We acknowledge that sustainability risks are likely to influence the financial performance and reputation of our portfolio and our funds. Since sustainability risks cannot be completely ruled out, we have developed specific strategies for our portfolio to identify and limit sustainability risks.
During the deal sourcing phase, we identify and exclude investments in companies with an increased risk potential. By applying specific exclusion criteria, we seek to align our investment decisions with environmental, social or governance values. Companies are only included in our portfolio if they meet our exclusion criteria (no companies whose primary activity is an illegal economic activity, the production of and trade in tobacco, distilled alcoholic beverages and related products, the business of pornography or vice, the financing of the manufacture and trade of weapons and ammunition and the operation of gambling facilities and equivalent enterprises).
During the investment process, we strive to improve the sustainability performance of our portfolio through active ownership and drive long-term value creation. Abac improves the sustainability performance of investees in four key transversal areas: climate, good employment, diversity, and governance. To achieve this target, Abac implements key processes ensuring sustainability management is integrated by all investees. These activities also contribute to mitigating sustainability risks at portfolio and fund level.
We acknowledge that our investment decisions may have external adverse impacts on our surrounding communities.
Consideration of such adverse impacts under the SFDR requires a formalised process based on certain data. Due to our size, we are free to decide whether to implement this process under the SFDR.
We have decided not to consider any adverse impact of investment decisions on sustainability factors in accordance with Article 4(1)(b) SFDR. We have chosen this approach since, whilst we measure a large number of the mandatory principal adverse impacts contained in Annex I of the RTS, we do not currently measure all of them and therefore we would not be able to prepare a PAI statement in line with the requirements set out in the RTS.
We will continually assess whether the process required by the SFDR can be implemented at a later date.
Our compensation policy does not incentivise employees to take sustainability risks, as the performance-related variable components of our remuneration policy are not of a size that would incentivise taking short term risks and take into account the employee’s contribution to Abac’s sustainable and long-term viability.
In this respect, the compensation policy is consistent with the strategies for the integration of sustainability risks.