Legal
1. EU SUSTAINABLE FINANCE DISCLOSURE REGULATION
The Sustainable Finance Disclosure Regulation (SFDR or the Regulation) applied from 10 March 2021. The Regulation requires financial market participants such as Aptimus Capital Partners (Ireland) Limited, Aptimus Capital Partners (London) Limited and Aptimus Capital Partners Spain SL (together, Aptimus Capital) to provide information to investors with regards to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics, and sustainable investment.
This Sustainability Risk Policy specifically addresses the obligation in Article 3 (1) of the Regulation:
“Financial market participants shall publish on their websites information about their policies on the integration of sustainability risks in their investment decision‐making process¨.
2. SUSTAINABILITY RISKS
“Sustainability Risks” is defined in Article 2 (22) of the Regulation as:
“an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of an investment”.
Sustainability Risks include (but are not limited to) the following:
- environmental risks such as the impact of environmental events such as increased flooding risks on operations of portfolio companies;
- social risks such as impact of non-compliance with anti-slavery or working conditions laws and regulations by portfolio companies; and
- governance risks such as inadequate management oversight of portfolio companies.
3. INTEGRATION OF SUSTAINABILITY RISKS IN INVESTMENT PROCESSES
Aptimus Capital is an independent, private market investment platform, offering tailored solutions to SMEs and middle market companies. Our focus is on the SME market and real economy, by providing an alternative source of capital to entrepreneurs and business owners. Our experience in this area means we understand how important alternative capital can be for generating sustainable economic growth, job creation and ultimately supporting the real economy. Accordingly, we believe our business model is inherently impact aligned and we have chosen to formally align ourselves with the UN Sustainable Development Goals (UN SDGs) framework.
We are aware of our responsibilities as a private market investor within the context of environmental, social and governance (ESG) factors and the ambitions of frameworks such as the UN SDGs. If these aspirational objectives are to be achieved, the support of private capital investors will be critical. Furthermore, empirical evidence has shown that the identification and analysis of ESG risks can help drive performance, not only in public markets, but also in private market transactions. Finally, by engaging with our portfolio companies on this front, we can help foster an attitude and approach to ESG that helps make businesses more resilient and future proof to ongoing regulatory changes. Ultimately, this will help drive growth, improve profitability, and build sustainable competitive advantage. With these factors in mind, we have made ESG an integral part of our investment process and analysis.
4.BUSINESS LINE AND STRATEGY-SPECIFIC APPROACH
At Aptimus Capital, we aim to differentiate our approach to responsible investing from that of other market participants in a number of ways.
- Firstly, we value actions over rhetoric. We support SMEs and the real economy, ultimately driving economic growth and job creation from the ground up and we provide long term capital solutions that often prove transformational for business owners and entrepreneurs.
- Secondly, we believe our core business model is inherently impact aligned and most directly and specifically supports action toward SDG 8 - Decent Work and Economic Growth. Our thesis is simple because it is integral to our business model.
- Thirdly, ESG adoption within the SME eco-system is in its infancy, and therefore we apply a balanced approach of practicality and engagement around ESG.
- Finally, we have implemented a multifaceted and nuanced approach, which is introduced below.
4.1 ESG Screening
For all transactions, across all ticket sizes, we have developed a hybrid, top-down approach, which integrates various tools and frameworks to ensure we identify and address ESG risks. We analyse all prospective investee companies to ensure they meet a satisfactory standard with regards to their ESG approach and so that we can assess whether their businesses have either a detrimental effect on society or an unacceptable approach to the welfare of the environment or their staff. This provides a ‘baseline’ to everything we do.
4.2 UN SDG alignment
In addition, we proactively look for businesses whose impact or activities align with one or more of the United Nations Sustainable Development Goals. While we do not require this alignment across our portfolios, where it is identified it positively contributes to our decision-making process as to whether or not we invest.
4.3 Fully aligned SDG portfolios
We are able to take this a step further for certain portfolios and provide prospective investors with portfolios exclusively comprised of companies that are aligned with selected SDGs. For these portfolios, a clear alignment with one of the SDGs would be a prerequisite for investment and measuring the positive impact generated by the companies in these portfolios would be part of regular investment performance reporting.
