ActiveCap – Capital Partners, SCR, S.A. (“ActiveCap”) is a private equity fund manager governed by Portuguese law. In this regard it qualifies as an alternative investment fund manager (“AIFM”) covered by EU Regulation 2019/2088 of the European Parliament and Council of 27 November 2019 regarding disclosure of information on sustainability in the financial services sector (“SFDR Regulation”)
Under Article 3 of the SFDR, alternative investment fund managers must disclose how sustainability risks are integrated into their investment decision-making process and the results of their assessment of the potential impacts of sustainability risks on the performance of the funds under management.
According to the SFDR Regulation, sustainability risks are events or conditions of an environmental, social or governance nature, the occurrence of which is likely to cause a negative impact on the value of the investment.
Although ActiveCap is not covered by the criteria set forth on the Article 4, paragraphs 3 and 4 of the SFDR Regulation, which applies to larger institutions, the Company aims to assess the negative impacts of investment decisions on sustainability factors.
ActiveCap intends to gradually incorporate sustainability criteria, , into its investment process, with the objective to mitigate risks and promote sustainable returns. In effect, as part of its activity, ActiveCap makes investment decisions on behalf of the funds under management and the continuous monitoring of its portfolio companies, Sustainability risks shall be considered in the decision making process and, and in respect of the investment policies set forth in the fund regulations, namely the following vectors:
a) in the environmental perspective, by adopting and ensuring climate change mitigation and adaption initiatives, pollution prevention and control, sustainable use and protection of natural resources
b) In the social perspective, ensuring no discrimination based on gender, race and other factors, ensuring compliance with fundamental human rights health and safety at work, and protection of consumer rights
c) in the governance perspective, focus on the assessment of the structure and composition of the management bodies, protection of shareholder rights, analysis of the remuneration policies, robust internal control processes and compliance with tax obligations.
Notwithstanding the above, ActiveCap does not yet adopts all the metrics and requirements required by European standards in the assessment of the negative impacts of investment decisions on sustainability factors and does not manage funds aimed at sustainable investments (as set out in article 9 of the SFDR) and is currently assessing the classification of its funds under the criteria of article 8 of the SFDR.
The Regulation (EU) 2022/1288 of April 6 (“RTS Regulation”) presents the main indicators to be considered in the identification of such negative impacts, among which are greenhouse gas emissions, carbon footprint, biodiversity, water, energy, waste, pollution, gender diversity, social and labor issues, among others. However, to this date, the publicly available information on these matters is not sufficiently rigorous, unified and comparable to allow an effective assessment of the negative impacts of investment decisions on sustainability factors. For these reasons there have been difficulties in defining consistent indicators and measuring them.
On the other hand, access to information on sustainability factors requires the use of external information sources, implying high and disproportionate costs in relation to the investment policy of the private equity funds under management.
Nevertheless, based on the conviction that environmental, social and governance issues can affect the performance of its investment portfolios and believing that the consideration of sustainability factors in investments will translate into the creation of value for investors, ActiveCap is in the process of defining ESG indicators and metrics and evaluating the classification of its funds under the criteria of article 8 of the SFDR.