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Sustainability Risk Policy: Bourne Park Capital (Lux) S.A. SICAV SIF

 

I. Introduction

The Sustainability Risk Policy aims to address the requirements of the 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 (further as “SFDR”).

 

As the Alternative Investment Fund Manager (AIFM), Duff & Phelps (Luxembourg) Management, will disclose relevant items relating to sustainability risks on their website.

 

There are the following SFDR Articles that the Sub-Funds need to be assessed to which article they fall under:

  • SFDR Article 6: Integrate the sustainability risks.

  • SFDR Article 8: Promote the environmental or social characteristics or a combination of those characteristics.

  • SFDR Article 9: Have sustainable investment as its objectives.

 

At the time of this policy, the Sub-Funds will be assessed under Article 6. As a result, the following are required to be assessed in this policy:

 

  1. the manner in which sustainability risks are integrated into the investment decision.

  2. the results of the assessment of the likely impacts of sustainability risks on the returns of the financial products made available.

II. Sustainable risks

 

Sustainable risks are defined as the Environmental, Social and Governance (ESG) risks.

 

Environmental factors include the environment, emissions, environmental stewardship, resource use, environmental solutions, waste, water, and environmental management.

 

Social factors include diversity, occupational health & safety, training & development, product access, community relations, product quality & safety, human rights, labour rights, compensation, and employment quality.

 

Governance factors include business ethics, corporate governance, transparency, forensic account and capital structure.

III. Sustainability risk in the investment decision process

 

The AIFM has delegated Portfolio Management duties to the Portfolio Manager. The Portfolio Manager, Donner & Reuschel Luxemburg S.A., has delegated day-to-day trading to the Sub-Portfolio Managers. Bourne Park Capital Limited acts as an Investment Advisor to the Portfolio Manager.

 

The Portfolio Manager and/or Investment Advisor is expected to consider the potential sustainable risks of a Sub-Portfolio Manager’s strategy during the manager selection process. This may include a view of ESG scorings on the Sub-Portfolio Manager’s portfolio to see where the portfolio ranks across a wide variety of factors.

 

Discretionary trading is conducted by the Sub-Portfolio Managers. The investment decision process will vary across Sub-Portfolio Managers.

IV. Assessment of the likely impacts of sustainability risks on the returns of the Sub-Funds

 

The likely impacts of sustainability risks on the Sub-Funds’ return are monitored by Bourne Park Capital on a best efforts basis. Sustainability risks are dealt with at several steps of the investment process.

The current active Sub-Funds focus on the Long Short Equity strategy. The Sub-Funds follow a bottom-up stock-picking investment process, where long and short positions are taken in companies to generate alpha with limited market & factor risks such as sustainability risk. Active risk management is executed in order to define, monitor, assess and mitigate risk. Given the nature of this strategy, sustainability risks are not expected to be a significant driver of returns at the portfolio level, as a significant portion of sustainability risk on the long side should be offset by similar risk exposure on the short side. Such risk should therefore be monitored more closely and mitigated at the position level.

Using various inputs from external data providers related to ESG factors such as Bloomberg and Arabesque, Bourne Park Capital has various scoring tools available to end investors to monitor, assess and mitigate sustainability risk:

  • UN Global Compact’s Ten Principles based on four categories: human rights, labour, environment and anti-corruption

  • ESG Sustainability Topics: 22 themes such as environmental management, diversity, corporate governance, etc. based on 250 signals

  • Preference filter of 11 different business involvements such as fossil fuels, weapons and tobacco

 

Prior to onboarding new Sub-Portfolio Managers, the Bourne Park Capital investment due diligence process pays particular attention to risk management. Investment guidelines are implemented to limit concentration risk, hence reducing the significance of sustainability risk at the position level. In addition, subject to investors specific requirements, additional investment guidelines may be implemented to adjust the investment universe to these requirements.

 

V. Consideration of principal adverse impacts

 

At present and given its investment advisory role, Bourne Park Capital does not, within the meaning of Article 4(1)(a) SFDR, consider the adverse impacts of its investment activity on sustainability factors. Bourne Park Capital does not currently do so because, among other reasons, it is not currently in a position to obtain and/or measure all the data which it would be required by the SFDR to report, or to do so systematically, consistently and at a reasonable cost for the Fund and end investors. This is in part because underlying investments are not widely required to, and may not currently, report by reference to the same data.

 

VI. Information made available to Shareholders

 

The following is highlighted in the Offering Document:

 

“REGULATION (EU) 2019/2088 ON SUSTAINABILITY-RELATED DISCLOSURES IN THE FINANCIAL SERVICES SECTOR - As required by Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial sector and implementing legislation, and to the extent not disclosed in this Offering Document, all relevant information shall be periodically made available to Shareholders by 10 March 2021 by means of disclosure in the annual reports of the Company or the AIFM's website”.