Ecofin Energy Transition UCITS Fund (the “Fund”)
EU Sustainable Finance Disclosure Regulation (EU) 2019/2088 (“SFDR”)
Sustainability risk is defined as “an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment”.
It is concerned with the risk that the value of an investment could be materially negatively impacted as a result of environmental or social risks. It is also worth noting that such risks need only be considered where they could have a material negative effect on the value of the relevant investment.
Ecofin Advisors Limited is the Sub-Investment Manager. Research on environmental, social and governance (“ESG”) matters is undertaken by the Sub-Investment Manager’s investment team. The team believes that engagement on environmental and social issues is much more powerful when it comes from the person committing the money to the investment, rather than from a separate sustainability team.
Sustainability risk analysis is also a part of stock assessment to identify negative ESG risks, or potential risks, of investments to ascertain the nature of the sustainability risk, as well as its materiality. The primary aim of this process is to assess how each ESG risk can derail or materially impact the underlying investment case of a company. The Sub-Investment Manager integrates sustainability risk into its investment decision making process both at the initial due diligence stage and as part of its ongoing due diligence.
For narrative on the identification and integration of sustainability risks in the portfolio of the Fund please refer to Annex I and Annex II of this Supplement.
The disclosures in this section are made pursuant to Article 8 of the SFDR.
Information on how the environmental, social and governance characteristics of the Fund are met:
The Fund will invest in the public equities of companies that have at least 25% of their revenues derived from sustainability initiatives. As of a result of the promotion of an environmental approach, the Sub-Investment Manager believes the investments generate a more sustainable future as described by the United Nations Sustainable Development Goals 7, 9, 11, 12, & 13, which, among other things, call for climate action, responsible consumption and production, sustainable communities, and affordable and clean energy for all. According to the UN, a sustainable future is defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
As already provided within the Supplement, ESG research is thoroughly incorporated into the investment process for the Fund. Each company has an assigned analyst who is responsible for all aspects of the research process and for engaging with company management. The Sub-Investment Manager utilizes a variety of company filings, engagements with management teams, and third-party research in its ESG assessment for qualitative analysis.
The Sub-Investment Manager’s perspective or edge in addressing energy transition is derived from its significant expertise in dealing with and evaluating policy frameworks within some of the major greenhouse gas (GHG) emitting industries, in particular utilities and sustainable infrastructure. The principal area of market inefficiency the Sub-Investment Manager is looking to exploit relates to its proprietary views on how policy frameworks (and laws) around ESG matters, such as climate change and emission efficiency, together with technology innovations, can conspire to create substantial deviations in market expectations.