EU Sustainable Finance Disclosure Regulation
Principal adverse impacts - statement of non-compliance
The Sustainable Finance Disclosure Regulation (“SFDR”) requires Chenavari to make a “comply or explain” decision whether to consider the principal adverse impacts (“PAIs”) of its investment decisions on sustainability factors, in accordance with a specific regime outlined in SFDR. Chenavari (the “Firm”) has opted not to comply with that regime. Accordingly, the Firm does not consider the principal adverse impacts of its investment decisions on sustainability factors.
The Firm has carefully evaluated the requirements of the PAI regime in Article 4 SFDR, and in the draft Regulatory Technical Standards which were published in April 2020 (the “PAI regime”). The Firm is supportive of the policy aims of the PAI regime, to improve transparency to clients, investors and the market, as to how financial market participants integrate consideration of the adverse impacts of investment decisions on sustainability factors. However, taking account of the nature and scale of the Firm’s activities and the types of products the Firm makes available, the Firm considers that it would be disproportionate to comply with the specific PAI regime of the SFDR. The Firm is also concerned about the lack of reasonably priced / readily available data to comply with many of the reporting requirements of the PAI regime, as the Firm believes that issuers and market data providers are not yet ready to make available all necessary data for the PAI regime.
The Firm will keep its decision not to comply with the PAI regime under regular review.
Notwithstanding the Firm’s decision not to comply with the PAI regime, the Firm has implemented positive ESG-related initiatives and policies, as part of its overall commitment to ESG matters.
Transparency of remuneration policies in relation to the integration of sustainability risks
The remuneration of staff (to the exclusion of the members of the Board) will be determined by the Chenavari executive management on the basis of both quantitative criteria (for example, financial performance of the individual, their business unit and the Chenavari Group) and qualitative criteria (for example, individual performance, assessment of adherence to certain policies and procedures). The qualitative criteria used include, among others, an assessment of whether the relevant individual employee has complied with Chenavari’s sustainability policies, including the Firm’s Policy of Responsible Investment, where applicable.
In general terms, a positive or neutral assessment of overall compliance by individual Staff with the Responsible Investment Policy would not in itself be expected to contribute to any additional variable remuneration being awarded to individual Staff. However, in extreme cases as assessed by the Group, a negative assessment of overall compliance by an individual Staff member regarding the Responsible Investment Policy may result in a reduction in the variable remuneration amount which would otherwise have been awarded to that individual Staff member. The amount of any such reduction must be authorised by the Group’s Executive Management and is determined at the sole discretion of the Executive Management.