Cipio Partners S.à r.l. (“Cipio Partners”, “Cipio” or the “AIFM”) makes the following disclosures in accordance with the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”).
Pursuant to Article 3 of the SFDR, Cipio Partners is required to disclose the manner in which sustainability risks (as defined hereafter) are integrated into the investment decisionmaking process.
A 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 investments made by Cipio Partners.
In the context of the AIFM, sustainability risks are risks which, if they were to crystallise, would cause a material negative impact on the value of the assets of the funds managed by the AIFM.
Such risks are principally linked to climate-related events resulting from climate change and society’s response to climate change (i.e. changing regulation on energy efficiency rules, car-bon tax, transition risks). Sustainability risks can also affect companies by introducing social risks (e.g. gender gaps, social inequality, potential social issues in the supply chain) and governance risks (e.g. bribery issues, selling practices, data security and customer privacy). All such risks may result in unanticipated losses that could affect an investment.
The impacts following the occurrence of a sustainability risk event may be numerous and vary in significance depending on industries, regions and asset classes. The sustainability risks that are particularly relevant to Cipio Partners and its investments include:
1- The exposition to environmental risk emerging from the need of mitigating climate change. Portfolio companies could be forced to deal with changing regulation on energy efficiency rules. A carbon tax could potentially make data centres and data processing as well as manufacturing cost more expensive rising the operational costs of the target companies.
2- The exposition to risk resulting from social and employee matters as well as human rights in the context of fastgrowing technology assets. Gender gaps, social inequality or potential social issues in the supply chain may lead to instability in teams, high employee turnover or result in lawsuits.
3- The exposition to risk resulting from governance matters which include bribery issues and illegal selling practices. Issues like this and around data security and customer privacy could potentially result in lawsuits or loss of market shares due to poor reputational risk management or changing customer habits.
Such sustainability risks are integrated into the investment decision making and risk monitoring to the extent that they represent a potential or actual material risks and/or opportunities to maximizing the long-term risk-adjusted returns. Before any investment decisions are made by Cipio, the proposed asset will be subject to an environmental (if applicable) as well as social and legal/governance due diligence process designed to identify the material risks, including sustainability risks, associated with such potential investments. The result of such due diligence will be part of the investment memorandum based on which the investment decision is taken.
No consideration of sustainability adverse impacts
Cipio does not consider the adverse impacts of investment decisions on sustainability factors (as defined hereafter) in the manner prescribed by Article 4 of the SFDR.
For the selection of portfolio companies, only other parameters are relevant for Cipio, such as valid business model, ownership structure, management qualifications, etc.
Cipio currently has no plans to change this.
“Sustainability factors” means environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
Cipio pays its staff in accordance with its remuneration policy which takes into account compliance with all of Cipio's internal risk management framework and internal policies, including those relating to the integration of sustainability risks.
In this regard, Cipio’s remuneration policies do not encourage risk-taking which is inconsistent with its internal risk limits or with the risk profile of the funds that Cipio manages, including regarding sustainability risks stemming in particular from climate-related events or from the society’s response to climate change.