The Sustainable Finance Disclosures Regulation (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“) requires firms that manage investment funds and other collective investment schemes to provide transparency on how they integrate sustainability considerations into the investment process with respect to the funds and schemes they manage. The SFDR was supplemented and amended by (i) the Framework to Facilitate Sustainable Investment and amending the SFDR (EU) 2019/2088 (Regulation (EU) 2020/852) of the European Parliament and of the Council of 18 June 2020 (“Taxonomy Regulation”) and (ii) the Regulatory Technical Standards (Regulation (EU) 2022/1288) of the Commission of 6 April 2022 (“RTS”).
Throughout the lifespan of our investments and as an active investor with representation on the governance bodies of our portfolio entities, we engage actively with our portfolio companies so that together we identify and manage ESG risks, to the extent (i) such entities are subject to the ESG regulations and, in particular, Taxonomy Regulation and/or (ii) any such risks are identified by the entities in question, and try, if possible, to help such entities reducing any sustainability adverse impacts.
No consideration of adverse impacts of investment decisions on sustainability factors
The SFDR requires the fund managers that are not covered by SFDR’s criteria set out in Article 4(3) and (4) of the SFDR to disclose if they consider adverse impacts of their investment decisions on sustainability factors, namely, to make a “comply or explain” decision whether to consider the principal adverse impacts (“PAIs“) of its investment decisions on sustainability factors, in accordance with a specific regime outlined in SFDR, in the Taxonomy Regulation and in the RTS (the “PAI regime”).
Bright Ventures is not covered by the above SFDR’s criteria which applies to larger institutions and, accordingly, has exercised its option not to comply with the PAI regime, both generally and in relation to the Funds under management, hereby stating that it does not take into consideration the adverse impacts of its investment decisions on sustainability factors.
Bright Ventures has thoroughly assessed the requirements of the PAI Regime and is supportive of the goals pursued by the PAI regime. However, Bright Ventures understands not to be in conditions to opt to comply with the requirements of the PAI regime, due to its size, nature and the scale of its activities and, as in particular, considering that (i) its investment scope is limited to sectors and geographic areas that entail limited adverse impacts on sustainability, (ii) it invests in small entities and start-ups that, due to their size and limited resources, are not capable of providing the information required to determine precisely the adverse impacts of the investment decisions in accordance with the SFDR, the Taxonomy Regulation and the RTS, (iii) it’s an organisation with limited resources and personnel and not capable of determining precisely what the adverse impacts of its investment decisions would be, based on the different criteria set forth in the SFDR, the Taxonomy Regulation and the RTS, and (iv) companies and market data providers are not yet ready to make available all necessary data for the PAI regime. In practice, access to information on sustainability factors requires the use of external information sources, involving high costs that are disproportionate to the investment policy of the funds currently under management.
Also, currently Bright Ventures does not market or manage funds that promote, among others, environmental or social characteristics or a combination of both (as set out in Article 8 of the SFDR) nor those aimed at sustainable investments (as set forth in Article 9 of the SFDR). As such, the underlying investments of said funds do not consider the EU criteria applicable to environmentally sustainable economic activities.
Bright Ventures will keep its decision not to comply with the PAI regime under regular review but despite such current decision, Bright Ventures is aware that its investment decisions, as well as its portfolio entities’ activities may have an impact on sustainability factors and, as such, takes into account, whenever applicable, constructive ESG-related initiatives and policies, as part of Bright Ventures´ overall commitment to ESG matters, benefiting, in particular, from being part of a Corporate Group – Sonae – that highly values its commitment to ESG matters.
In particular, Bright Ventures remuneration policy complies with the applicable laws and follows international standards. It targets an alignment of interests between investors and the fund manager, avoiding incentives for inappropriate risk taking, being in line with its sustainable long-term financial development and consistent with the integration of sustainability risks, in accordance with the SFDR.
As a final note, we emphasize that Bright Ventures is fully aware of the importance of sustainable practices within the financial system and of its responsibility as a fund manager to encourage its portfolio companies to introduce sustainability principles into their management.
This is a matter under continuous review and Bright Ventures’ commitment will be at all moments to combine its investment strategy and goals with the active promotion of sustainability factors.
