Principles for Responsible Investment - PRI

The Company in May 2019 joined the Principles for Responsible Investment (“PRI”) in order to incorporate in internal process and investment decisions the so called Environmental Social and Governance (“ESG”) factors. Subsequently, by deliberation of the Board of Directors of the Company of 17/12/2020, Ver Capital Sgr has undertaken to combine the performance objectives of the funds managed with environmental, social and corporate governance issues (ESG). On the basis of this deliberation, the so called ESG factors apply to all funds launched after 01/01/2021. For managed funds launched before 01/01/2021, the ESG factors are applied in accordance with these funds’ regulations.

Starting from the first day of January 2021, the portfolios are therefore built through a process of selection of investment opportunities that, in addition to including the diversification and solvency criteria of the issuer company, also include ESG variables in order to generate long-term sustainable value. More precisely, Ver Capital Sgr has therefore committed to:

  • Incorporate ESG factors in investment analysis and decision-making processes in the most suitable procedures in relation to the different asset classes in which it invests through the funds managed;
  • Request, where possible, documentation on ESG issues from issuers object of investment, agent or directly from the issuing companies for direct lending deals;
  • Incorporate, where possible, information on results obtained from the implementation of the policies adopted in this field;
  • Promote, depending on the company’s development strategy and the reference market, thematic investment funds that prefer impact investments and follow PRI principles on the matter of ESG factors.

Ver Capital Sgr considers that respect for environmental, social and governance factors can be pursued both at the Sgr level and at the investments level in the short, medium and long term through a greater attention on:

  • Combating environmental degradation or sudden climate change, investigating the exploitation of particular natural resources, favouring the use of renewable energy and reducing of pollution (air, water, land);
  • Respecting human rights and investigating the issues of health, safety at work and promoting system of fair pay and fair treatment of employees;
  • Respecting gender equality and encouraging transparent communication both towards employees and towards the end customers.

Please refer to Ver Capital SGR ESG Policy for more information.

Disclosure - Regulation (EU) 2019/2088

Disclosure pursuant to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability reporting in the financial services industry:

Art. 3 – Transparency of sustainability risk policies

Regulation (EU) 2019/2088 (the "Regulation") defines sustainability risks as those environmental, social or governance events or conditions the occurrence of which could cause a significant actual or potential negative impact on the value of the investments to which they pertain.

Ver Capital SGR S.p.A. (the "Company"), which has adhered to the United Nations "Principles for Responsible Investment" relating to environmental, social and governance investment policies and procedures, integrates the assessment of sustainability risks, as defined above, as part of its investment process and due diligence activities. The Investment Memorandum that the Company's investment team prepares for each investment opportunity submitted to the [Investment Committee] for review and decision indicates, among other things, the outcome of the performed sustainability risk reviews. During the course of each investment cycle, the Company monitors sustainability risks as part of its broader monitoring activities related to the investment.

With regard to the fund named Ver Capital Sinloc Transition Energy Fund, the Company is developing specific policies and procedures for assessing sustainability risks, which will be disclosed to investors prior to the start of operations of the fund itself (with a simultaneous update of this disclosure).

Art. 4 – No consideration of the adverse impacts of investment decision on sustainability factors

On April 6th 2022, the European Commission adopted Delegated Regulation 2022/1288 which integrates EU Regulation 2019/2088 (information on sustainability in the financial services sector - SFDR) with the new regulatory technical standards - RTS.

The Company, currently, in according with the provisions of art. 4, paragraph 1, letter b) of the Regulation, has chosen to adopt an "explain" approach, not taking into consideration the negative effects (Principal Adverse Impact - PAI) of investment decisions on sustainability factors, provided in Annex 1 of Delegated Regulation 2022/1288.

The reason for this lies in the fact that the SGR is not able to collect the necessary data to carry out the assessments required by the regulations regarding PAIs, taking into account the circumstance that the investment strategies of most of the funds under management are oriented towards the credit market.

