Disclosures under 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 »)
Fortino Capital Partners makes the following disclosures in accordance with articles 3, 4 and 5 of the SFDR.
Integration of sustainability risk in the investment policies
In accordance with the SFDR sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment. For Fortino Capital Partners, sustainability risks are risks which, if they were to crystallise, would cause a material negative impact on the value of the portfolios of its funds.
Fortino Capital Partners sees the integration of sustainability risk as the practice of incorporating material environmental, social, and governance (ESG) data and insights into investment decision-making, alongside traditional due diligence information, with the objective of improving the long-term value of the portfolios of its funds. Consideration of sustainability risk does not imply that a fund has a sustainable investment objective, but rather describes how sustainability risk is considered as part of the overall investment process.
The integration of sustainability risk in the investment process has been included as a principle in the ESG Policy (as included in the Integrity Policy and Code of Conduct) of Fortino Capital Partners. As such, sustainability risk has been included as a risk factor in the risk management policy of Fortino Capital Partners and a checking item in the risk checklist.
Fortino Capital Partners includes ESG information, where relevant or available in the (i) initial research and screening of an investment opportunity, (ii) due diligence in relation to a potential investment, (iii) investment committee and approval, and (iv) monitoring phases of the investment process. This includes thematic sustainability information sourced from trustworthy sources (such as UN reports in relation to sustainability) and the use of a proprietary ESG due diligence questionnaire to identify, analyse and document sustainability matters. This information is used by the investment committee when reviewing and approving an investment opportunity. Fortino Capital Partners considers sustainability criteria during post-investment monitoring and conducts regular portfolio risk reviews.
Integration of sustainability risk in the remuneration policy
The remuneration policy of Fortino Capital Partners takes into account compliance with its policies and procedures, including the ESG policy, and discourages excessive risk-taking among others in relation to sustainability risks.
Principal Adverse Impact reporting
Adverse sustainability impacts relate to the risk that the business of a portfolio company may have on sustainability indicators.
Fortino Capital Partners considers that the private equity industry can have a significant impact on a number of sustainability indicators in relation to the society and the environment. Fortino is of the opinion that the consideration that the business of an investee company may have an adverse impact on sustainability indicators should form part of the investment process and has formalised its approach to assess certain of these potential adverse impacts. Fortino Capital Partners commits to consider certain potential adverse sustainability impacts without, at this point in time, considering all adverse sustainability impacts under the SFDR.
Therefore, in accordance with article 4.1(b) of the SFDR, Fortino Capital Partners states that it does not consider the adverse impacts of investment decisions on all of the sustainability factors as referred to in article 4.1(a) of the SFDR and does not make the disclosures as described in article 4.1(a) of the SFDR. Given the size of the organisation of Fortino Capital Partners, such disclosure as referred to in article 4.1(a) of the SFDR and the administrative burden in connection therewith would currently not be proportional. Fortino Capital Partners will review its position on a regular basis taking into account the evolution of the applicable rules and the results of the consideration of certain potential adverse sustainability impacts that it currently takes into account.