Sustainability risks are uncertain environmental, social or governance-related events or conditions that, if they occur, can cause a significant negative impact on the company and other participants.
The three factors of ESG can be described as follows:
It includes all risks associated with climate crisis, raw material depletion and environmental pollution.
It covers all risks regarding diversity, human rights, consumer protection and animal welfare.
It refers to all responsibilities and rights of a company’s management, board and shareholders. It includes topics such as, management structure, employee relations, executive and employee compensation.
fundcraft’s remuneration policy aims to:
fundcraft has split the remuneration into a base salary, evenly paid out monthly, and a variable component paid as a bonus once a year. The base salaries for all employees are based on an individual’s role and the level of responsibility for the upcoming term. It is contractually fixed, reviewed once a year and typically only significantly adjusted if there is a role change. The variable component is relative to individual and team objectives as well as to the Company’s overall achievements. The amount is defined in advance at the beginning of term in accordance with the upcoming term’s objectives and expectations for the overall performance of the Company.
In addition to the remuneration, fundcraft offers long-term incentives in the form of equity-related compensation. This way, employees are more focused on sustainable value creation and avoidance of inappropriate risk-taking or short-term profit maximisation at the expense of long-term value generation for our clients and sustainability. A Good and Bad Leaver policy for the long-term incentive is in place.
fundcraft believes that the Remuneration Policy, and an individual employee’s remuneration, must be consistent with and promote sound and effective risk management and not encourage risk-taking that exceeds the level of tolerated risk of fundcraft. Among several risk-limiting features, fundcraft’s Remuneration Policy includes the application of nonfinancial metrics, such as an assessment of an employee’s compliance with the fundcraft’s Sustainability Risk Policy, where applicable.
Principal Adverse Impacts (PAIs) are negative impacts on sustainability factors (i.e. environment, social and governance factors) that may materialise or expand as part of an investment decision or advice.
Currently, fundcraft does not consider principal adverse impacts of investment decisions on sustainability factors. The data required for identifying and weighting principal adverse sustainability impacts is not sufficiently available in the market or not of sufficient quality. fundcraft will regularly review the data situation and, if the situation changes, reassess the possibility of taking into account principal adverse impacts of investment decisions on sustainability factors as part of its internal strategy.
In the context of the article 3 of the Regulation (EU) 2019/2088 of the European Parliament and the council of 27 November 2019 (SFDR), fundcraft Management S.à.r.l. has amended his investment process and its risk management policy to take into consideration sustainability risks.
fundcraft Management S.a.r.l. considers the potential ESG features mentionned in the fund legal documents to ensure a proper implementation. The portfolio and risk management function includes in its analysis the ESG considerations described in the information shared with the investors. The granularity of the review will depend on the size, nature, scale of the activities and the types of financial products as described in the fund legal documents.
As per the article 4 of SFDR, all alternative investment funds managed by fundcraftManagement S. à r. l. have been assessed taking due account the size, nature and scale of their activities to determine to which extent a disclosure must be communicated to the investor via the pre-contractual documents and periodic reports.
Currently there are no alternative investment funds managed by the AIFM which are promoting environmental or social characteristics, nor having sustainable investments as their objectives within the meaning of Article 8 and 9 of the SFDR.
At present, fundcraft Management S.a.r.l. does not take into consideration of adverse impacts of investment decisions on sustainability factors. The fund documents and periodic reports will be amended accordingly as and when applicable.
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