Disclosure of non-adherence to consideration of adverse impacts on sustainability factors in investment process

Introduction

The Sustainable Finance Disclosure Regulation (SFDR) is a European Union regulation that aims to enhance transparency and accountability on the integration of environmental, social and governance (ESG) factors into the financial sector. The SFDR applies to financial market participants, including alternative investment fund managers (AIFM), and financial advisers, who are required to disclose information on how they consider sustainability risks and impacts in their activities.

Policy Statement

B&B Capital Partners recognizes that sustainability risks may affect the performance of the AIFs it manages, and therefore, it intends to integrate the assessment of such risks into its investment decision making process in the future. The integration of sustainability risks is consistent with B&B Capital Partners’ fiduciary duty to act in the best interest of the investors and to pursue the investment objectives of each AIF. The integration of sustainability risks is also aligned with B&B Capital Partners’ commitment to responsible investment and to contribute to the transition to a low-carbon and more sustainable economy.

Implementation

B&B Capital Partners intends to implement the integration of sustainability risks into its investment decision-making process through the following steps:

• Screening: B&B Capital Partners applies a negative screening approach to minimize investments that are directly exposed to high sustainability risks or that are incompatible with its ESG criteria.
• Due diligence: B&B Capital Partners conducts a thorough due diligence process to assess the potential sustainability risks and opportunities of each investment opportunity. The due diligence process covers various ESG aspects, such as environmental impact, social responsibility, governance practices, and regulatory compliance. B&B Capital Partners uses both internal and external sources of information, such as ESG ratings, reports, and audits, to evaluate the ESG performance and risks of the target companies or assets.
• Decision-making: B&B Capital Partners incorporates the findings of the due diligence process into its investment decision-making process. B&B Capital Partners considers the materiality and the likelihood of the sustainability risks, as well as the potential mitigating factors and value creation opportunities. B&B Capital Partners may decide to reject, accept, or conditionally accept an investment opportunity based on its ESG assessment.
• Monitoring: B&B Capital Partners monitors the sustainability risks and performance of its portfolio companies or assets on an ongoing basis. B&B Capital Partners uses various tools and indicators, such as ESG dashboards, key performance indicators (KPIs), and benchmarks, to track and measure the ESG impact and value of its investments. B&B Capital Partners may also engage with its portfolio companies or assets to encourage them to improve their ESG practices and to address any sustainability issues or concerns.
• Reporting: B&B Capital Partners reports on the integration of sustainability risks into its investment decision-making process to its investors and other stakeholders. B&B Capital Partners discloses the ESG policies, strategies, and objectives of each AIF, as well as the ESG risks and impacts of its investments. B&B Capital Partners also complies with the relevant reporting obligations under the SFDR and other applicable regulations.

For existing funds under management: B&B Capital Partners Fund II SCSp (the Funds), B&B Capital Partners does not consider the adverse impact of investment decisions on sustainability factors, as defined in Article 4 1. (a) of the SFDR, as the funds aim at providing global diversification on well-functioning markets in relation to conventional benchmarks. In future, B&B Capital Partners will expand its investment management process to incorporate ESG related risk factors and to assess the adverse impact of its investment decisions on sustainability factors, in line with the regulatory developments and the best market practices.