Integration of Sustainability Risks in the Investment Decision-Making Process
As a diligent and prudent management entity, Altos Equity Partners takes into account various risks that may be relevant to fund investments, including sustainability risks. As defined in Regulation (EU) 2019/2088 of the European Parliament and of the Council, dated November 27, 2019 (Sustainable Finance Disclosure Regulation or SFDR), such risks are environmental, social, or governance (Environmental, Social, and Governance – ESG) events or conditions that, if they occur, may cause a significant real or potential negative impact on the investment’s value. The consideration of these risks is done on a case-by-case basis, depending on the circumstances and characteristics of the managed funds, weighed based on their nature, scale, and complexity of the investments to be made and proportionate to the size of Altos Equity Partners.
These principles are applied in various stages of the decision-making process:
- Screening: In the process of identifying investment opportunities, exposure to sustainability risks will be considered, which may include lists of sectors most exposed to such risks.
- Investment Analysis: Information collected in the previous phase, whenever relevant, will be supplemented with additional information.
- Due Diligence: Whenever appropriate, due diligence processes should consider such risks in their analyses, including mitigation measures.
- Investment Decision: Information collected and analyzed in the previous phases should be taken into account in the decisions to be made, including any mitigation measures.
- Portfolio Monitoring: Relevant sustainability risks and respective mitigation measures will be considered in regular monitoring activities.
The impact of these types of risks on the value and return of investments should be evaluated on a case-by-case basis and integrated into the management entity’s investment decision-making process.
Non-consideration of the Negative Impacts of Investment Decisions on Sustainability Factors
Notwithstanding its diligent and prudent conduct under the management mandates assigned to it, Altos Equity Partners currently does not take into account the negative impacts of investment decisions on sustainability factors, based on the following:
- The management entity does not meet the requirements for large financial market participants provided for in paragraphs 3 and 4 of Article 4 of the SFDR.
- Funds managed do not fall within the scope of paragraph 1 of Article 8, nor paragraphs 1, 2, and 3 of Article 9 of the SFDR, and it is not foreseen that investments underlying funds managed by it will take into account the European Union criteria applicable to environmentally sustainable economic activities.
- The publicly available information on target companies in terms of ESG, particularly regarding the indicators listed in Annex I of the Commission Delegated Regulation (EU) 2022/1288, dated April 6, 2022, is not sufficient for due consideration of these impacts, nor is it expected that such companies will have and effectively provide this information. It is also not expected that such information can be provided by third parties or at costs proportionate to the size of the management entity.
If the above circumstances change in the future, Altos Equity Partners may reconsider this matter and, in such case, will duly inform any changes, but it is not currently possible to anticipate a date for this.
Remuneration Policy
Altos Equity Partners currently does not have a remuneration policy that integrates sustainability risks. Nevertheless, given the relevance of the matter, this will be re-evaluated in due course in light of the circumstances that then apply.