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 (“SFDR”) seeks to (i) establish a harmonised approach in respect of sustainability-related disclosures made by financial market participants to investors within the European Union’s financial services sector and (ii) to achieve more transparency regarding how financial market participants integrate sustainability risks into their investment decisions and the consideration of adverse sustainability impacts into the investment process. Financial market participants include AIFMs, MiFID authorised firms and UCITS management companies, in their capacity as manager of financial products (which includes all forms of AIFs and UCITS).
As a registered AIFM, Development Capital is considered to be a financial market participant for the purposes of the SFDR.
“Sustainability Risk” for the purposes of the SFDR and as referred to herein 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.
At Development Capital we integrate and evaluate Sustainability Risks as part of our investment process. Development Capital is committed to considering all Sustainability Risks in the course of its due diligence and in the monitoring of portfolio investments.
We believe that responsible and effective investing drives value in our portfolio companies and for the investors who back us. Development Capital seeks to maximise the returns on investment for all investors in our funds. We back ambitious companies that are adopting a responsible approach towards their environmental impact, their social impact and the governance of their business.
Development Capital has adopted a policy which details the integration of Sustainability Risks in the investment decision-making process, the management of Sustainability Risks and value creation opportunities post investment. In addition, the valuation of the fund’s investments are monitored on a quarterly basis and, in line with International Private Equity and Venture Capital Valuation (IPEV) Guidelines, are revised where necessary after taking into consideration all issues facing the portfolio company including any Sustainability Risks.
Development Capital has less than 500 employees and in accordance with Article 4 of the SFDR has chosen not to consider principal adverse impacts (“PAI”) on sustainability factors.
Development Capital supports the aims of PAI Reporting and uses its own procedures, policies and metrics to assess the impact of investment decisions on sustainability factors. We do not currently consider the PAI of investment decisions on sustainability factors for the purposes of, or to the detailed extent required by, Article 4 of the SFDR. The level of information required to comply with PAI reporting obligations is not currently available to support Development Capital to opt in to the PAI reporting obligations. As a result, Development Capital has chosen not to opt in to these requirements at this time. We continue to keep this decision under review as we work on developing an effective, accurate and auditable data collection process.
Development Capital is required under SFDR to include in its remuneration policy information on how its policy is consistent with the integration of Sustainability Risks.
Development Capital remuneration policy allows for relevant employees to be remunerated on both a fixed (salary and benefits) and variable (including bonus) basis. Variable remuneration payable considers personal and firm performance, including an assessment of an employee’s performance versus our investment policies and processes. As stated above, the assessment of Sustainability Risks forms part of our investment process. Therefore, how an employee integrates Sustainability Risk into investment decisions and portfolio monitoring is considered within our assessment of performance for remuneration.