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, clients may choose to apply ethical screening or other ESG criteria to their advisory or discretionary managed portfolios. Clients may, for example, express sustainability preferences for their portfolio, apply restrictions to direct holdings based on the proportion of turnover generated from certain activities, or choose to invest in ESG-rated funds or ETFs. Portfolios will then be managed in accordance with these client-directed preferences
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 does not currently consider the PAIs of its investment decisions on sustainability factors. This is because sustainability risk factors are not a fundamental part of the investment decision-making process. Kestrel Capital has also taken into account the nature and scale of its activities when determining this position. Kestrel Capital notes that it has fewer than 500 employees and is therefore not subject to the mandatory PAI reporting requirements.
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.
