Adriatic Horizon Fund

Adriatic Horizon Fund SCSp is an alternative investment fund managed by Adriatic Horizon GP S.à r.l, an Alternative Investment Fund Manager (currently under registration process with the CSSF) integrating sustainability and responsible investment principles in line with EU SFDR standards.

SFDR Disclosure
AIFM
Adriatic Horizon GP S.à r.l.
Classification
AIFM — under CSSF registration
Article 8 / 9 status
Not applicable — Article 6
Jurisdiction
Luxembourg
§ 01

Integration of sustainability risks in the investment decision process — Definition

A sustainability risk refers to an environmental, social or governance (ESG) event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of an investment. No single regulatory definition governs which events or conditions qualify; the EU Taxonomy sets out the following reference criteria.

Environment

Climate change, sustainable use and protection of water and marine resources, transition to a circular economy, waste prevention and recycling, pollution prevention and control, and protection of healthy ecosystems.

Social

Equality, social cohesion, social integration, and labour relations.

Governance

Sound management structures, employee relations, remuneration of relevant staff, and tax compliance.

Adriatic Horizon GP S.à r.l. (the "AIFM") reviews and assesses potential sustainability risks within the meaning of SFDR as part of its decision-making process and ongoing risk monitoring with respect to investments made, or to be made, by the Fund, and has integrated such review within its internal procedures and policies, as further detailed below.

§ 02

Relevance of sustainability risks

Sustainability risks may affect the Fund's performance, having regard to the types of investments made or to be made in accordance with its investment policy and objectives — meaning that, should any such risk materialise, returns on investments may be adversely affected as a result.

Investor note

It is difficult to assess with reasonable certainty either the probability that such risks will occur or the likely impact of a materialised sustainability risk on the value of investments.

§ 03

ESG risk assessment process

The AIFM generally considers materially relevant sustainability risks in the investment process alongside other material factors. The degree to which sustainability risks are considered may vary from one product to another, depending on that product's scope and structuring.

The AIFM treats sustainability-risk assessment as a means of identifying investment opportunities and of managing and monitoring investment risk, integrating this assessment into its investment decisions and due-diligence processes in order to maximise long-term risk-adjusted return. In deciding whether ESG data are material to a particular investment, the AIFM evaluates the relevance of that information and its likely impact on financial return in the context of the fund's investment strategy — even where the fund does not pursue or promote ESG objectives, it remains exposed to sustainability risks. Identification and assessment of risks, including sustainability risks, take place on an ongoing basis as investments are made in accordance with the Fund's investment policy.

Review sequence

  1. Prior to any investment decision on behalf of the Fund, the AIFM identifies the material risks, including sustainability risks, associated with the proposed investment.
  2. These risks form part of the overall investment proposal submitted to the board of managers of the AIFM.
  3. Following its assessment, the AIFM makes the relevant investment decision having regard to the Fund's investment policy and objectives, subject to the board of managers' approval.

The identification, assessment and, to the extent possible, mitigation of sustainability risks is embedded throughout this process.

§ 04

Transparency of remuneration policies — Article 5(1)

No remuneration policy in place

For the purposes of Article 5(1) SFDR, the AIFM declares that it has not put in place a remuneration policy addressing the integration of sustainability risks, on the basis that it qualifies as a registered Alternative Investment Fund Manager and therefore does not fall under this requirement of the AIFMD.

§ 05

No consideration of principal adverse impacts — Article 4(1)(b)

PAI not considered

Article 4(1) SFDR requires fund managers such as the AIFM to state clearly whether they consider the "principal adverse impacts" of investment decisions on sustainability factors — i.e. environmental, social and employee matters, respect for human rights, and anti-corruption and anti-bribery matters.

Although ESG and sustainability risks are important to the AIFM, it does not consider the adverse impacts of investment decisions on sustainability factors in the manner prescribed by Article 4(1) SFDR, for the following reasons:

  • No reliable and sufficiently available or accessible data currently exist to perform such impact measurement and provide the mandatory reporting imposed by the regulatory technical standards in a consistent manner.
  • The investment strategy and objectives of the fund managed by the AIFM, and thus its overall portfolio, are neither ESG-focused nor, in the AIFM's opinion, likely to have an impact on sustainability factors.
  • The underlying investments are not generally required to, and may not currently, report on such factors.

This position remains subject to ongoing review in line with regulatory developments.

§ 06

Fund-related disclosures — EU Taxonomy, Article 7

Underlying investments do not take EU Taxonomy criteria into account

With reference to Article 7 of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, amending Regulation (EU) 2019/2088 (the "EU Taxonomy"), and supplementing Article 6 SFDR, it should be noted that the investments underlying this financial product — the assets of the fund under management by the AIFM — do not currently take into account the EU criteria for environmentally sustainable economic activities.

