SFDR

Sustainability-related disclosures

Mandatory disclosures under Regulation of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (EU) 2019/2088 (“SFDR”):

A. Future Energy Ventures GmbH (entity level)

Date of Publication: 22.07.24

Future Energy Ventures GmbH (“FEV”) is a securities institution within the meaning of the German Securities Institutions Act (Wertpapierinstitutsgesetz – “WpIG”) and therefore discloses the following information in connection with the consideration of sustainability-related aspects pursuant to the SFDR on its website.
Unless expressly stated in relation to a specific alternative investment fund (“Financial Product”) whose alternative investment fund manager (“AIFM”) FEV advises in relation to its investment activities, the following information refers to FEV’s investment advisory services in general.

I. Transparency of sustainability risk policies for financial advisors (Article 3 SFDR)

As an investment advisor to AIFM of Financial Products, FEV takes sustainability risks into account when advising the AIFM on investments. Sustainability risks are currently taken into account as part of the standard due diligence and risk assessment processes.

According to the SFDR, „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. Sustainability risks, such as advancing climate change, can lead to negative effects on the assets of the Financial Products or their portfolio companies. With regard to climate change, there are in particular actual physical risks (e.g. extreme weather events) and transformation risks (e.g. costs for restructuring the energy system). In the area of good corporate governance and with regard to social characteristics, there are risks relating to the reputation of the portfolio companies or possible claims for damages, for example. Corresponding political and regulatory measures can also lead to considerable costs and a reduction in assets. If sustainability risks materialize, this can lead to a significant reduction in the net asset value of the financial products and thus severely impair the return.

In order to exclude investments with particularly high sustainability risks, FEV endeavors to the best of its ability to recommend investments to the AIFM it advises only if the investment fulfils certain sustainability preferences previously defined by the AIFM.

As part of the pre-selection (due diligence) of potential investments to be recommended, FEV assesses whether they fulfil selected environmental, social and corporate governance criteria. For the purposes of this review, the following tools are usually used by FEV: (i) ESG screening questions, (ii) ESG Due Diligence Questionnaire and (iii) consulting of external sector-specific experts. The result of the analysis is taken into account for every potential investment by the AIFMs advised by FEV as part of a risk-oriented materiality analysis and is incorporated into the investment recommendation of FEV. The relevant ESG criteria are also continuously monitored during the holding period and are taken into account in the exit recommendation.

II. No consideration of adverse impacts of investment decisions on sustainability factors/ (Article 4 SFDR)

FEV does currently not consider principal adverse impacts of investment decisions on sustainability factors as part of its investment advisory services. This decision is based on the current lack of available and reliable data and is subject to regular review by the management of FEV at least once a year.

However, this approach does not contradict FEV’s commitment to sustainability, in particular the consideration of FEV’s environmental footprint and the commitment to good governance principles in decision making processes as well as the consideration of sustainability risks. In addition, FEV pursues, if relevant and the required data is available and reliable, to avoid in line with the objectives of the respective AIFM in relation to the respective Financial Product any negative sustainability impact of the investments FEV is advising.

III. Transparency of remuneration policies in relation to the integration of sustainability risks (Article 5 SFDR)

FEV appropriately considers sustainability risks as part of its remuneration policy. The implemented remuneration system does not offer any incentives to take sustainability risks in relation to FEV or in the course of FEV’s investment advisory services.