4.4 UN Principles for Responsible Investment (UN PRI)
We support the efforts of the UN Principles for Responsible Investment and have set out our responsible investment activities to reflect this. We are a signatory of the UN PRI.
5. INVESTMENT MONITORING
The identification and mitigation of ESG risks pre-investment can be a key determining variable in assessing the ability of prospective investee companies to perform over the lifetime of the transaction. Our proprietary, multi-stage investment process facilitates the integration of various ESG tools and frameworks at the appropriate time and with the relevant level of scrutiny. This enables us to identify the risks early on and front run challenging conversations, which ultimately help to drive strong risk adjusted returns for our investors. Identification of ESG related risks and/or opportunities for value creation is embedded within the Aptimus Capital investment process. During the investment process, ESG factors are considered starting with sector eligibility and arriving at sector and company specific due diligence questions. Aptimus Capital manages the integration of ESG issues within the investment process, with support from specialist external service providers where appropriate.
6. IMPACTS OF SUSTAINABLE RISKS
Throughout the processes outlined above, Aptimus Capital takes a robust and pro-active approach to integrate Sustainability Risks into its investment decisions. These are not limited to initial screening or due diligence; the firm monitors and reports on investments throughout the investment cycle and is committed to reporting on such risks to investors. The nature of the different products means that Sustainability Risks can impact the returns of the financial products that Aptimus Capital makes available in different ways. We benefit from both the integration of the Sustainability Risk Policy and the Responsible Investment Policy together with binding diversification criteria applicable at the product-level to reduce the likely impact of Sustainability Risks on financial returns. Through the integration of the processes outlined above Aptimus Capital believes that likely impacts of Sustainability Risks on the returns of any given product are low.
7. RESPONSIBILITY REVIEW AND MONITORING
Each Company’s Board of Directors (or, in the case of Aptimus Capital Partners (Spain) SL, its Directors) have responsibility for this policy and for the implementation of Aptimus Capital’s responsible investment strategy. The management of Aptimus Capital will recommend to the Board of Aptimus Capital Partners (Ireland) Limited the proposed overall strategy for Aptimus Capital, including the development of new products or offerings, and how sustainability considerations will be incorporated into these.
The Head of ESG and Impact Alignment has day to day responsibility for monitoring ESG related trends and issues and advising on their relevance for Aptimus Capital’s responsible investment strategy. The Head of ESG and Impact Alignment will ensure a consistent integration of ESG and implementation of this policy across Aptimus Capital.
The Credit Committee is charged with executing Aptimus Capital’s investment strategy, including its Responsible Investment strategy, in the context of investment considerations. Where material ESG risks have been identified with respect to a potential investee company, the approval of the Head of ESG / Impact Aligned Investing will be required prior to presentation at the Credit Committee. For enhanced product offerings of portfolios that are fully aligned to specific UN SDGs, the Head of ESG and Impact Alignment will sit on the Credit Committee.
Monitoring and feedback on ESG implementation will be reported to the Credit Committee on a regular basis and to the Boards of the Companies on a quarterly basis. Aptimus Capital will develop suitable internal approaches to implementation and performance tracking to guide our ESG integration in our activities as a firm. We will ensure all relevant staff are provided with the necessary tools and training to implement this policy.
8. REVIEW OF THIS POLICY
This Sustainability Risk Policy is effective as of 1 January 2023 and will be reviewed at least once a year.
1. EU SUSTAINABLE FINANCE DISCLOSURE REGULATION
The Sustainable Finance Disclosure Regulation (SFDR or the Regulation) applied from 10 March 2021. The Regulation requires financial market participants such as Aptimus Capital Partners (Ireland) Limited, Aptimus Capital Partners (London) Limited and Aptimus Capital Partners Spain SL (together, Aptimus Capital) to provide information to investors with regards to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics, and sustainable investment.
This Remuneration Policy specifically addresses the obligation in Article 5 of the Regulation:
“Financial market participants and financial advisers shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks and shall publish that information on their websites¨.
2. REMUNERATION AND SUSTAINABILITY RISKS
A “Sustainability Risk” as defined in Article 2 (22) of the Regulation is: “an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of an investment”.
