Riverside Europe Partners S.à r.l.– EU Sustainable Finance Disclosure Regulation
Riverside Europe Partners S.à r.l. and Riverside Partners LLC (together the “AIFMs”) make the following disclosures in accordance with the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”)
Pursuant to Article 3 of the SFDR, AIFMs are required to disclose the manner in which sustainability risks (as defined hereafter) are integrated into the investment decision-making process.
A sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investments made by the AIFMs. In the context of the AIFMs, sustainability risks are risks which, if they were to crystallise, would cause a material negative impact on the value of the portfolios of the AIFMs' funds.
Such risk is principally linked to climate-related events resulting from climate change (i.e. physical risks) or to the society’s response to climate change (i.e. transition risks), which may result in unanticipated losses that could affect an investment. Sustainability risks can also affect companies by introducing social risks (e.g. gender gaps, social inequality) and governance risks (e.g. bribery issues, selling practices).
The impacts following the occurrence of a sustainability risk event may be numerous and vary in significance depending on industries, regions and asset classes.
Such sustainability risks are integrated into the investment decision making and risk monitoring to the extent that they represent a potential or actual material risks and/or opportunities to maximizing the long-term risk-adjusted returns. In particular, to mitigate risks and identify the value potential of an investment, the AIFMs and their affiliates (“Riverside”) conduct thorough due diligence of sustainability risks on their investment opportunities. This process includes scoring every investment opportunity using the Riverside ESG&V Index, which assesses the status of the potential investment with regard to environmental, social, governance and value standards and identify areas for potential improvement. After Riverside makes its investment, it aims to improve the ESG&V score of the portfolio company during its hold period. The Riverside ESG Index is integral to the life cycle of our portfolio companies and it is used to monitor and track ESG&V score, Riverside collects ESG Data (qualitative and quantitative) once a year from portfolio companies.
No consideration of sustainability adverse impacts
The AIFMs do not consider the adverse impacts of investment decisions on sustainability factors (as defined hereafter) in the manner prescribed by Article 4 of the SFDR because non-financial data is still not available in satisfactory quality and quantity to allow the AIFMs to adequately assess the potential adverse impact. However, the AIFMs may at fund level, on a voluntary basis, take into account principal adverse impacts of the investment made which they consider relevant to that specific investment, the result of which will be disclosed in an annual “Principal Adverse Impact Statement” relating to the relevant funds.
The SFDR defines sustainability factors as environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
Remuneration policy
The AIFMs pay their staff a combination of fixed remuneration (salary and benefits) and variable remuneration (including bonus). Variable remuneration for relevant staff takes into account compliance with all of the AIFMs' policies and procedures as well as with the AIFMs’ internal risk management framework and risk limits, including those relating to the integration of sustainability risks. In this regard, the AIFMs’ remuneration policies do not encourage risk-taking which is inconsistent with their internal risk limits or with the risk profile of the funds that the AIFMs manages, including regarding sustainability risks stemming in particular from climate-related events or from the society’s response to climate change.
