The Sustainable Finance Disclosure Regulation (”SFDR” or “the Regulation”) applies as of 10 March 2021. The Regulation requires financial market participants such as DFF 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.
DFF makes the following disclosures in accordance with the Regulation:
Sustainability risks are considered in investment selection, during the due diligence phase, as well as in ongoing management of portfolio companies, as set out in our ESG Policy. This is a priority for DFF because sustainability factors are likely to affect the long-term value of our portfolio companies, and thereby the value of our investments. Sustainability risk is defined by 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:
DFF does not consider the principal adverse impacts of investment decisions on sustainability factors to the extent that is required by Article 4(1) of the Regulation. Given the obligations contained in the Regulation (including the technical methodologies and data capture requirements this would reasonably entail) compliance is not assured among the different portfolio companies that DFF invests in. Furthermore, given the early-stage nature of the portfolio companies, the relatively small size and the short operating history of the fund, DFF is not currently able to compile clear, comparable and consistent data with which to report on principal adverse impacts of investment decisions on sustainability factors.
Nevertheless, with ongoing monitoring of our portfolio we aim to identify and limit potential adverse sustainability impacts on a best-efforts basis. We will consider reporting on this criterion once we have the required data.
DFF is not required to have, and does not currently have, a remuneration policy. The requirement of SFDR article 5 therefore does not apply.
That being said, we aim to implement fair remuneration principles which are structured in such a way that promotes effective risk management, discourages excessive risk-taking, and avoids potential conflicts of interest.
DFF does not expressly promote ESG characteristics in relation to its investment product and does not have sustainable investment as its primary objective and therefore does not classify itself as an Article 8 or an Article 9 product. In line with SFDR article 6, DFF has included descriptions of (a) the manner in which we have integrated sustainability risks in our investment decisions; and (b) the results of the assessment of the likely impacts of sustainability risks on DFF’s returns in our pre-contractual disclosures. For this, please refer to the Key Information Document.