Sustainability Risks, by their nature, may materialise only over long time periods, and Aptimus Capital’s remuneration policy is designed to reflect that infrequent, high magnitude risks are not always best captured by short term indicators. The remuneration policy aims to promote adherence to the value creation strategies that Aptimus Capital believes provide the best returns on business activities.
Aptimus Capital recognises that incentive structures can lead to harmful outcomes if improperly structured, and that they therefore need to be adjusted to ensure continued alignment with the full range of desired outcomes. Aptimus Capital has adopted a remuneration policy effective as of January 2023 which it believes is consistent with the integration of Sustainability Risks over both a short and long-term timeframe.
3. VARIABLE COMPENSATION
Among other forms of remuneration that are provided on a fixed basis, the firm awards employees variable discretionary bonuses on an annual basis. This includes a comprehensive review of the employees’ contributions across various criteria, including with respect to sustainability initiatives. These criteria are applied in a differentiated way among team members, in order to take into account their potential impact on the firm’s investment activities that may or may not involve sustainability risks. The total amount of variable remuneration is based on a combination of the assessment of the performance of the employee and the overall results of Aptimus Capital, as well as the conduct of the employee under any relevant internal procedures, policies, and compliance requirements (which may, to the extent applicable, include factors relating to Sustainability Risks). This will be reviewed as appropriate on a regular basis.
4. REVIEW OF THE POLICY
This Remuneration Policy disclosure reflects the Remuneration Policy that is effective as of January 2023 and will be reviewed at least once a year.
1. INTRODUCTION
Aptimus Capital Partners (Ireland) Limited, Aptimus Capital Partners (London) Limited and Aptimus Capital Partners Spain SL (together, Aptimus Capital) have established this policy with respect to the good governance assessment of investee companies.
This document is in relation to the assessment of the governance practices of investee companies as required under the Sustainable Finance Disclosure Regulation (SFDR). SFDR requires that those products classified as Article 8 or Article 9 products under the regulation invest only in companies which are determined to practice Good Governance. This policy applies to all products classified as Article 8 or Article 9 under SFDR.
This policy sets out Aptimus Capital’s definition of Good Governance and the requirements for the investment team for in scope products to confirm that the companies in which they invest practice Good Governance.
The investment teams of Article 8 or 9 products are responsible for determining that the investee companies they invest in engage in good governance practices. In support of this, investment teams are provided with a wide range of data, research and analysis regarding the governance practices which must be considered when assessing the governance practices of investee companies.
2. PURPOSE
For the Aptimus Capital products marketed in, into or from the European Union which are classified as Article 8 or Article 9 products under SFDR, the companies invested in must follow Good Governance practices as a precondition for investment. This policy outlines how a Good Governance determination is made and what research and analysis is used in making such a determination.
3. GOOD GOVERNANCE DEFINITION
Aptimus Capital considers “Good Governance” to be a standard of governance which is broadly reflective of industry-established norms and practices with regards to management structures and decisionmaking, accountability to shareholders, compensation structures, corporate culture, compliance with applicable law and the absence of negative events which are likely to have a material adverse impact on the financial returns of the company.
4. GOOD GOVERNANCE ASSESSMENT REQUIREMENT
The investment team is responsible for the ongoing assessment and monitoring of the governance practices of the companies in which they invest in to assess Good Governance. The investment team will re-consider their initial assessment if they become aware of new events or information which might have a material impact on their determination that a company practices Good Governance. Aptimus Capital also believes that a governance assessment is an ongoing rather than a point in time assessment, and the investment team may from time to time engage directly with companies to seek further information, to address concerns and/or to remedy issues with respect to governance practices that the investment team may identify.
5. RESPONSIBILITY REVIEW AND MONITORING
Aptimus Capital’s Compliance Officer is responsible for ensuring the proper risk controls are implemented, in relation to this policy. Adherence to this Policy and its restrictions is part of the control framework and monitored regularly. Any restrictions following the Good Governance assessment are strictly adhered to. Sufficient controls are in place to make sure that an event or changed circumstance is flagged when it affects the assessment. The outcomes of the assessments and decisions of the investment team and duration of engagement processes are logged in a central registry and monitored.
6. REVIEW OF THE POLICY
This Good Governance Assessment Policy disclosure is effective as of 1 January 2023 and will be reviewed at least once a year.