In order to comply with the Regulation (EU) 2019/2088 of the European Parliament and the European Council, dated 27 November 2019, on sustainability-related disclosures in the financial sector (the Sustainable Finance Disclosure Regulation, hereinafter abbreviated to "SFDR"), we answer the following questions:
- do we take sustainability risks into account in our investment process?
- do we consider the principal adverse impacts of investment decisions on sustainability factors?
- do we take sustainability risks into account in our remuneration policy?
With Investment Fund Hoofbosch, the investment manager does not promote environmental and/or social characteristics ("light green investments" as referred to in Article 8 SFDR) nor is it explicitly aimed at including sustainable investments ("dark green investments" as referred to in Article 9 SFDR). Hoofbosch's underlying investments do not take into account the EU criteria for environmentally sustainable economic activities as referred to in the Taxonomy Regulation (Regulation 202/852).
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Integration of sustainability risks
Remuneration policy
Statement
Integration of sustainability risks
Definition of sustainability risk ("ESG risk")
"Sustainability risk" for the purposes of the SFDR means an environmental, social or governance event or circumstance that, if it occurs, could cause an actual or potential material adverse impact on the value of Hoofbosch's investments. That is why the investment manager takes these sustainability risks into account in the investment process. Identified sustainability risks will be disclosed to (potential) investors in the most up-to-date version of the prospectus and in the interim in the annual report.
Types of sustainability risks
Sustainability risks can include the following:
Environmental:
• Climate risks (such as CO2 emissions and their consequences, such as: floods, temperature increases, droughts)
• Environmental risks (such as: nitrogen emissions resulting in declining biodiversity, depletion of raw materials, pollution, waste production)
• Transition risks (risks related to the transition to a lower-carbon and more environmentally friendly economy, such as: changes in climate and environmental policies, changing technology, changing consumer and market sentiment)
Social:
• Poor treatment of customers
• Lack of proper employment policy (poor working conditions)
• Inequality, lack of diversity
Governance:
• Poor corporate governance (e.g.: shareholders have insufficient control, the composition of the board is not right, the remuneration of the board is too high)
• Company conduct (e.g.: inadequate financial reporting, insufficient tax transparency, unethical way of doing business, non-compliance with privacy regulations or other non-compliance)
• Conflicts with stakeholders
Identification of sustainability risks
In order to determine whether a company in which Investment Fund Hoofbosch invests or is considering investing is exposed to sustainability risks, we use the information provided by Sustainalytics and MSCI on their websites.
Assessment of sustainability risks
In the assessment of whether the sustainability risks for a particular company, identified in this way, are acceptable, we examine the consequences for the value of that company if a sustainability risk were to materialise despite the attractiveness of the company in other areas. In this context the extent to which the company avoids these risks or has mitigated (part of) the risks is important. We look at the sustainability risk scores that MSCI and Sustainalytics assign to companies. Both have their own scoring methodology, which takes into account (1) the sustainability risks that the (sub)sector in which a company operates may be confronted; and (2) how a specific company in that (sub)sector deals with those risks: are they accepted or are control measures taken (what do they do about it). The ESG risk that remains after control measures (the "unmanaged ESG risk") yields a certain score.
Our policy
Investment Fund Hoofbosch will only invest in a company if it is estimated that the potential financial impact of the sustainability risks associated with that company on the value of the entire portfolio is low. This is assumed to be the case if MSCI or Sustainalytics do not assign that company the worst possible score.
Remuneration policy & sustainability risks
The remuneration policy does not contain any incentives that could lead to sustainability risks being neglected in the making of investment decisions and in the monitoring of investments.
Adverse effects of investment decisions on sustainability factors are not taken into account
In the area of sustainability, we focus exclusively on the impact of sustainability risks on Investment Fund Hoofbosch's performance, in the manner described above ("Integration of sustainability risks into the investment process"). In doing so, we do not specifically take into account what the effects of our investment decisions (could) be on environmental, social and employment matters, respect for human rights, and the fight against corruption and bribery (the so-called "sustainability factors" as referred to in Article 4(1a) SFDR) and therefore do not annually issue a so-called "principle adverse sustainability impacts statement" (hereinafter: 'impact statement'). This is for the following reasons:
- Investment Fund Hoofbosch's objective is to grow assets in the long term at an acceptable risk. Participants in the fund expect us to invest in accordance with this objective and to take sustainability risks into account in the context of risk management. Focusing on the avoidance of adverse impacts on sustainability factors is not part of the investment objective;
- If we were to decide to produce an impact statement, it would have to take into account numerous detailed requirements, many of which are not relevant to Investment Fund Hoofbosch, given the investment universe and investment strategy;
- The necessary information to produce an impact statement is not available within our firm and special measures would therefore have to be taken to publish such a statement. The possible added value for (potential) participants of issuing an impact statement is disproportionate to the costs, amount of time and attention that will be involved in producing and maintaining that statement.
A reconsideration of the foregoing may become relevant under various circumstances, for example if the investment policy is adjusted (an annual evaluation is made to see whether this is desirable), or if it turns out that the majority of the participants do wish to see an impact statement.
Date of declaration: 23 May 2024LEI no. De Grote Voskuil Capital B.V: 724500RO07JNYFXUZG67