ADRIATIC HORIZON GP S.À R.L.
Registered Alternative Investment Fund Manager · Luxembourg
This page discloses information required under Regulation (EU) 2019/2088 (SFDR) and Regulation (EU) 2020/852 (EU Taxonomy) and does not constitute investment advice or a solicitation.
2, Place de Strasbourg, L-2562 Luxembourg
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SFDR disclosures

Integration of sustainability risks in the investment decision process

o   Definition

A sustainability risk refers to an environmental, social or governance (ESG) event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of an investment.

The definition of sustainability risk refers to environmental, social and governance events or conditions, however there is no regulatory definition for these events or conditions.

The EU Taxonomy refers to the following criteria, activities, and practices in relation to ESG:

  • Environment: climate change, sustainable use and protection of water and marine resources, transition to a circular economy, waste prevention and recycling, pollution prevention control and protection of healthy ecosystems;
  • Social: equality, social cohesion, social integration, and labour relations;
  • Governance: sound management structures, employee relations, remuneration of relevant staff and tax compliance.

Adriatic Horizon GP S.a.r.l  (also referred as the "AIFM") reviews and assesses potential sustainability risks within the meaning of SFDR as part of its decision-making process and ongoing risk monitoring with respect to investments made or to be made by the Fund and has integrated such review within its internal procedures and policies, as further detailed hereafter.

o   Relevance of sustainability risks

Sustainability risks may affect the Fund's performance having regard to the types of investments made or to be made in accordance with its investment policy and objectives, meaning that if any such risk occurs, returns on investments may be materially negatively affected as a result. Investors and potential investors should note that it is difficult to assess with reasonable certainty the probability of the occurrence of such risks and the likely impact of such materialized sustainability risks on the value of investments;

o   ESG risk assessment process

The AIFM generally considers materially relevant sustainability risks into the investment process alongside with other material factors. The degree to which sustainability risks will be considered may vary from one product to another and may depend on the product scoping and concrete structuring of each individual product.

The AIFM considers sustainability risks assessment as a mean of identifying investment opportunities, managing and monitoring investment risk, and therefore integrate this assessment in their investment decisions and their due diligence processes in order to maximize the long-term risk-adjusted return.

When deciding whether ESG data are material for a particular investment, the AIFM shall evaluate the relevance of the information and the likely impact on the financial return of the investment in the context of the particular fund's investment strategy. Indeed, even if the fund concerned does not pursue or promote ESG objectives for the moment nor has sustainable investments' objectives, it remains exposed to sustainability risks.

The identification and assessment of risks, including sustainability risks, will take place on an ongoing basis if and when investments are made in accordance with the Fund's investment policy.

Such review is performed by the AIFM as summarized below:

  • Prior to an investment decision being taken on behalf of the Fund, the AIFM identify the material risks, including sustainability risks, associated with the proposed investment;
  • These risks form part of the overall investment proposal to be submitted to the board of managers of the AIFM;
  • Ultimately and following its assessment, the AIFM makes the relevant investment decision having regard to the Fund's investment policy and objectives and subject to the board of managers' approval.

The identification, assessment and, to the extent possible, mitigation of sustainability risks is embedded into the above process.

o   Transparency of remuneration policies in relation to the integration of sustainability risks – article 5(1)

For the purposes of article 5(1) of SFDR, the AIFM declares that it has not put in place a remuneration policy in light of the fact that it qualifies as a registered alternative investment fund manager and thus does not fall under such requirement under the AIFMD.

o   No consideration of adverse impacts of investment decisions on sustainability factors – article 4(1)(b)

Article 4(1) of the SFDR requires fund managers such as the AIFM to provide a clear statement as to whether or not 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.

Although ESG and sustainability risks are important to the AIFM, the latter does not consider the adverse impacts of investment decisions on sustainability factors in the manner prescribed by article 4(1) of the SFDR, in particular due to the fact that (i) no reliable and sufficiently available or accessible data are available to perform such impact measurement and provide the mandatory reporting imposed by the regulatory technical standards in a consistent manner; (ii) the investment strategy and objectives of the fund managed by the AIFM and thus its overall portfolio are neither ESG-focused nor, in the opinion of the AIFM, likely to have an impact on sustainability factors and (iii) the underlying investments are not generally required to, and may not currently, report on such factors. This position shall remain subject to ongoing review in line with the regulatory developments.

o   Fund-related disclosures

Transparency of other financial products in pre-contractual disclosures in the periodic reports – article 7 of the Taxonomy Regulation.

Furthermore, with reference to Article 7 of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 ("EU Taxonomy"), supplementing art 6 of SFDR, it should be noted that currently, the investments underlying the financial product (the assets of the AIFM's fund under management), do not take into account the EU criteria for environmentally sustainable economic activities.