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 (hereinafter, the “SFDR Regulation”) requires TORSA CAPITAL, S.G.E.I.C., S.A. (hereinafter, “Torsa” or the “Manager”) to make certain disclosures on its website, including information on the integration of sustainability risks in its investment decision-making process; its approach to adverse sustainability impacts; and the consistency of its remuneration policies with the integration of sustainability risks.
Its purpose is for end investors to have information on the integration of sustainability risks carried out by the Manager’s vehicles.
Information on the policy related to the integration of sustainability risks in the investment decision‐making process (Article 3 of the SFDR Regulation)
Sustainability risks are environmental, social or governance events or conditions whose occurrence could cause an actual or a potential material negative impact on the value of the investment.
In this respect, it must be pointed out that as part of investment assessment, Torsa will consider the risks related to sustainability of potential investments when considered opportune.
The Manager seeks to recognise, assess and weigh up the relevant risk factors appropriately, when making investment recommendations for its clients. Therefore, sustainability risks are just one of the diverse risk aspects considered as part of investment decision-making. Other risk factors considered could include (but are not limited to): market, liquidity and/or counterparty risks. Therefore, ESG (Environmental, Social and Governance) factors are taken into account in the investment decision-making process as an additional tool that provides greater information on the actual and potential non-financial risks of the investments.
Torsa will apply the principle of proportionality at all times, duly taking into account the strategic relevance of an investment, as well as its transactional context.
Information on the policy in relation to the consideration of adverse sustainability impacts (Article 4 of the SFDR Regulation)
It is reported that Torsa is not explicitly taking into account the adverse impacts of its investment decisions on sustainability factors due to the lack of detailed information and a due diligence policy in relation to these adverse impacts.
Pursuant to Consideration (20) of the SFDR Regulation, Principal Adverse Impacts (PAI) should be understood as those impacts of investment decisions and advice that result in negative effects on sustainability factors (environmental or social).
Pursuant to Section 3 of Article 4 of the SFDR Regulation, the PAI statement is only compulsory for financial markets participants exceeding the criterion of the average number of 500 employees on their balance sheet dates.
On this basis, although Torsa is not obliged to fulfil this disclosure requirement, we will be watchful of upcoming challenges in the field of investment sustainability, undertaking to increasingly take into account ESG factors, in order to foster more responsible investment.
Transparency of remuneration policies in relation to the integration of sustainability risks (Article 5 of the SFDR Regulation)
Being SGEIC registered with respect to Article 5.4 of Law 22/2014, of 12 November, regulating venture capital entities, other collective investment entities and collective investment management companies, which amends Law 35/2003, of 4 November, on Collective Investment Institutions (“LECR”), Torsa is not obliged to disclose the remuneration policy on its website.
In any case, the Manager considers that its remuneration policy is consistent with its approach of integrating sustainability risks in the investment decision-making process. Sustainability risks are taken into account, among other potentially significant risk factors, when it comes to taking investment decisions and failure to take into account any of the significant risks may have an adverse impact on the investment performance.
In general, the Manager’s remuneration policy is based on fixed and variable remunerations. Variable remuneration is determined on a discretionary basis and is closely linked to the performance of each employee and the Manager’s overall financial performance. With this system, any failure in the consideration of sustainability risks with an adverse impact on the investment performance would be reflected in the overall of variable remuneration awarded to staff. Furthermore, in this case, adverse performance is likely to have an individual impact on variable remunerations.