Disclosure of the requirements of Regulation (EU) 2019/2088 on sustainability

Statement of Principal Adverse Sustainability Impact

Statement of no consideration of adverse impacts of investment decisions on sustainability factors

Sustainability Risk Policy

Disclosure on the implementation of the requirements of Article 3 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector regarding the transparency of integration of sustainability risks in the investments decision-making process

Legal framework

Iolcus Investments S.A. A.I.F.M. (hereinafter “Company”) is an alternative investment fund manager established in Greece in accordance with Chapter II of the Directive 2011/61/EC (the “AIFM Directive”) and authorised and regulated by the Hellenic Capital Market Commission.

Within the scope of its regulatory authorisation, the Company manages funds that qualify as alternative investment funds (“AIF”) and further provides portfolio management for segregated accounts and/or investment advice.

1.1 Relevant legislation

Regulation EU 2088/2019 on sustainability‐related disclosures in the financial services sector (“SFDR”)

On 27 November 2019, Regulation (EU) 2019/2088 of the European Parliament and of he Council of 27 November 2019 on sustainability-related disclosure requirements in the financial services sector (hereinafter “SFDR”) was published and entered into force on 10 March 2021. The main objective of the SFDR is to create transparency on

how sustainability risks are considered in the management of products; and
if principal adverse impacts of investment decisions on sustainability factors are considered in the management of products.

Purpose of this policy

This policy describes the Company’s decision with respect to the requirements of article 3 SFDR regarding the integration of sustainability risks in the investment decisions-making process. The Company has chosen to integrate the sustainability risks in the investment decisions-making process. The policy herein is part of the Company’s Investment Policy.

Policy review

This policy will be reviewed and updated annually, and on an ad hoc basis in case of relevant changes to the organizational structure of the Company, in case of amendments to the regulatory framework governing this policy or if otherwise deemed necessary.

Definitions

(In the meaning 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 (“SFDR”).

Sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.

Sustainability factors mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

ESG factors, include (but are not limited to):

Environmental issues

Climate change, sustainable land use, waste management, reduction of greenhouse gas emissions, prevention of environmental risks

Social issues

Compliance with employment safety and health protection, employee rights, supply chain monitoring and consideration of interests of communities and social minorities.

Governance issues

Tax avoidance, executive pay, anti-corruption measures, Director nominations, Cyber Security

PRI Principles

The Company is signatory to the Principles for Responsible Investments (PRI). The six principles and the Company’s targets are listed below:

“1 We will incorporate Environmental, Social and Corporate Governance (ESG) issues into
investment analysis and decision-making processes.

2 We will be an active owner and to incorporate ESG issues into our ownership policies
and practices.

3 We will seek appropriate disclosure on ESG issues by the entities in which we invest.

4 We will promote acceptance and implementation of the Principles within the
investment industry.

5 We will work with the PRI Secretariat and other signatories to enhance their effectiveness in implementing the Principles.

We will report on our activities and progress towards implementing the Principles.”

6. Sustainability risk consideration-Investment Universe

The Company considers sustainability risks in its investment decisions besides the common financial analysis as well as the other portfolio specific risks. This consideration applies to the investment management process including the investment assessment and screening.

The investment universe gets shaped on the basis of a strategy of “ESG factor integration”.

The Company selects financial products based on the following criteria:

An ESG score of “average” or “leader”
Financial analysis criteria

ESG scores (which are provided by reliable third party data providers) show:

the exposure of issuers of financial products to ESG risks that arise by the occurrence of events that impact the environment, society, and corporate governance.
How effectively these issuers manage those risks compared to other peer corporations.

7. Governance

Investment Committee and portfolio managers have the responsibility to implement the policy.
Risk Management Policy: The Company has modified its risk management policy to identify and manage all risks including those linked to ESG factors.
Conflict of interest: The Company acts according to the “Iolcus Conflict of Interest Policy”
Monitoring

There are on-going reviews regarding risk control and ESG metrics

8. Awareness

The Company promotes awareness of sustainable and responsible investment among its staff members and to the public. This includes internal courses and presentations to the clients.

