SUSTAINABILITY RELATED DISCLOSURES (ENTITY LEVEL) - COUNTERACT
In accordance with Articles 3, 4 and 5 of the EU 2019/2088 Regulation on Sustainability Related Disclosures in the financial services sector (Sustainable Finance Disclosure Regulation or "SFDR"), please refer to the sections below and the associated documents to read how Counteract Partners Ltd (“Counteract”) has integrated sustainability risks and material adverse sustainability impacts in its investment processes together with the requisite disclosures regarding Counteract’s remuneration policy.
SUSTAINABILITY RISK POLICY
The SFDR has applied from 10 March 2021 (the “Application Date”). Article 3 (1) of the SFDR requires “Financial market participants shall publish on their websites information about their policies on the integration of sustainability risks in their investment decision-making process”.
Counteract’s Sustainability Risk Policy specifically addresses Article 3 (1) of the SFDR and can be accessed by clicking on the link below.
Counteract Sustainability Risks Policy
PRINCIPAL ADVERSE IMPACTS STATEMENT
The SFDR has applied from the Application Date and Article 4 (1) thereof requires “Financial market participants shall publish and maintain on their websites where they consider principal adverse impacts of investment decisions on sustainability factors, a statement on due diligence policies with respect to those impacts, taking due account of their size, the nature and scale of their activities and the types of financial products they make available”.
Counteract’s Principal Adverse Impacts Statement specifically addresses Article 4 (1) of the SFDR and can be accessed by clicking on the link below.
Counteract Principal Adverse Impacts Policy
REMUNERATION POLICY IN RELATION TO THE INTEGRATION OF SUSTAINABILITY RISKS
The SFDR has applied from the Application Date and Article 5 (2) thereof requires “Financial market participants and financial advisers shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks and shall publish that information on their websites.”
Counteract, as an appointed representative of Khepri Advisers Limited, is not required to maintain a remuneration policy pursuant to any one of the specified Directives (or the successor legislation to any one of such Directives as is in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018) cited in Article 5(2) of the SFDR.
Counteract has, however, adopted an approach to remuneration consistent with the requirements of an alternative investment fund manager pursuant to Directive 2011/61/EU. Once it has established an HR function, Counteract will look to develop a formal remuneration policy by 30th June 2023 as part of the development of a broader set of HR policies and procedures. This statement will be updated accordingly at that time.
Counteract’s first and only fund, Counteract One (the “Fund”), has as its objective to ‘catalyse 5 gigatons of CO2e removal by 2050’. This sets an extremely ambitious but clear goal for Counteract and for the Fund. As a sustainable investor, Counteract also considers a broader set of material sustainability factors within its investment process – including the sustainability risks and principal adverse impacts related to each potential investment.
Counteract’s approach to remuneration is linked to its performance in achieving this primary fund objective and how it considers and incorporates these broader material sustainability factors. Its approach is split between its short term (annual team member) remuneration and long term (GP carried interest) remuneration.
Short term remuneration
As a committed impact investor, all of Counteract’s team members are expected, as part of their day-to-day responsibilities, to consider and assess sustainability factors and risks as part of the investment process and during active asset management. Given these expectations, annual team member remuneration considerations (salary and bonus reviews) are not explicitly linked to individual performance in incorporating sustainability risk and sustainability factors. Instead, Counteract takes a balanced discretionary approach to annual team member remuneration that incorporates, inter alia, performance dimensions that include, business results, leadership and teamwork, risk, personal development and conduct.
Long term remuneration
Counteract’s long term remuneration (GP carried interest) is directly linked to the Fund’s financial performance and also its performance against its primary CO2e objective only. This reflects the distinct focus of Counteract and reinforces our commitment to delivering an impact on Greenhouse Gas (GHG) removals.
The GP’s potential carried interest is linked to the Fund’s long term performance. As such, where sustainability risks have an impact on the Fund’s financial performance, this is directly related to the GP carried interest – and hence the quantum of the team’s long term remuneration.
Furthermore, the GP’s potential carried interest is set to vary between 16% and 24% of the fund’s returns, with a central case of 20% for achieving the target of ‘catalysing 5 gigatons of CO2e removal by 2050’. The principles and methodologies for calculating the fund’s actual performance against its ‘catalysing 5 gigaton’ target are detailed in the LPA and incorporates the contracting of a third party carbon removal expert to ensure objectivity and transparency in the application of the key carbon removal calculation methodologies to the calculation of the GP carried interest.
SUSTAINABILITY RELATED DISCLOSURES (PRODUCT LEVEL) - COUNTERACT ONE
Counteract One (the “Fund”) has “sustainable investment as its objective or a reduction in carbon emissions as its objective” as defined in Article 9 of the EU 2019/2088 Regulation on Sustainability Related Disclosures in the financial services sector (Sustainable Finance Disclosure Regulation or "SFDR").
More information on the sustainable investment objectives of the Fund, including the binding elements of its investment strategy, the sustainability indicators used to measure the attainment of those objectives, and a graphical breakdown of the Fund’s planned asset allocation, can be accessed in the link to the Website Disclosure below for financial products referred to in Article 9 of the SFDR.