Sustainability

INFORMATION ON SUSTAINABILITY - SDR

Sustainability policy of the Fund Manager: (Article 3)

Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (the “SDR”) entered into force on 10 March 2021. SDR is part of the European Commission's action plan for the financing of sustainable growth and the objectives include ensuring transparency and openness on sustainability-related issues.

Among other things SDR states that financial market participants and financial advisers must act in the best interests of end-investors, including, but not limited to, the requirement to perform an appropriate due diligence prior to investments being made. Recital 12 to the Disclosure Regulation states that in order to fulfil its regulatory obligations, financial market participants and financial advisers should integrate into their processes, including due diligence, not only all relevant financial risks, but also all relevant sustainability risks that could have a significant adverse impact on the financial return of an investment or on the advice provided, and that such risks are to be continuously evaluated. A ‘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.

Proxy P Management AB (“Proxy” or the “Fund Manager”) has adopted an environmental, social and governance (“ESG”) policy (the “Policy”), outlining the general principles on how ESG and Sustainability Factors are integrated in the investment strategies of the respective sub-funds of the Fund and which specifies how the Fund Manager follows principles for responsible investment and how sustainability risks are incorporated in the investment decisions. The policy applies to all funds managed by the Fund Manager.

The Policy also outlines the general principles on how ESG and Sustainability Factors are integrated in the investment strategies of the respective sub-funds of the Fund.

The Fund Manager is a signatory of the United Nations-supported Principles for Responsible Investments (“UNPRI”). The UNPRI is recognised as leading global network for investors committed to integrating ESG considerations into investment practices.

The Policy is reviewed and updated at least on an annual basis or regularly whenever required due to changes of general principles set out in the Policy or in case of regulatory changes. Additional details on the Fund Manager’s Policy will be published on the Fund Manager’s website, on the following link: www.proxypm.se

Transparency of adverse sustainability impacts at entity level (Article 4/7)

Currently the level-2 rules detailing how to evaluate adverse sustainability impact indicators are not yet fully defined. Therefore, the Fund Manager chooses initially not to consider negative consequences for sustainability factors under SDR. However, as outlined in the Policy, adverse sustainability impact is considered already today through for example partial scope analysis. The Fund Manager expects to comply as rules becomes clearer and be compliant at the latest by January 2022.

Article 6

Sustainability work process 

The Fund Manager’s investment process is based on its ESG framework, taking relevant aspects into account.

The primary objective is to generate stable risk adjusted financial returns and ESG objectives are part of the toolbox used to generate alpha and outperformance.

The Fund Manager’s investment strategy aims at being ESG compliant strategy as the energy transition universe inherently includes companies which are critical for global reduction in Green House Gas Emissions (GHE) and consequently a more sustainable business environment.

ESG objectives support the fund’s risk framework and enhances risk mitigation. A high ESG score is considered increased quality assurance and indication of company longevity.


How sustainability risks are integrated

Proxy operates through an active investment strategy where the capital manager continuously makes assessments about the investment objects business models, market positions, future prospects and sustainability risks. The scope of the analyzed risks is environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters. Based on the results from the analysis we form an opinion if we will invest or not.


How sustainability risks are identified

Sustainability risks are identified through internal analysis. Proxy considers sustainability risks in conjunction with all investments which means attempting to identify and document what sustainability risks are relevant for each investment and how they are expected to affect the returns.


How the due diligence of potential sustainability risks is integrated 

Proxy operates through an active investment strategy where the capital manager continuously makes assessments about the investment objects business models, market positions, future prospects and sustainability risks. The sustainability risk analysis and assessments are carried out by the fund manager before new investments are executed.


How the identified sustainability risks are evaluated and prioritized

When it comes to sustainability risks there is no such thing as a multipurpose tool or an all-round general solution for everything. What is a severe problem in one industry can be off lesser importance in other industries. The identified sustainability risks are evaluated by the Fund Manager before new investments occur.


  • Measures

NEGATIVE EXCLUSION

Proxy’s investment universe focuses on the Energy Transition Theme and as such, directly exclude companies with unwanted business models and industry sector exposure, for example:

Fossil Fuel (Oil and Gas)

General negative environmental impact factors

  • CO2 emission
  • Non-renewable energy source
  • Waste and inefficient use of resources


POSITIVE INCLUSION

Proxy is proactively and intentionally seeking out companies who are supporting the transition to a carbon free economy.

Proxy is focusing on three areas of energy transition:

1. Energy Efficiency – systems and technologies that provide a more efficient energy consumption which in turn result in declining GHE/CO2.

2. Electrification – energy storage technologies, like batteries, replace the usage of oil leading to a decline in GHE/CO2.

3. Renewables – replaces coal and natural gas based energy production, supporting a decline in GHE/CO2.

Proxy aims to analyse and understand the overall impact of the individual portfolio companies and the GHE/CO2 impact of the investment universe.

We analyse the data from two perspectives: absolute and rate of change. We also analyse it from a sub-sector and geographical point of view. Our analysis and calculations results in a Proxy proprietary ESG score for each individual company.

As an owner Proxy will in short address issues such as:

  • Social issues, we promote sound labor and human rights practices and expect all portfolio companies to provide adequate solutions for human health and safety in their operations.
  • Compliance with international conventions and norms, Proxy expects companies to conduct business in a manner which is in line with well-established and generally agreed international conventions and norms, such as the UN Global Compact’s ten principles on human rights, environment, and anti-corruption. We seek not to invest in companies with severe or systematic ESG controversies where active shareholder engagement is deemed to have limited effect, affecting shareholder value negatively.
  • Unethical business practices, we expect our portfolio companies to have zero tolerance against unethical or illegal business practices, bribery, corruption and tax evasion. We believe that unethical business practices are a signal of bad management and short-term views making these companies less attractive as investments.


Article 5 - Compatibility of the remuneration policy with the sustainability risk integration policy 

Proxy’s remuneration policy shall be consistent with the sustainability risk integration policies at any given time.

The purpose of Proxy's remuneration policy is to counteract a risk-taking that is not compatible with the Fund's (and its sub-funds) risk profile, fund regulations and the common interest of unitholders. The company's remuneration structure does not encourage excessive risk-taking, nor in terms of sustainability risks. Employees should not be able to take excessive risk or disregard identified sustainability risks in the performance of their duties.

For further information see our remuneration policy which can be received by request.




Proxy P Management policy on long-term shareholder engagement

Swedish government on Directive 2017/828 of EU stipulates that an AIFM has to report on below points:

  • Overview of the AIFM policy on voting and shareholder engagement in portfolio holdings
  • Overview of the most important shareholder votes for the preceding year
  • Information if the AIFM has used advice or voting recommendations from voting advisors

Proxy P reporting on above for 2018:

  • Proxy P has an internal policy in regards to how the AIFM acts as a shareholder in portfolio companies, the policy can be supplied to fund investors in Proxy P managed funds at request to info@proxypm.se. The policy is reviewed and approved on at least an annual basis by the board of Proxy P. Proxy P current approach to shareholder issues can be summarized to be of a passive approach, meaning that Proxy P closely follows shareholder issues and important questions for the portfolio holdings including questions raised at shareholder meetings. However, Proxy P's current policy is not to be an active owner in the portfolio companies. When and if Proxy P votes on shareholder issues ,Proxy P always acts in a manner that follows our ESG policy and is in the best interest of our fund shareholders to the best of Proxy P's knowledge.
  • Proxy P funds were launched in December 2018 and has as such not been involved in any shareholder votes for 2018
  • Proxy P has not utilized voting advisors in any way for 2018