Sustainable Risk Finance Disclosure Regulation

Sustainable Risk Finance Disclosure Regulation (2019/2088) (the "Disclosure Regulation")

Equistone Partners Europe Limited and Equistone Partners Europe SAS make the following disclosures in accordance with Articles 3(1), 4(1)(b) and 5(1) of the Disclosure Regulation. 

Approach to sustainability risk

A sustainability risk means "an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment".  This is a broad term which could describe a large number of events or conditions related to, for example, climate change, pollution, biodiversity or human rights violations, amongst others.  For Equistone, sustainability risks are risks which, if they were to crystallise, would cause a material negative impact on the value of the portfolios of our funds.

Before any investment decisions are made on behalf of any funds that we manage, we identify the material risks associated with each proposed investment, including sustainability risk.  We consider such risks as part of our fund risk management process, having regard to the fund's investment policy and objective.  This leads to the submission of investment proposals to investment committee. 

The relevant investment committee assesses all identified risks alongside other factors set out in the proposal.  Following its assessment, investment decisions are made having regard to the fund's investment policy and objectives. 

We pay staff a combination of fixed remuneration (salary and benefits) and variable remuneration (including bonus). Allocation of variable remuneration to investment professionals reflects personal, team and firm performance.  Compliance with all of our policies and procedures, including policies and procedures relating to the impact of sustainability risks on the investment decision making process, shall be taken into account as part of that overall assessment.

Consideration of sustainability adverse impacts

Although ESG and sustainability risk is important to Equistone and we take it seriously, we do not consider the adverse impacts of investment decisions on sustainability factors in the manner prescribed by Article 4 of the Disclosure Regulation. 

This is our current position, which we will keep under review.  The detailed requirements were not settled by 10 March 2021, when we were required to decide and publish our initial approach.  We are continuing to assess the mandatory data collection and disclosure requirements which are applicable to firms which opt in to consider the principal adverse impacts of their investment decisions.  In particular, we are considering whether: (i) opting in would be the right strategic decision for us as a firm, and would help us to effectively facilitate our broader ESG and sustainability objectives; and (ii) we could gather and/or measure the mandatory data on which we would be obliged to report systematically, consistently and at a reasonable cost to our investors.