Sustainability Risk is defined in the Sustainable Finance Disclosure Regulation (2019/2088) (“SFDR”) as an environmental, social or governance (ESG) event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the instrument.
Sustainability risk factors are not a fundamental part of the investment decision making process at Kestrel Capital.
However, during suitability discussions with Kestrel Capital, clients may choose to apply certain ethical screening, or other ESG criteria, to their advisory or discretionary managed portfolio. Clients may for instance select restrictions for direct holdings, based upon the proportion of turnover generated through a company’s involvement in an activity. Or clients may choose to only invest in ESG rated funds or ETFs. Portfolios are then managed to reflect these restrictions.
Sustainability risks are not integrated into Kestrel’s Remuneration Policy.
Principal adverse impacts (“PAIs”) are described as impacts that result, or might result, in negative effects on sustainability factors, such as social and employee matters, respect for human rights, anti-corruption or anti-bribery matters. Kestrel Capital has elected not to consider PAI at the present time, either in portfolio management or investment advisory services. This is because it is not a cornerstone of our investment process, and it is not required for investment firms with under 500 employees. Kestrel Capital has no plans to change this but will continue to review its approach to managing sustainability risks and adverse impacts on behalf of its clients.
