Mandatory disclosures under the Regulation of the European Parliament and of the Council on sustainability-related disclosure requirements in the financial services sector (EU) 2019/2088 (“Disclosure Regulation”):

Sustainability-related Disclosures

Strategies for dealing with sustainability risks in investment decision-making processes (Article 3 of the Disclosure Regulation)

We have integrated the analysis of sustainability risks into all phases of our investment decision making process. Principles for Responsible Investments as defined by the United Nations are a key element in this process - from the initial investment decision through the entire ownership period.

We have defined certain exclusion criteria, which prohibit any investment by the funds managed by ECM. Such exclusion criteria include gambling, pornography, weapons and tobacco. Further exclusion criteria are serious misconduct in the areas of environmental, social or governance (ESG). This includes, for instance, the cause of environmental damages, misconduct against employment law or human rights or damage to customers based on inadequate product safety or data security.

After the initial review of the businesses and sectors the deal team analyses company specific ESG aspects based on seller documents, management presentations, own research and expert interviews. To the extent considered relevant external consultants are mandated to perform a separate ESG due diligence. The risks and opportunities identified in the internal and external due diligence are part of the discussion of the Investment Committee.

During the ownership period, we provide support to the management teams of the portfolio companies in developing appropriate measures to achieve ESG goals specifically aligned to their business model. The initial assessment of the ESG status of a new investment and the development of KPIs can be supported by independent third party ESG reviews. The portfolio company regularly reports to its supervisory board on the developments of its defined individual ESG goals and implementation of strategic measures.

Mandatory disclosures on the consideration of adverse sustainability impacts at the entity level (Article 4 of the Disclosure Regulation)

At present, ECM does not take into account the principle adverse impacts of investment decisions on sustainability factors as defined by the SFDR, as it believes that the information provided by the portfolio companies is not sufficient to allow it to do so. However, we generally consider adverse impacts on sustainability factors by (i) defining certain exclusion criteria for investment opportunities, (ii) performing ESG due diligences and (iii) integrating ESG goals in the value creation strategy.

ECM monitors the developments with regard to available information of the funds’ portfolio companies and currently reviews its processes to be able to disclose the “principal adverse sustainability impacts statement” according to the template in annex I table 1 of the Commission Delegated Regulation (EU) 2022/1288 here in the future.

We aim to collect the underlying data and the current status of Principal Adverse Impact (PAI) indicators already in the due diligence phase and to define respective goals to improve those indicators. During our ownership phase we expect to include the PAIs in the annual reporting of ESG KPIs and report on the progress of each ESG KPI towards its targeted value.

Mandatory Disclosures on Remuneration Policy in Connection with the Consideration of Sustainability Risks (Article 5 of the Disclosure Regulation)

ECM Equity Capital Management GmbH or its closed-ended alternative investment funds do not have a remuneration guideline (remuneration policy) in accordance with the requirements of the KAGB. Sustainability aspects are not specifically factored into the employee’s compensation.


Last updated on 20 December 2022