9. Voting Rights

The Company, where applicable, will use its voting rights to reinforce the sustainability targets.

ESG Investment Policy

Iolcus Investments’ ESG investment policy

Remuneration Policy

Disclosure on the implementation of the requirements of Article 5 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector regarding the transparency of remuneration policy in relation to the integration of sustainability risks

Legal framework

1.1 Relevant legislation

HCMC Decision 28/606/22.12.2011
Law 4209/2013 (article 13)
ESMA Guidelines _03.07.2013
Regulation EU 2088/2019 on sustainability‐related disclosures in the financial services sector (“SFDR”)

how sustainability risks are considered in the management of products; and
if principal adverse impacts of investment decisions on sustainability factors are considered in the management of products.

Purpose of this policy

This Remuneration Policy aims to establish the guidelines according to which the Company determines the pay of its employees whose activities have a material impact on the Company’s risk profile.

Policy review

The Company’s Board of Directors establishes, is responsible for, and periodically assesses the Remuneration Policy according to the existing regulatory framework, and with regard to the size, the internal organization, the nature and complexity of the Company’s activities.

An important parameter in the implementation of the Remuneration Policy is proportionality. The company does not have a complex structure and its activities and size allow for a relative flexibility with regard to the Remuneration Policy.

The Company reviewed the Remuneration Policy in relation to the integration of sustainability risks.

Definitions

(In the meaning 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 (“SFDR”).

Sustainability factors mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

Application of this policy

The employees whose activities have an essential impact on the company’s risk profile are:

Executive members of the BoD.
Managerial personnel

Persons carrying out control tasks

Portfolio managers

Structure of this policy

9.1 Type of Remuneration

Remuneration is defined as pay and provisions of any kind that is received by the staff, directly or indirectly, in return for the professional services provided by them, whether they are employees or not, such as wages, optional retirement provisions, variable remuneration or provisions that are dependent on the performance of the worker or by contractual terms, guaranteed variable remuneration and payments related to a unilateral termination of a contract. This remuneration can consist of cash payments, AIF shares, shares of the Company, as well as other elements of additional provisions, such as health insurance coverage, discounts, use of vehicles or cellular phones, etc.

The remuneration can be constant, such as pay and provisions which are not connected to the performance of the staff, or variable, such as additional pay or provisions that are dependent on the staff’s performance or on contractual terms.

The ancillary payments or provisions which are provided indiscriminately to the staff are a part of the general policy of the Company and are not included in variable remuneration.

9.2 Risk Management

There are no incentives provided for the assumption of excessive risk, nor is the assumption of risk beyond the Company’s strategy rewarded.
Remuneration practices are in accordance with the business strategy, the goals, the values and the long-term interests of the Company and discourage conflicts of interest.
Remuneration practices do not encourage the assumption of risk that is incompatible to the Funds’ risk profile.
Remuneration practices do not encourage the assumption of sustainability risks. The sustainability risks are integrated into the investment decision process of the Company, (Sustainability Risk Policy). The Company makes the management decisions taking into account the risks arising from sustainability factors. The Company considers sustainability risks in their investment decisions beside the common financial analysis and along with the other, portfolio-specific, risks.

9.3 Contractual obligations

The Company ought to adjust its contractual obligations to the staff in order to ensure compliance with this Policy.

9.4 Staff that has been assigned control tasks

The staff that are assigned with control tasks, are remunerated on the basis of the achievement of the goals that are connected with their duties, independent of the business sectors that they control. The pay of the staff in the functions of risk management, regulatory compliance and internal control, are under the direct oversight of the BoD.

9.5 Adjustment of variable remuneration on the basis of risk

The Company defines the appropriate ratio between fixed and variable remuneration. Fixed pay represents a rather high proportion of the total pay, so as to make possible the application of a fully flexible policy on variable remuneration, including the possibility of not making those payments.
Guaranteed variable remuneration is not allowed. In exceptional circumstances they are allowed, only in the cases of the hiring of new personnel and are limited to the first year of their work at the Company.

