Introduction
Under the Sustainable Finance Disclosure Regulation (“SFDR”) and the Taxonomy Regulation, investment fund managers, such as Synova Capital B.V., must provide sustainability information.
Synova Capital is aware of the importance of sustainability and the role of the financial sector in it. Synova Capital does not specifically focus on sustainable investments or promoting environmental or social features. As a result, the fund managed by Synova Capital does not promote ecological or social characteristics (as referred to in Article 8 SFDR) nor does it have a sustainable investment objective (as referred to in Article 9 SFDR). This does not alter the fact that Synova Capital is aware of sustainability risks and their possible eLects on the return of the fund it manages. Sustainability risks are therefore taken into account by Synova Capital in its investment decisions.
Policy regarding sustainability risks
A “sustainability risk” (as defined in SFDR) 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 the investment. These risks include, but are not limited to, climate change transition and physical risks, natural resources depletion, waste intensity, labour retention, turnover and unrest, supply chain disruption, corruption and fraud and human rights violations. A sustainability risk trend may arise and impact a specific investment or may have a broader impact on an economic sector, geography or political region or country. The impacts following the occurrence of a sustainability risk may be numerous and vary depending on the specific risk, region and asset class.
When selecting investments, numerous factors that may aLect the (in)direct return are taken into account. Sustainability risks are considered as part of the due diligence that precedes an acquisition of real estate. Part of the due diligence is a technical investigation of the property. This investigation also examines environmental aspects, such as: presence of asbestos, soil contamination, technical installations and energy label. When relevant risks are identified, possible control measures are clarified. Physical risks (such as the risks of extreme weather conditions or, for example, the risks of subsidence as a consequence of climate change) are mitigated by diversification of properties.
In relation to a hedge fund strategy Synova Capital invests in a portfolio of listed equities and derivative instruments. It is not likely that sustainability risks are considered within the hedge fund strategy.
Sustainability risks and remuneration policy
Under the AIFMD registration regime, Synova Capital is not required to adopt a remuneration policy. Given the limited size of the organization (no employees), it has not been decided to draw up a specific (voluntary) remuneration policy. Due to the absence of (an obligation to draw up) a remuneration policy, Synova Capital will not integrate sustainability risks in such policy.
07-04-2025