In compliance with § 1 of article 3.º of the SFDR Regulation, GM is disclosing its internal policy on the integrating sustainability risks in the investment decision‐making process.
GM manages the funds and takes the investment decisions in accordance with the internal regulation and the investment conditions of the respective fund. Whether how and to what extent sustainability risks are considered depends on the investment strategy of the individual fund.
In accordance with § 22 of article 2.º of the SFDR Regulation “‘sustainability risk’ is 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 risks are independent risks, notwithstanding, GM does not consider sustainability risks autonomously from other risks, as an environmental, social or governance event or condition impact other types of risks and contribute as a factor to the materiality of them. In GM risk management system, we consider sustainability risks as sub-factors of other types of risks, in particular legal, reputational, operational and compliance risks.
Therefore, environmental, social, and governance events are considered, and the associated risks are integrated into the investment policy of each fund and the due diligence process of each target company when evaluating potential investments on behalf of the funds, as follows:
- Environmental events and conditions that may cause an actual or a potential material negative impact on the value of the investment are considered a sub factor of legal risk and is mitigated through the verification of the legal requisites applicable to the business of the company target of the investment: the target company shall hold the legal required licences and authorizations for the operation of its business, namely environmental licenses issued by the competent Environmental Authorities.
- Social events and conditions that may cause an actual or a potential material negative impact on the value of the investment are considered a sub-factor of the reputation risk, that can cause GM to lose credibility with stakeholders. In the investment decision making process GM has in considerations the jurisdictions where the target company is located or has subsidiaries: Investments will not be made in companies located in jurisdictions that do not grant the prohibition of human rights violations, child labour and any type of discrimination.
- Governance events or conditions are considered part of reputational and operational risks and are considered during the due diligence process. In respect of reputational risks, Golden Monarque only invests in companies whose board members, beneficial owners, or any related persons do not have any publicly available information that could cause GM to lose credibility with stakeholders. In respect of operational risks, GM only invests in companies which have solid corporate governance structures (Shareholder’s rights; structure of directors’ remuneration and expertise; composition of the Board of Directors; independence and effectiveness of functions of the members of the supervisory bodies).
- Governance events and circumstances also considers compliance and AML deficiencies of the target company. Investments in companies with compliance and AML deficiencies will not be executed.
