ESG Disclosures

Integration of sustainability risks in our remuneration policies:

As per Article 5 of 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 (the “SFDR”), Financial Market Participants shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks and shall publish that information on their websites.

Consulco Capital Ltd’s (“the Company”) remuneration policy is consistent with the integration of sustainability risks and incorporates measures to ensure that, it does not encourage excessive risk taking, including risk taking in terms of sustainability risk (including greenwashing risks).

The Company’s Remuneration Policy promotes, amongst others, the following practices which are consistent with the Company’s sustainability risk policies:

promoting sound and effective risk management and a fee structure which does not encourage risk-taking which is inconsistent with the risk profiles and objectives of the underlying funds/ fund compartments under management,
fixed and variable components of total remuneration are appropriately balanced, and the fixed component represents a sufficiently high proportion of the total remuneration to allow the operation of a fully flexible policy, on variable remuneration components, including the possibility to pay no variable remuneration component,
ensuring that the assessment of performance includes a comprehensive adjustment mechanism to integrate all relevant types of current and future risks,
taking into consideration both financial as well as non-financial criteria when assessing individual performance.

Integration of sustainability risks in the investment decision-making process:

Sustainability risk means an environmental, social or governance (ESG) event or condition that, if it occurs, could cause actual or potential material negative impact on the value of the investment.

The Company does not offer alternative investment funds that seek to promote one or more environmental or social characteristics, nor does it have sustainable investment as its objective. The funds under management are therefore considered as “Article 6” financial products in accordance with SFDR.

Sustainability Risks are part of the investment risk management framework taken into consideration along with other risk factors as part of the wider investment decision making process. The main sustainability risks that indirectly relate to the Funds under management at the moment are environmental risks which can be divided into physical risks and transition risks.

Following risk mitigation and due diligence measures taken, the Company considers that current sustainability risks on the investment portfolios are of a lower risk and the impact of such risks on investment returns is not considered as material. If, however, in the future sustainability risks identified may have a material and negative impact on the returns of the Funds, relevant risk mitigation strategies will be put in place.

Further information can be found in the Company’s Sustainability Risk Policy.

No consideration of adverse impacts of investment decisions on sustainability factors:

Principle adverse impacts (“PAIs”) are potential adverse effects of investment decisions on sustainability factors. Sustainability factors are environmental, social and employee matters, respect for human rights, anti-corruption, and anti-bribery matters.

In accordance with Article 4(1)(a) of 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 (the “SFDR”), financial market participants shall publish and maintain on their website where they consider PAIs of investment decisions on sustainability factors a statement on due diligence policies with respect to those impacts taking due account of their size, the nature and scale of their activities and the types of the financial products they make available.

Where financial market participants do not consider adverse impacts of investment decisions on sustainability factors, clear reasons for why they do not do so, including, where relevant, information as to whether and when they intend to consider such adverse impacts must be disclosed.

As per Article 12 of Commission Delegated Regulation (EU) 2022/1288, Consulco Capital Ltd (“the Company”) in its capacity as a Financial Market Participant, for the time being, except as may be otherwise disclosed at a later stage on our website, does not consider principal adverse impacts of investment decisions on sustainability factors due to the fact that currently such considerations are deemed not to be material to the Funds’ investment strategy. In the event that sustainability factors do, in the future, become material, the Company will consider the principal adverse impacts of its investment decisions on sustainability factors.

Sustainability Risk Policy - May 2024

1. Introduction

Consulco Capital Limited (the “Company”) is a limited liability company with share capital, incorporated in accordance with the Laws of the Republic (Registration Number HE330560). The Company is regulated as an alternative investment fund management company (“AIFM”) by the Cyprus Securities and Exchange Commission (“CySEC”) with license number AIFM05/56/2013.

The Company is committed to integrating sustainability risks in its investment decision-making process. For the purposes of 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 (the “SFDR”), the Company maintains this sustainability risk policy (the “Sustainability Risk Policy”), which includes the processes followed by the Company in relation to sustainability risks.

The regulatory framework considered for the purpose of this policy is as follows:

Commission Delegated Regulation 2021/1255 EU amending Delegated Regulation (EU) No 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers.
SFDR 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.
Commission Delegated Regulation (EU) 2022/1288 supplementing the SFDR.
Taxonomy Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment and amending Regulation (EU) 2019/2088.

2. Key Definitions

Art. 2 (17) of the SFDR defines “sustainable investment” as investment in an economic activity that contributes to an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy, or an investment in an economic activity that contributes to a social objective, in particular an investment that contributes to tackling inequality or that fosters social cohesion, social integration and labour relations, or an investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives and that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance;

Art. 2 (22) of the SFDR defines “sustainability risk” as 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 the investment.

Some examples of sustainability risks are the following:

Environmental issues: These include climate change, unsustainable practices, carbon footprint/emissions, production of wastes and pollution.
Social issues: These include unethical working conditions, health and safety issues, infringements of human rights, child and slave labour, product safety.
Governance issues: These include transparency and integrity, bribery, and corruption, lack of board directors & senior management diversity, internal controls, shareholder rights.

