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.
fundcraft (the “Company”) considers sustainability risks as the set or mix of environmental, social and governance events which, if any or a combination of them happen, will have a directly measurable negative impact on a portfolio’s performance and/or a direct or indirect negative impact on society as a whole.
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.
These risks are always considered an integral and mandatory part of the assessment in our investment process. We identify potential sustainability risks associated with the investment from an ESG-point of view for every fund and every investment pursued. Identified potential or emerging risks are analysed and submitted to the investment committee.
The investment committee deliberates about the sustainability risk(s) with the same importance as any other material risk factor(s) an investment might entail. There is a growing sense of a positive correlation between the long-term success of companies and the adherence to ESG guidelines and objectives. The investment committee takes its investment decision following the latest available fund investment policies, objectives and overarching regulatory requirements.
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.
The above declaration by fundcraft Management S.à r.l. was made in accordance with respective effective versions of Articles 3(1), 4(1)(a) and 5(1) of the Sustainable Finance Disclosure Regulation (2019/2088).
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