Harmonization with provisions of the Regulation sustainability-related disclosures in the financial services sector

NO CONSIDERATION OF SUSTAINABILITY ADVERSE IMPACTS

1. Introduction

Regulation (EU) 2019/2088 of 27th November 2019 on sustainability-related disclosures in the financial services sector, as amended (hereinafter the "SFDR") governs the transparency requirements regarding the integration of sustainability risks into investment decisions, the examination of adverse impacts on sustainability and the disclosure of ESG information and sustainability-related information.

The Company, in the management of investment funds (Undertakings for the Collective Investment in Transferable Securities (UCITS), Alternative Investment Funds (AIFs) and Registered Alternative Investment Funds (RAIFs)), falls under the definition of a financial market participant as per the SFDR, therefore, it has the relevant obligations set forth in it and described in this Notification.

In general, the Company closely monitors the continuous developments in the changing regulatory framework and adapts its investment policy and products, in order to meet, not only the requirements of the supervisory authorities, but also the increased interest of investors for products and services with sustainable characteristics and goals investment.

2. Definitions

• Sustainable Investment:
  An investment in an economic activity that contributes to an environmental objective, as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water and land, on the production of waste, and greenhouse gas emissions, or on its impact on biodiversity and the circular economy, or an investment in an economic activity that contributes to a social objective, in particular an investment that contributes to tackling inequality or that fosters social cohesion, social integration and labour relations, or an investment in human capital or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives and that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance.
  
  
• Sustainability Risk:
  An environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment. 
  
  
• Sustainability Factors:
  Environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
  
  

3. Compliance with the SFDR

It is noted that, at this stage, no sustainability risks have been incorporated into investment decisions, nor have any negative impacts on sustainability been taken into account and / or environmental and social information, as well as information related to the Company's governance been disclosed, as described in the SFDR.

In regards to Environmental, Social and Governance (“ESG”) objectives the Company and the funds under its management invested in [equity securities, money market instruments, fixed income securities and Exchange Traded Funds], lacking sufficient data to assess against the products’ characteristics. The Company, is not, therefore, as things stand, in a position to reliably assess whether these financial products promote sustainability characteristics or whether the underlying investments follow good governance policies. As more data becomes available by the underlying institutions, in the future, and especially after the adoption of the regulatory technical standards under the Disclosure Regulation (“SFDR RTS”) are adopted by the European Commission, which has been delayed until January 2022 the Company shall reassess this position.

In addition, investments made by the Company do not take into account the EU classification criteria under the Taxonomy Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investments.

If, in the future, it is decided that sustainability assessments will be integrated into the investment analysis and decision-making process, in accordance with the SFDR, this Notification will be updated accordingly.

4. Disclosures

The Company ensures that pre-contractual disclosures, namely the Prospectus of the investment funds under the Company’s management and the Key Investor Information Document (KIID), are in compliance with the SFDR. The above documents are posted on the Company’s website www.wealthfs.com.cy/en.