Art. 2 (24) of the SFDR defines “sustainability factors” mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

Recital 16 of Commission Delegated Regulation (EU) 2022/1288 states that ‘greenwashing’, is, in particular, the practice of gaining an unfair competitive advantage by recommending a financial product as environmentally friendly or sustainable, when in fact that financial product does not meet basic environmental or other sustainability-related standards.

Recital 11 of Taxonomy Regulation (EU) 2020/852 states in the context of this Regulation that, “greenwashing” refers to the practice of gaining an unfair competitive advantage by marketing a financial product as environmentally friendly, when in fact basic environmental standards have not been met.

The European Supervisory Authorities (“ESAs”) understand greenwashing as a practice where sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants.

3. Scope of the Policy

The Sustainability Risk Policy applies to the Company since it qualifies as a financial market participant due to its authorization to operate as an AIFM and to any alternative investment funds under the management of the Company (the “funds under management”). The employees of the Company are expected to read, understand and acknowledge the content of the Sustainability Risk Policy.

4. Purpose and Approach

The Sustainability Risks Policy describes the Company approach, handling and monitoring of sustainability risks (including greenwashing risks) which may arise during the investment decision making process relating to the funds under management and fall under the scope of SFDR.

Within the Policy the Company aims to:

i. set the framework for the manner in which sustainability risks are integrated into their investment decisions, and

ii. describe the approach taken to manage and monitor sustainability risks which may have a material influence on the funds managed by the Company.

The Company’s approach in integrating sustainability risks into its investment decision making process is to ensure that the services provided and its operations do not result in unacceptable impacts on the environment and society.

5. Roles and Responsibilities

The Senior Management ensures that the Sustainability Risks posed to the Funds under management are integrated effectively and investment strategies and the risk limits are properly and effectively implemented. In addition, the Company retains the necessary resources and expertise for the effective integration of sustainability risks.

The Risk Manager of the Company is responsible for managing Environmental, Social or Governance (“ESG”) issues and risks when they arise. As such the Company’s Risk Management Policy comprises of such procedures necessary to enable the Company to identify, assess and mitigate, for each Fund it manages, the exposure to sustainability risks which may be material.

The Company will ensure that necessary resources and expertise for the effective integration of sustainability risks is retained at all times.

6. Integration of Sustainability Risks into the Investment Decision Process

As per SFDR sustainability risk is defined as 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 the investment.

In compliance with the obligations under the SFDR, the Company integrates Sustainability Risks into the investment decisions, meaning, a process is followed by which first such risks (if any) are identified and, where relevant, monitors and manages such risks which may impact a Fund in a manner considered to be appropriate to the particular investment strategy of the Fund and consistent with the best interests of the Investor Shareholders. Nevertheless, the approach taken to the integration of Sustainability Risks into the investment decision-making processes may evolve over time in line with the continually evolving nature of Sustainability Risks.

Identification of Sustainability Risks

Sustainability Risks are part of the investment risk management framework taken into consideration along with other risk factors as part of the wider investment decision making process. The Company identifies, assesses and monitors sustainability risks that may arise when making investment decisions. The main sustainability risks that currently indirectly relate to the Funds under management are environmental risks which can be divided into physical risks and transition risks.

Due Diligence & Risk Mitigation

Following risk mitigation and due diligence measures taken, the Company considers that current sustainability risks on the investment portfolios are of a lower risk and the impact of such risks on investment returns is not considered as material. If, however, in the future sustainability risks identified may have a material and negative impact on the returns of the Funds under management, relevant risk mitigation strategies will be put in place. More information with regards to the due diligence and risk mitigation measures are described in the Company’s Risk Management Policy.

Furthermore, investments within the funds under management currently do not take into account the EU Taxonomy criteria (Regulation EU 2020/852 on the establishment of a framework to facilitate sustainable investment) for environmentally sustainable economic activities unless otherwise stated in the Sub-Funds’ investment objective and policy.

7. Principal Adverse Impacts of Investment Decisions on Sustainability Factors

Principal adverse impacts on sustainability factors refer to adverse impacts of investment decisions on sustainability factors that mean environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.

The Company does not consider any adverse impacts of its investment decisions on sustainability factors in respect of the Funds under management as the investment strategies of the Funds under management do not regard sustainability factors to be material to their investment strategy.

In the event that sustainability factors do, in the future, become material, the Company will consider the principal adverse impacts of its investment decisions on sustainability factors.

8. Conflict of Interest

When the Company identifies types of conflicts of interest the existence of which may damage the interests of a Fund, including conflicts of interest that may arise as a result of the integration of sustainability risks in the Company’s processes, systems and internal controls and conflicts of interest that could give rise to greenwashing, mis-selling or misrepresentation of investment strategies relevant actions will be taken to manage and prevent such conflicts. However, it should be noted that no conflicts of interest arise in terms of sustainability risks.

9. Policy Review & Monitoring

The Company will monitor and review the Policy on an annual basis and on an ad-hoc basis in the event of major changes to the policy framework of the Company and will proceed to changes where and as needed.

The policy will be acknowledged by the Board of Directors of the Company after every review and/or material changes to its content.