Article 3 Disclosure - Sustainability risk investment decision making policy disclosure
This disclosure applies to the following entities:
- Cromwell Investment Luxembourg S.à r.l. (the "AIFM").
The AIFM is making the following disclosure pursuant to Article 3 of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector ("SFDR").
The AIFM considers that sustainability risks can have a material impact on investment performance and therefore consideration of sustainability risk is integral to the AIFM's investment decision-making and investment management process.
"Sustainability risks" mean an environmental, social or governance event or condition that, if it occurs, could have a material negative impact on the value of the investment. The materiality of sustainability risks is determined by the likelihood, magnitude and time-horizon of the risk materializing.
As a member of the Cromwell group, the AIFM benefits from Cromwell’s sustainability framework, which is implemented with a view to ensuring that the Cromwell group as a whole remains focused on improving performance through a structured, responsible and balanced pathway to sustained success. The framework comprises five pillars through which material Environment, Social and Governance (ESG) risks and opportunities are addressed.
Each pillar is led by a senior leader in the Cromwell business who is responsible for adopting the sustainability objectives and targets, embedding them into business plans, and for delivering activities and initiatives relating to that particular pillar across the entire business.
In addition, the aforementioned considerations are addressed in the following key areas:
- Risk Management Policies: the process through which risks surrounding an investment strategy can be assessed, monitored, reported and mitigated in a consistent manner;
- Investment Evaluation: the AIFM seeks to consider sustainability risks at each stage of investment evaluation, including through the use of sustainability checklists to assess sustainability risks. Consideration of sustainability risks is specifically included in the AIFM's investment decision policies. During the investment selection process, the relevant investment committee will assess the investment proposal and consider the findings of the due diligence screening and analysis. The materiality and relevance of a sustainability risk will vary depending on the specific asset in question;
- Asset Management: while an asset is held, all ESG data within operation and control is collected, monitored and assessed and ESG action plans are developed as necessary. Energy Performance Certificates (EPCs) and green building certification (e.g. BREEAM, LEED) are used as a measurement to improve asset level performance;
- Reporting: as appropriate, ESG performance measurement and reporting is provided for each mandate and investment strategy;
- Benchmarking: Through the use of tools like the Global Real Estate Sustainability Benchmark (GRESB) and the Carbon Risk Real Estate Monitor (CRREM) the AIFM benchmarks the asset and fund performance.
Where portfolio management is delegated by the AIFM in accordance with the AIFMD, appropriate controls and safeguards will be put in place at time of the portfolio management delegation to ensure that the delegate appropriately integrates consideration of sustainability risks into its investment decisions.
Article 4 Disclosure – PAI Statement
Disclosure pursuant to Article 4 of Regulation (EU) 2019/2088
Cromwell Investment Luxembourg S.à r.l. (the "AIFM") is subject to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (the "SFDR").
While the AIFM does not consider the principal adverse impacts of investment decisions on sustainability factors in accordance with SFDR at the date hereof, due to the fact that the regulatory technical standards ("RTS") under the SFDR are only available in draft form, once the RTS are published in final form, the AIFM will revisit this position with the intention to comply with Article 4 SFDR.
Article 5 Disclosure - Sustainability risk remuneration policy disclosure
As of 10 March 2021, Cromwell Investment Luxembourg S.à r.l. (the "AIFM") is subject to Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (the "SFDR").
The AIFM has established a remuneration approach that integrates the potential impact of sustainability risks on investments. The AIFM's remuneration arrangements are consistent with sound and effective risk management, including in respect of sustainability risk. As with other risks identified by the AIFM, the remuneration policy seeks to discourage excessive risk-taking in respect of sustainability risk.
Negative qualitative performance overrides any good financial performance and must be reflected appropriately in calculating the staff member’s variable remuneration.
In determining remuneration pools or individual awards, the AIFM will consider the full range of current and potential risks associated with the activities undertaken by the individuals concerned, including sustainability risks, and can make appropriate adjustments.