Environmental, Social and Governance Disclosures
Objectives
The IforD Umbrella Fund hosts sub-funds with sustainable investment objectives, falling within the meaning of article 9 of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector. Each sub-fund has different specific social objectives, which may or may not include environmental objectives aligned with the Paris Agreement and the Sustainable Development Goals (SDGs). For further information, please refer to the disclosures which are available on the websites of the individual sub-funds.
LMDF Disclosures // FCCF Disclosures
Adverse Impact
The potential for adverse impacts also varies from sub-fund to sub-fund, but include those indicated in the table below:
| Risk | Details | Level | Mitigants |
|---|---|---|---|
| Social risks | The Fund financially supports businesses with limited regard for their social impact | Low | • Depending on the sub-fund, Investments are specifically oriented towards businesses with a strong social impact • Loans are provided with the sole purpose of promoting projects with a social and/or environmental impact • The Fund adopts an exclusion list prohibiting investments which are likely to have a substantial negative social impact • Covenants can be placed on companies requiring certain minimum governance, financial and/or social standards to be met • Monitoring of core social performance metrics from companies is received and analysed on a quarter or semi-annual basis depending on the sub-fund |
| Social and Employee matters | Fund invests in SMEs and companies in emerging markets which may have low governance standards and a lack of formalisation of HR issues | Medium | All sub-funds have an exclusion list with strict labour requirements All businesses are expected to comply with local laws regarding human resources Employment practices are monitored at the time of due diligence and reviewed during monitoring |
| Respect for Human Rights | Businesses do not give adequate regards to Human Rights in their practices | Low | The mitigants vary from sub-fund to sub-fund: • Within FEF, all businesses are expected to comply with Luxembourg (and EU) Law which enshrines Human Rights • Within LMDF, all businesses are expected to have social vision and mission – and these visions and missions are aligned with best practices in the industry. Practices are monitored through the ALINUS and other social performance measurement initiatives • Within FCCF, investees are expected to aim for FSC certification which ensures respect for relevant human rights in the forestry and forest industry sector |
| Governance | Fund works with young institutions, SMEs and institutions in developing countries which may have low levels of formalisation and weak governance | Medium | Governance structures are systematically analysed during due diligence. Board members will also be subject to scrutiny Covenants can be placed on companies requiring certain minimum governance standards to be met Local tax law is expected to be respected |
| Environmental risks | Risk that fund projects contribute to substantial degradation of environment | Low | All sub-funds adopt exclusion lists which include environmental factors. With the exception of FCCF, investments are generally not made into institutions which have a high exposure to environmental risk or make a substantial contribution to climate related factors. Within FCCF, projects are expected to obtain FSC certification, where possible, during the investment period |
| Anti-bribery and corruption | Underlying businesses engage in corrupt practices with consequent legal and reputational issues | Medium | Bribery and corruption risk is monitored on a geographical basis Risks stemming from bribery and corruption are monitored within the due diligence process Financing provided to institutions is to be exclusively used for specific purposes related to the Fund’s vision and mission |
Policies
Given the varied profiles of individual sub-funds, key information on policies and investment processes (including ESG policies and engagement policies, if relevant) is included on the sub-fund websites (LMDF // FCCF). Please do not hesitate to contact us if you are interested in receiving further information.
In order to support global initiatives relates to sustainable finance and to uphold global best practices, the SICAV has adopted the following measures:
- Operating Principles for Impact Management – The SICAV is a signatory to the Operating Principles – the arrangements are currently in place for FCCF, but the Fund hopes to expand this to cover the whole SICAV
- UN Principles for Responsible Investment – LMDF is a signatory of the Principles and the Fund is hoping to expand this to cover the whole sub-fund
- Task Force on Climate Related Climate Disclosures – The SICAV is a signatory to the TFCD and considers various climate related measures in its reporting for different sub-funds
- Exclusion lists – which prohibits investments into certain types of business which are considered to present a particular moral or environmental hazard
Criteria used in the performance assessment to determine variable remuneration reflect the Vision and Mission of the various sub-funds to generate social and/or environmental impact alongside financial returns. The variable remuneration structure also considers the long-term nature of many of the Fund’s objectives. Full details of the Fund’s Remuneration Policy are available here.
These disclosures reflect current practices within the Fund. Should there be any evolution in these practices, this will be reflected and explained on the website.