Mandatory disclosures under the Regulation of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (EU) 2019/2088 (“SFDR”)
CONSTELLATION INVESTMENT GmbH (“CONSTELLATION”) is an alternative investment fund manager within the meaning of the German Capital Investment Code (Kapitalanlagegesetzbuch, KAGB) and as such publishes the following information in light of the consideration of sustainability-related aspects in accordance with the 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 (the “SFDR”).
Unless information is explicitly provided in relation to a specific fund managed by CONSTELLATION, the following statements refer to the management and investment decision-making processes of CONSTELLATION in general.
A. Sustainability Risks (Article 3 SFDR)
CONSTELLATION considers sustainability risks as part of its investment decision-making process. Sustainability risks are environmental, social or governance events or conditions, the occurrence of which could have an actual or potential material adverse effect on the value of the investment. CONSTELLATION considers and assesses sustainability risks as part of the due diligence process prior to any investment. This also includes an assessment of sustainability risks. Such assessment is being conducted through an ESG due diligence. The results of such assessment are taken into close consideration when the investment decision is being made and are documented. CONSTELLATION remains free in its decision to refrain from investing or to invest despite sustainability risks in which case CONSTELLATION can also apply measures to reduce or mitigate any sustainability risks. CONSTELLATION will apply the principle of proportionality in dealing with sustainability risks taking due account of the strategic relevance of an investment as well as its transactional context.
B. Principal Adverse Impacts (Article 4 SFDR)
No consideration of sustainability adverse impacts
CONSTELLATION does not consider adverse impacts of investment decisions on sustainability factors. Sustainability factors are environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. No sustainability indicators are currently used. The administrative burden associated with considering negative impacts on sustainability factors (especially the use of sustainability indicators) is disproportionate given the size of CONSTELLATION’s investments. As a consequence, it cannot be foreseen whether the data capture requirements as specified in the Regulatory Technical Standards (Delegated Regulation (EU) 2022/1288, “RTS”) can be met and at the current point in time CONSTELLATION must assume to not be able to fully take into account and monitor the principal adverse impacts (PAIs) of its investment decisions as requested by Article 4 SFDR. However, CONSTELLATION seeks to proactively engage with its portfolio companies to create long-term sustainable value. CONSTELLATION will monitor developments with regard to available information and reporting practices to determine when it will be reasonably possible to fully implement the processes required by the Article 4 SFDR and the RTS in the future.
C. Remuneration Disclosure (Article 5 SFDR)
As a registered alternative investment fund manager under section 44 para. 1 in connection with section 2 para. 4 of the German Capital Investment Code (Kapitalanlagegesetzbuch, KAGB), CONSTELLATION currently has no and is not obliged to have a remuneration guideline or policy that is consistent with the integration of sustainability risks. Sustainability risks are not considered with respect to the determination of remuneration.
CONSTELLATION does not invest in, guarantee or otherwise provide financial or other support, directly or indirectly, to companies, including funds, or other entities whose business activity includes coal, unconventional oil & gas, nuclear power, arms and weapons, tobacco, alcohol, adult entertainment, gambling. CONSTELLATION puts sufficient risk management processes in place to ensure that emergent and existing threats are (1) identified, (2) evaluated, (3) prioritized, (4) mitigated, (5) monitored and (6) continuously re-assessed. Still, we recognize that business decisions are risky in their nature and require to balance trade-offs.