Art. 5 – Transparency of remuneration policies with regard to the integration of sustainability risks

The Company is required to adopt sound and prudent compensation and incentive policies that reflect and promote sound and effective risk management and do not encourage risk-taking that is inconsistent with the risk profiles and regulations of the funds it manages. In application of this principle, the Company's remuneration policies do not encourage sustainability risk-taking.

In particular, the assessment of the results taken into account by the Company for the purposes of assigning variable remuneration is carried out considering any possible negative impact - ex ante or ex post - from the sustainability risks undertaken.

ART. 10 REGULATION (UE) n. 2019/2088

TRANSPARENCY OF SUSTAINABLE INVESTMENTS (ART. 10 REGULATION (EU) No. 2019/2088)

 

VER CAPITAL CREDIT PARTNERS SMEs - PRIVATE DEBT

Ver Capital Credit Partners SMEs - Private Debt (the “Sub-Fund”) promotes environmental or social characteristics but does not have as its objective sustainable investment.

The assets selection by Ver Capital SGR (the “Investment Manager”) is based on exclusions criteria (negative screening) and scoring Environmental, Social, and Governance (“ESG”) (positive screening). The Investment Manager has developed a proprietary model based on the qualitative/quantitative assessment of ESG factors. Specifically, each asset is subjected, both in the preliminary investment phase and in the subsequent monitoring and reporting phase, to an internal analysis aimed at determining an ESG score, taking into account the initiatives and/or targets that the company, the object of potential investment, intends to pursue.

The ESG process covers all assets included within the Sub-Fund, but at least 50% of the financial instruments must be compliant with the environmental, social and government characteristics promoted by Sub-Fund.

Environmental and social characteristics are promoted by the Sub-Fund through an internal methodology based on predetermined criteria and analysis for identification, implementation and monitoring. The main methodological limitations include: the limited availability of data for conducting ESG analysis; the absence of universal standards regarding ESG information; the absence of systematic third-party monitoring of ESG data; the limited comparability of data, as not all companies publish the same indicators; the use of proprietary methodologies, which rely on the experience and expertise of the Investment Manager team.

No benchmark index has been designated for the achievement of the environmental and social characteristics promoted by the Sub-Fund.

Sustainability Disclosure Reporting of the VER CAPITAL CREDIT PARTNERS SMEs - PRIVATE DEBT

 

VER CAPITAL SINLOC TRANSITION ENERGY FUND

The Ver Capital Sinloc Transition Energy Fund (the "Fund") managed by Ver Capital SGR S.p.A. is an alternative investment fund whose main objective is to invest in companies or project companies developing (i) energy redevelopment and efficiency interventions, (ii) renewable energy plants, (iii) public network projects and (iv) sustainable mobility projects.

The Fund pursues sustainable investment objectives by making investments in economic activities that contribute to environmental objectives and do not significantly harm any environmental or social objectives.

In particular, specific Key Performance Indicators (KPI) are provided for each sector, also assessed from the point of view of contribution to the achievement of the Social Development Goals defined by the UN in 2015 and related targets.

These criteria are indicative, constituting a non-binding reference benchmark with respect to individual projects. KPIs can in fact be modified/supplemented in light of the specific objectives and characteristics of each project.

It is also planned to use a descriptive questionnaire on the standards of partner companies, containing specific questions aimed at understanding the standards of these companies in the environmental, social and governance areas.

The Fund's investment policy and strategy considers the following indicators:

  • Greenhouse gas emissions (GHG)
  • Non-renewable primary energy consumption

The investment strategy, defined and reflected in the Fund's Regulation, adheres to the definitions of Impact Investing available in the relevant literature. The Fund's investments are consistent with the EU and national policies of transition to a low carbon economy. This objective is set out in Annex 1 of the Regulation ("Eligible Investments"), which defines minimum targets of environmental impact to be generated by the investment activity. The minimum impact targets and the related application methodology for defining an investment as a Suitable Investment pursuant to Annex 1 of the Regulation have been verified and validated by the Polytechnic of Milan.