The sum of variable remuneration does not limit the ability of the Company to strengthen its own funds. The Company suspends in total or in part the payment of supplementary pay when specific indexes are not satisfied in full or when its financial situation is significantly worsened, especially in the cases where the smooth continuation of its operations is rendered uncertain. In these cases, without prejudice to the general principles of the national labour law, including its provisions on employment contracts, the Company has the ability to demand the return of a payment already made, if, after the payment has been made, it is proven that the rewarded performance was the result of illegal practices.

Variable remuneration is never paid through methods or mechanisms that do not complied with this Policy.
The staff is obligated to not use personal risk hedging strategies or insurance connected with payments or responsibilities with violate the included herein risk alignment mechanisms.
Payments connected to the premature termination of the contract reflect the performance achieved over time and are designed is such a way as to avoid rewarding failures.

Retirement policy is in accordance with the business strategy, the goals, values, and long-term interests of the Company and the Funds it manages.
The remuneration does not encourage excessive risk‐taking with respect to sustainability risks and is linked to risk‐adjusted performance.

Variable remuneration can take the form of money, shares in AIFs or equity, when conditions are such that such moves are allowed and always in accordance with the provisions of Law 4209/2000 and the principle of proportionality. The financial instruments of this clause are subject to an appropriate retention policy, with the aim of aligning the incentives to the interests of the Company, the Funds it manages and the investors.
The payment of a significant part, and in any case of at least forty percent (40%) of variable remuneration is deferred for a period that is appropriate to the AIF’s share redemption policy and properly aligned with the nature of the risks of the AIF. This period referring to this current case is between three (3) and five (5) years, unless the lifecycle of the AIF in question is shorter. Remuneration payable that has been deferred shall vest no faster than on a pro-rata basis to the end of the deferral period. In the case of variable remuneration of a particularly high sum, the payment of at least sixty percent (60%) is deferred. The Company can take into account the principle of proportionality in the application of this paragraph.

9.6 Performance measurement

In the case where remuneration is connected to performance, the total sum of provisions is based on a combination of assessing the performance of an individual, the function to which they belong and the total results of the Company. In the process of the assessment both financial and qualitative criteria are taken into account. Indicatively, qualitative criteria include, but are not limited to professional qualifications, professional development, the degree of compliance of the person remunerated to the processes of the Company, the level of management of the sustainability risk.
The measurement of performance used to calculate variable remuneration components or pools of variable remuneration components includes an adjustment for all types of current and future risks and takes into account the cost of the capital and the liquidity required

the assessment of the performance is set in a multi-year framework in order to ensure that the assessment process is based on longer-term performance and that the actual payment of performance-based components of remuneration is spread over a period which takes account of the share redemption policies of the AIFs, the underlying business cycle of the Company and its business risk.

10. Publication

The following are included in the AIF Annual Report:

The total sum of remunerations for the financial year, distinguishing between fixed and variable remuneration that the Company is required to pay, as well as the number of beneficiaries, as well as any contribution to the added return that is to be paid by the AIF.
The total sum of remunerations received by managerial staff, and the total sum of remunerations of staff whose actions have a material impact on the risk profile.

[1] Further clarifications will be provided by the Regulatory Technical Standards with regard to the content, methodologies and presentation of disclosures pursuant to article 2a (3), article 4 (6) and (7), article 8 (3), article 9 (5), article 10 (2) and article 11 (4) of the SFDR. These Regulatory Technical Standards are expected to be applied as from 1 January 2022.

[2] Article 2 (22) of the SFDR defines sustainability risk as an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.

[3] i.e. focus of the strategy on defined environmental and/or social aspects provided that good governance practices are adhered to.

[4] Legally required considerations such as exclusion of companies associated with cluster munitions are per default considered.