On sustainability-related disclosures in the financial services sector pursuant to Regulation (EU) 2019/2088

The main activity of illimity SGR S.p.A. (the “SGR” or the “Company”) is the provision of collective investment management services by managing the assets and risks of Italian and non-Italian reserved closed-end security and credit alternative investment funds (“AIFs”). To this end, the Company sets up, administers, manages, organises, promotes and markets its AIFs and additionally performs the activities connected with and necessary for providing the above-mentioned asset management services in accordance with the applicable laws and regulations in force at the time. The SGR is not authorised to provide portfolio management services or consultancy services in regard to investments or to receive or transmit orders, nor may it market third-party Undertakings for Collective Investment in Transferable Securities (UCITs).
As a financial market participant, illimity SGR, is committed to integrating ESG (Environment, Social and Governance) and sustainability factors into its AIF investment and management processes.
The SGR’s operations are carried out in compliance with the principles inspiring the illimity Group (the “Group”), which include the respect for and promotion of human rights, the elimination of all forms of discrimination in the employment field, of child labour and of any form of forced labour, the safeguarding of the environment and the fight against corruption.
The Group bases its sustainability strategy on five pillars - 1) Principles of Governance, 2) People, 3) Prosperity, 4) Innovation, 5) Planet and Society - with a view to providing a contribution to the Sustainability Development Goals (SDGs) set out in the UN’s 2030 Agenda for Sustainable Development. These goals, which permeate the SGR’s activity, are exposed below.

In accordance with the transparency requirements on sustainability introduced by Regulation (EU) 2019/2088 (the Sustainable Finance Disclosure Regulation - SFDR), the SGR states the following.

Disclosure pursuant to article 3 of the SFDR - Integration of sustainability risks in the investment decision-making process

Pursuant to article 3 of Regulation (EU) 2019/2088, the SGR states that it integrates ESG factors and sustainability risks into its investment decision-making processes by:

1. Identifying significant ESG risks and integrating them into its risk management framework, mapping and assessing the impact that sustainability risks can or may have on the types of risk to which each fund is exposed;

2. Adopting and applying illimity SGR’s ESG Investment Policy which contains the guidelines for the integration of ESG risks in the investment process and the management of sustainability risk; these guidelines are applied to each Fund from time to time, depending on the type of Fund and operation. Lastly, it should be remembered that in the investment decision-making process, the SGR adopts a negative screening criterion by business sector (e.g. tobacco, gambling, the production and sale of weapons, activities that significantly cause degradation of the environment and natural resources, etc.) and for counterparties considered controversial (companies unable to ensure full and complete respect of human rights or the abolition of child labour, etc.). Further information on this matter can be found in illimity SGR’s ESG Investment Policy.

Disclosure pursuant to article 4 of the SFDR - Consideration of the principal adverse impacts on sustainability factors

No consideration of adverse impacts of investment decisions on sustainability factors.

At the current time, the SGR does not consider the principal adverse impacts of its investment decisions on sustainability factors as envisaged by article 4, paragraph 1(a) of Regulation (EU) 2019/2088, adopting instead an “explain” approach. It also provides clear reasons for why it does not do so , in accordance with the disclosure requirements envisaged by paragraph 1(b) of that article.
Specifically, the main reasons relate to the fact that:

1. the legislative and regulatory framework and best practices are subject to constant evolution and changes in implementation (e.g. amendments to regulatory technical standards that establish detailed requirements on content, methodologies and presentation of information in relation to sustainability indicators identified in the SFDR; and

2. the incomplete availability of data, with regard to the specific issue of sustainability, on the portfolio assets of the AIFs currently managed, which is necessary for the assessment both at the investment stage and for subsequent reporting, also considering the characteristics of the underlying portfolio.

illimity SGR constantly engaged in the process of monitoring impacts and adjusting its compliance to regulatory requirements and intends to remedy any compliance needs through the development of appropriate processes. The SGR will accordingly reassess its position in regard to the consideration of any adverse impacts on sustainability factors that may arise as a result of changes in the operating situation, and it will provide disclosure of these from time to time.

Disclosure pursuant to article 5 of the SFDR - Remuneration policies

In accordance with the disclosure requirements of article 5 of Regulation (EU) 2019/2088, the SGR adopts a sound and prudent remuneration and incentive policy for its asset managers, which limits the sustainability risk-taking , in the context of broader business risks, including reputational and operational risks, by providing ESG objectives, measurable and quantifiable, linked to variable remuneration, in line with the remuneration policies of the Group to which it belongs.