The Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”) came into effect on 10 March 2021. This document has been prepared for the purpose of meeting the specific disclosure requirements set out in Articles 3 and 4 of the Regulation.
The objective of SFDR is to harmonize transparency rules with regards the integration of sustainability risks and the consideration of adverse sustainability impacts in the Fund’s investment management processes and the provision of sustainability-related information.
Sustainability risks are defined in Article 2 of 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 investment.
GreenGateFX Luxembourg 1 SCSp (“the Fund”), qualifies as a Financial market participant as defined in the article 3 of the SFDR. As a consequence, GreenGateFX General Partner Sarl (“the Manager”) discloses on its website information about its policy on the integration of sustainability risks in its investment decision-making process.
Transparency of adverse sustainability impacts at Fund level
Sustainability risks (climate change, health and safety, companies with breach issues such as serious criminal penalties, etc.) may represent a risk of its own and/or have an impact on other Fund risks. Therefore, sustainability risks may significantly contribute to the increase of the Fund risks, such as market risks, credit risks, liquidity risks and operational risks while negatively impacting the value and/or the return of the Fund.
Sustainability risks may have an impact on long-term risk adjusted returns for investors. Assessment of sustainability risks is complex and may be based on environmental, social, or governance data which is difficult to obtain and incomplete, estimated, out of date or otherwise materially inaccurate. Even when identified, there can be no guarantee that these data will be correctly assessed.
Therefore, the Manager considers, in addition to financial criteria, ESG criteria could help to enhance long-term risk adjusted returns for investors, in accordance with the investment objectives and policies of the Fund.
As of the date of this document, the Fund has not been designed to integrate sustainability criteria (as defined in the Article 8 or 9 of SFDR). Therefore, a superficial integration of ESG criteria will not encounter Article 8 and 9 of SFDR requirements.
As a consequence, neither the Fund nor its Manager promotes ESG characteristics (as defined in article 6 of SFDR) and do not have as main objective sustainable investments (as defined in the Article 8 or 9 of SFDR). This is mainly due to the fact that the Fund is investing in OTC derivative contracts.
Although GGFX might consider ESG criteria, it does not engage on actions in relation to adverse sustainability impacts, or policies in accordance with Article 3g of Directive 2007/36/EC, neither does it adhere to responsible conduct codes and internationally recognized standards for due diligence and reporting, or report the degree of its alignment with the objectives of the Paris Agreement.
GreengateFX’s investment manager does currently not apply an ESG policy. Sustainability risks being not integrated in the investment decision-making process, no specific incentives will be given to the identified staff to take additional risks related to the sustainability aspects and the investment manager therefore considers that the risk of discrepancy between its investment process and remuneration policy does not exist.