These targets refer to parameters consistent with the energy transition mission and are expressed in units of measurement useful for reporting non-financial results achieved in terms of reduction of non-renewable primary energy consumption (TEP) and reduction of climate-changing emissions (CO2):

  • 9,000 TEP/year of non-renewable primary energy savings
  • 15,000 TCO2/year of greenhouse gas emissions avoided

The Fund's investment strategy foresees that, for each of the typical dimensions of sustainable investments, i.e. environmental, social and governance, a series of evaluation criteria useful to guide the choice of projects in which the Fund may invest are identified in advance and, where applicable, subsequently monitored and periodically reported.

For each objective consistent with the Social Development Goals (SDGs), it is foreseen the monitoring of the results achieved through the use of indicators and targets shared at international level and, when consistent, the monetization of benefits.

The Fund invests in special purpose vehicle companies (SPVs) linked to public-private partnership operations and concessions, which are developing, have developed, own or operate, an energy efficiency project, a renewable energy project, a public grid project or a sustainable mobility project.

These are, therefore, specially established special-purpose vehicles with no previous, pre-established governance structures.

Since these are investments made with a majority stake, in the moment of the constitution of the project companies, it is the SGR that defines their structures, providing all possible good governance practices and carrying out adequate monitoring and control mechanisms during the development of individual projects.

The Fund's asset allocation is 100% for sustainable investments, through direct investments in companies or project companies that develop the sustainable investment projects mentioned above.

The information and project data required to conduct the assessments regarding the achievement of the sustainable investment objective are provided by the industrial partners promoting the investment projects being assessed.  The quality of the data is verified, in particular, through the internal evaluation procedures prescribed by the Fund, which include, among other things, a check against market benchmarks and public databases.

Due diligence activities on specific issues may also be planned to support the evaluation process.

The methodologies used by the Fund to measure the achievement of the sustainable investment objective through the use of sustainability/impact indicators allow for verification of compliance with the minimum requirements set forth in Annex 1 of the Regulation, with no limitations on the use of such methodologies/data.

Investment opportunities are analyzed through a well-defined and structured investment process that gathers the results of the experience gained over years of investment activity by the Manager and the Advisor. As part of that investment process, Due Diligence activities are divided into the following phases: Sourcing, Screen Pre-Analysis, Fundamental Analysis.

ESG criteria and objectives are defined in the Fund's Regulation, and are therefore binding in the implementation of the Fund's investment policy. The definition of these criteria in the Fund's Regulation makes it compulsory, in terms of the investment process, for the SGR's control functions (risk management, compliance and internal audit) to monitor and control compliance with these limits/objectives.

The investment agreements to be adopted as part of the investment transactions include specific disclosure obligations for the target companies that allow periodic and ex-post monitoring of the impact value of individual investments through KPIs specifically defined to assess the degree of achievement of the objectives defined ex-ante, at portfolio level and at the level of investment sub-sector, as well as the degree of contribution of the individual initiative to the achievement of the 2015 UN Social Development Goals and related targets, in order to monitor and document the actual impact generated.

The information thus produced is reported at least semi-annually and ex-post to the body representing the investors (Advisory Board).

The Fund's objective is to reduce carbon emissions pursuant to Article 9 (3) of Regulation (EU) No. 2019/2088. Annex 1 to the Fund's Regulation, in outlining the "Eligible Investments", defines binding minimum carbon emission reduction targets, to be achieved through the Fund's investment activity, in the amount of 15,000 tCO2/year.

No specific index has been designated as a reference benchmark for the Fund to achieve its sustainable investment objectives.

As noted, in any case, the Fund's Regulation defines minimum targets of environmental impact to be generated by the investment activity, referring to parameters consistent with the mission of energy transition.

Sustainability Disclosure Reporting of THE VER CAPITAL SINLOC TRANSITION ENERGY FUND

Latest periodic disclosure on the sustainability of the investments of the fund VER CAPITAL SINLOC TRANSITION ENERGY FUND