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SFDR Disclosure

No consideration of the negative impact of investment decisions on sustainability factors

1. Introduction

On 25 September 2015, the United Nations General Assembly adopted a new global framework for sustainable development: 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 dimensions of sustainability: economic, social and environmental.

If the EU is to achieve the SDGs, capital flows must be redirected towards sustainable investments.

PROFINPAR PARTNERS, a “registered” alternative investment fund manager (the AIFM or PROFINPAR PARTNERS) within the meaning of Article 3(2)(b) of Directive (EU) 2011/61 of 8 June 2011 on alternative investment fund managers (the AIFM Directive), makes the following statements in accordance with Regulation (EU) 2019/2088 of 27 November 2019 on sustainability disclosure 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 promote sustainable investment (the Taxonomy Regulation or TR)) and (2) Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022.

At the date of this publication, the AIFM, in its capacity as a registered alternative investment fund manager, manages only one alternative investment fund, namely PROFINPAR FUND S.C.Sp (the Fund or PROFINPAR), of which it is also the general managing partner within the meaning of the Luxembourg law of 10 August 1915 on commercial companies, as amended.

Points 2. to 4. below concern the AIFM’s own reporting obligations pursuant to SFDR, while point 5. concerns the AIFM’s reporting obligations relating to the Fund pursuant to the Taxonomy Regulation.

2. Failure to take into account adverse impacts of investment decisions on sustainability factors

Article 4(1) of the SFDR requires fund managers such as the AIFM to clearly declare whether they take into account the main negative impacts of investment decisions on sustainability factors (i.e., within the meaning of the SFDR, environmental, social, human rights, anti-corruption and anti-bribery issues).

Although sustainability risks and potential environmental, social and governance (ESG) impacts are deemed significant by PROFINPAR PARTNERS, particularly in view of the fact that PROFINPAR’s investment policy, which focuses on smaller SMEs, is deemed by PROFINPAR PARTNERS to be socially responsible, taking into account in particular (i) the size, the nature and scope of the activities of PROFINPAR PARTNERS, which manages the Fund, as well as PROFINPAR’s own characteristics, and (ii) the fact that the investment strategy and objectives, and therefore the entire portfolio of the Fund, are neither ESG-focused nor specifically likely to have an impact on sustainability factors, PROFINPAR PARTNERS declares that it does not take into account the negative impact of investment decisions on sustainability factors in the manner prescribed in Article 4(1) of the SFDR.

3. Transparency of sustainability risk policies

General overview

A sustainability risk within the meaning of SFDR is an ESG event or condition which, if it occurs, could have an actual or potential material adverse effect on the value of the investment.

The AIFM analyses and assesses potential sustainability risks within the meaning of the SFDR Regulation as part of the procedures inherent in investment decisions relating to investments made by the Fund and has incorporated the following internal procedures and policies into its decision-making and monitoring of investment risks.

Appropriateness of taking sustainability risks into account

Sustainability risks may affect the Fund’s performance. If any of these risks materialise, the return on investment is likely to be materially impacted. Investors and potential investors in the Fund should consider that it is reasonably difficult to estimate with certainty the likelihood of any of these risks occurring and the potential impact of sustainability risks on the value of investments.

Valuation procedure

Risks, including sustainability risks, are identified and assessed prior to an investment and on an ongoing basis once an investment has been made by the Fund in accordance with its investment policy. This review is carried out by the GFIA and takes into account the following elements:

  1. PROFINPAR does not invest in companies which, based on the GFIA’s reasonable research and monitoring :
    1. do not take into account their impact on the environment (greenhouse gas emissions, biodiversity, water) ;
    2. do not take the necessary measures to minimise their waste production and encourage recycling;
    3. do not take the necessary measures to minimise air, soil and water pollution;
    4. extract, store, transport or produce fossil fuels;
    5. discriminate against their employees;
    6. produce controversial weapons or their components.
  2. Investments are local (Belgium, France and Luxembourg) and two of the Fund’s three managers and one to three Fund investors sit on the boards of partner companies. As a result, exposure to social, labour, human rights, anti-corruption and bribery issues is limited.
    PROFINPAR PARTNERS is sensitive to the energy efficiency of the real estate assets of the companies in which the Fund invests.
  3. When PROFINPAR invests in manufacturing companies, PROFINPAR PARTNERS ensures that these companies comply with emission standards (air, soil, water), take into account their energy performance (optimisation of combustion processes, photovoltaic installations, etc.) and optimise their waste production (limitation at source, recycling, etc.).
  4. Preventing accidents in the workplace is a priority. Depending on the target company’s sector, indicators are put in place to monitor accident rates (frequency and severity).

4. Remuneration policy

PROFINPAR PARTNERS does not employ any staff. Fund management and investment advisory services are provided by the three management companies of the Fund’s founders:

  • PROQUITY, a public limited company incorporated under Belgian law, registered with the Belgian Companies Register under number 0460.854.324 at the Crossroads Bank for Enterprises (the “CBE”) duly represented by Mr Pierre ROBIN ;
  • LMcV, a private limited liability company incorporated under Belgian law, registered with the BCE under number 0555.790.006, duly represented by Mr Thomas WALGRAFFE;
  • NABOO, a private company with limited liability under Belgian law, registered with the ECB under number 0883.804.513, duly represented by Mr Dimitri de FAILLY.

The AIFM’s remuneration does not encourage risk-taking with regard to sustainable development risks. However, for the purposes of Article 5(1) SFDR, the AIFM declares that it has not implemented a remuneration policy in view of the fact that it is a registered alternative investment fund manager and is not subject to the obligation to implement a remuneration policy in accordance with the AIFM Directive.

5. Statements in relation to the fund – transparency of other financial products in published pre-contractual information and periodic reports

The social contract signed by the Fund’s investors defines, among other things, the investment policy and the investment process. In accordance with articles 8 and 9 of the SFDR, PROFINPAR does not target sustainable investments and does not promote environmental or social characteristics.

The investments underlying this financial product do not take into account the European Union’s criteria for environmentally sustainable economic activities[1].

[1] Article 7 of the TR