating procedures.
Even though at the moment, no environmental or social characteristics are promoted by Change Ventures’ financial products in accordance with Article 8 of SFDR and Change Ventures’ financial products do not have sustainable investments as their purpose in accordance with Article 9 of the SFDR, we do believe that, in order to make good investments, sustainability factors should not be overlooked.
Sustainability risk policies (Article 3 of SFDR)
According to Article 2 (22) of SFDR, “sustainability risk” means ‘’an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of an investment.
Change Ventures, therefore, approaches sustainability risk from the perspective of the risk that ESG events might cause a negative impact on the value of our clients’ investments.
In order to create lasting stakeholder value, investees must have a prudent approach to the planning and management of ESG policies. Ignoring ESG risks is no different than ignoring technical, currency or commercial risks, and could just as likely result in negative financial consequences and lower shareholder value on top of the social and environmental impact.
We consider environmental, social and governance (ESG) principles to be a significant part of our operating procedures and we have a Responsible Investment Policy that outlines the relevant procedures and processes that help us manage and mitigate sustainability risks in investment decision-making processes.
CV’s approach to assessing sustainability risk factors in investment decision-making process starts with an assessment of ESG factors as they relate to risk management, business effects, profitability and continues through engagement with management at investee companies to ensure ongoing monitoring and assessment.
We assess performance against a number of ESG criteria, including but not limited to energy, climate, environmental regulations, labor relations, management capability and integrity, and financial management factors.
We assess ESG issues as outlined in our Responsible Investment Policy, which includes the following steps:
• Screen against excluded and potentially excluded investees;
• Conduct pre-investment due diligence procedure;
• Take responsible investment decisions and follow risk control measures;
• Conduct continuous risk monitoring.
No consideration of adverse impacts of investment decisions on sustainability factors (Article 4 of SFDR)
Change Ventures does not consider principal adverse impacts (PAIs) of our investment decisions on sustainability factors.
There are several areas where CV must allocate its limited resources and personnel. Considering the size of Change Ventures and its investment funds, conducting a PAI assessment in accordance with SFDR and its delegated acts would tie up a disproportionate amount of CV’s resources. Additionally, currently available ESG data is insufficient to fulfill the requirements, which arise from the regulatory technical standards complementing SFDR.
Change Ventures, at the given moment, does not intend to consider adverse impacts of investment decisions on sustainability factors in the future in accordance with article 4 of the SFDR for the aforementioned reasons.
Nevertheless, we are aware that our investment decisions, as well as our portfolio entities’ activities, may have an impact on sustainability factors. Therefore, we duly consider the negative impacts of our investment activities and report ESG data to our investors and other relevant stakeholders, as described in our Responsible Investment Policy document.