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SFDR Disclaimer
1. Introduction
On 25 September 2015, the United Nations General Assembly adopted a new global sustainable development framework: the 2030 Agenda for Sustainable Development (hereinafter referred to as the “2030 Agenda”). The 2030 Agenda is structured around the Sustainable Development Goals (SDGs) and is based on the three pillars of sustainability: economic, social, and environmental.
Achieving the SDGs within the European Union requires redirecting capital flows towards sustainable investments.
PROFINPAR PARTNERS, an alternative investment fund manager (the AIFM or PROFINPAR PARTNERS) “registered” within the meaning of Article 3(2)(b) of Directive (EU) 2011/61 of 8 June 2011 on Alternative Investment Fund Managers (AIFMD), makes the following disclosures in accordance with Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector (SFDR), as supplemented by (1) Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (the Taxonomy Regulation or TR), and (2) Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022.
As of the date of this publication, the AIFM manages only one alternative investment fund in its capacity as a registered AIFM, namely PROFINPAR FUND S.C.Sp (the Fund or PROFINPAR), for which it also acts as the general partner under the amended Luxembourg law of 10 August 1915 on commercial companies.
Sections 2 to 4 below refer to the AIFM’s own disclosure obligations under the SFDR, while section 5 concerns the AIFM’s disclosure obligations regarding the Fund under the Taxonomy Regulation.
2. No Consideration of Adverse Impacts of Investment Decisions on Sustainability Factors
Article 4(1) of the SFDR requires fund managers such as the AIFM to clearly state whether they consider the principal adverse impacts of investment decisions on sustainability factors (i.e., environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters).
While sustainability risks and potential environmental, social and governance (ESG) impacts are considered important by PROFINPAR PARTNERS—notably given that PROFINPAR’s investment policy focusing on small SMEs is regarded by PROFINPAR PARTNERS as a socially responsible act—and taking into account (i) the size, nature and scope of PROFINPAR PARTNERS’ activities in managing the Fund, as well as PROFINPAR’s specific characteristics, and (ii) the fact that the strategy and investment objectives of the Fund are neither ESG-focused nor specifically likely to impact sustainability factors, PROFINPAR PARTNERS declares that it does not consider the adverse impacts of investment decisions on sustainability factors in the manner prescribed by Article 4(1) of the SFDR.
3. Transparency of Sustainability Risk Policies
General Overview
A sustainability risk within the meaning of SFDR refers to an ESG event or condition that, if it occurs, could cause a material negative impact on the value of an investment.
The AIFM analyses and evaluates potential sustainability risks under the SFDR as part of the decision-making procedures for investments made by the Fund. It has integrated the following internal procedures and policies into its investment decision-making and risk monitoring processes.
Relevance of Considering Sustainability Risks
Sustainability risks may affect the Fund’s performance. If such a risk materialises, the return on investment may be materially affected. Investors and potential investors should consider that it is reasonably difficult to accurately assess the likelihood of such risks occurring and the potential impact on investment value.
Assessment Procedure
Risk identification and assessment, including sustainability risks, is carried out prior to investment and on an ongoing basis after investment, in accordance with the Fund’s investment policy. This review is conducted by the AIFM and takes into account the following elements:
1.PROFINPAR does not invest in companies that, based on reasonable research and monitoring by the AIFM:
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- do not consider their environmental impact (greenhouse gas emissions, biodiversity, water);
- do not take necessary steps to minimise waste production and promote recycling;
- do not take necessary steps to minimise air, soil, and water pollution;
- extract, store, transport, or produce fossil fuels;
- discriminate against employees;
- produce controversial weapons or their components.
2. Investments are local (Belgium, France, and Luxembourg), and two of the three Fund managers and one to three Fund investors sit on the boards of portfolio companies. Exposure to social, labour, human rights, anti-corruption and bribery issues is therefore limited.
3. PROFINPAR PARTNERS is attentive to the energy efficiency of the real estate assets of the companies in which the Fund invests.
4. When PROFINPAR invests in manufacturing companies, it ensures that these companies comply with emissions standards (air, soil, water), monitor their energy performance (e.g. combustion optimisation, solar panel installation), and optimise waste production (source reduction, recycling).
5. Occupational accident prevention is a priority. Depending on the target company’s sector, indicators are implemented to monitor accident frequency and severity rates.
4. Remuneration Policy
PROFINPAR PARTNERS employs no staff. The fund management and investment advisory services are carried out by the three founding partners’ management companies:
- PROQUITY, a public limited company under Belgian law, registered under number 0460.854.324 with the Crossroads Bank for Enterprises (“CBE”), represented by Mr. Pierre ROBIN;
- LMcV, a private limited liability company under Belgian law, registered under number 0555.790.006 with the CBE, represented by Mr. Thomas WALGRAFFE;
- NABOO, a private limited liability company under Belgian law, registered under number 0883.804.513 with the CBE, represented by Mr. Dimitri de FAILLY.
The AIFM’s remuneration does not encourage excessive risk-taking with regard to sustainability risks. However, for the purposes of Article 5(1) SFDR, the AIFM declares that it has not established a remuneration policy, as it is a registered AIFM and is not subject to the remuneration policy requirement under the AIFMD.
5. Fund-Related Disclosures – Transparency of Other Financial Products in Pre-Contractual and Periodic Disclosures
The limited partnership agreement signed by the Fund’s investors defines, among other things, the investment policy and process. Under Articles 8 and 9 of the SFDR, PROFINPAR does not aim to make sustainable investments and does not promote environmental or social characteristics.
The underlying investments of this financial product do not take into account the European Union criteria for environmentally sustainable economic activities.[1].
[1] Article 7 du TR
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