DECA Investments AIFM - ESG Policy disclosure (SFDR)

1.Background and Disclaimer

DECA  Investments  AIFM  (“DECA”)  a  private  asset  management  company  active  in  the  Greek market,  committed  to  a  philosophy  of  healthy  long  term  growth  and  sustainable  returns  on investment,  is  gradually  integrating  Environmental,  Social  and  Governance  (ESG)  metrics, factors and objectives into its investment philosophy, policy, stategy and processes in the whole investment  life  cycle  (pre-investment  mapping  phase,  due  diligence  phase,  post  investment monitoring phase) with the goal to minimize its investments risks, improve its financial returns and have a positive ESG footprint.

The ESG Metrics integration into the investment policy,  strategy, and processes of DECA is an ongoing  long-term  gradual  process,  that  may  affect  asset  allocation,  assets  valuation,  risk assessment and eventually risk and financial returns. DECA has developed this ESG Investment Policy,  which  will  be  part  of  its  internal  policy  and  strategy.  The  integration  of  the  ESG Investment Policy to the overall investment philosophy of the funds for which DECA performs investment management services, aims to build a reliable policy and strategy for ESG responsible investing, to  adapt  to  the  new  regulatory requirements  as set  by the  EU  Sustainable  Finance Framework, to minimize risks and to maximize returns in the long-term.

DECA is committed to a philosophy of sustainable return on investments and long-term growth. With this ESG Investment Policy, DECA aims to build an ESG responsible investing procedure, to adapt  to  the  new  regulatory  requirements,  set  by  the  EU  SFDR  (EU  2019/2088)  and  the  EU Taxonomy Regulation (EU 2020/852), minimizing risks and maximizing returns.

The ESG Investment Policy is available to all stakeholders on the official website of the Company and will be updated in due time and course, without prior notice.

 

2.Corporate Profile & Services

DECA  operates  under  a  model  of  corporate  governance  structure,  with   an  independent investment decision making mechanism under a comprehensive investment, approval, and risk- management framework. The team consists of professionals, who are committed to try hard to generate attractive returns for the shareholders, enhance high shareholder added value with sound corporate governance and generate attractive workplaces for the portfolio companies’ employees. DECA follows a thorough investment process, which comprises several distinct stages including the sourcing of potential investments, financial investment analysis and valuation, ESG investment assessment, investment  committee  review, financial, legal, tax, technical  and ESG due diligence, transaction closing, active portfolio management, company performance and ESG monitoring, value creation and exit.

Defining ESG Investing for DECA

ESG Investing Definition: According to the PRI, Responsible Investing is an investment process and approach to investing that aims to incorporate Environmental, Social and Governance (ESG) factors  into  the  investment  decision  making  process,  to  better  manage  risk  and  generate sustainable, long-term returns. A central feature of responsible investing is the identification and analysis  of  significant  ESG  metrics  (KPIs)  at  portfolio  companies  or  investment  targets  (the combination of which reflect Risks and Opportunities), to take them into account by the design and implementation of the investment strategy.

Source: Principles for Responsible Investment (PRI).

“Sustainable Investing’ means an investment in an economic activity that contributes to:

  • an environmental objective (‘E’), as measured, for example, by key resource efficiency indicators on the use of energy, renewable energy, raw materials, water, and land, on the production of waste, and greenhouse gas emissions, or on its impact on circular economy or
  • an investment  in  an  economic  activity  that  contributes  to  a  social  objective  (‘S’),  in particular  an  investment  that  contributes  to  tackling  inequality  or  that  fosters  social cohesion,  social  integration  and  labor  relations, or  an  investment  in  human  capital  or economically or socially disadvantaged communities, provided that such investments do not significantly harm any of those objectives or
  • that the investee companies follow good governance practices (‘G’), in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance.

Source: 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. Article 2, par. 17.

 

3.ESG legal Frameworks and Principles acknowledged

Following  relevant  legal frameworks  and  principles  are  acknowledged  for  this  ESG  Policy  and

Strategy:

 

4.DECA Investments’ ESG Principles

  • Integration of ESG issues into the overall investment processes, policy, and strategy in the  complete  investment  life  cycle  (pre-investment  evaluation  phase,  due  diligence phase, post investment monitoring phase). Incorporating pre investment ESG assessment and  ongoing  post  investment  ESG  assessment  of  portfolio  companies  and  taking  into account the sector, segment, size and countries of operation of the candidate investee company.
  • Active integration of ESG metrics into the investment process with the implementation of ESG investment strategy, which are in line with the overall investment philosophy, and the application of transparency and disclosure of the important and relevant ESG KPIs.
  • Active shareholders in portfolio companies. Strategic goal is the ongoing performance and ESG improvement of portfolio companies with the incorporation of ESG metrics into their strategy and disclosure of their material ESG metrics (e.g., in an annual sustainability report)

 

5.DECA’s main ESG considerations in its Investment Policy:

  • Will exclude   certain   sectors   and   segments   (some   absolutely   and   some conditionally) with high risk and potential negative impact on ESG issues
  • Will actively seek sectors, segments, and investments with positive (best) impact on ESG issues, or low risk
  • Will be (in its capacity of investment manager of the fund(s) active shareholders

of portfolio companies and seek ESG improvement of investee companies.

DECA has adopted the following process to design an efficient SFDR compliant investment policy and  strategy  considering  the  ESG  Risks  and  Opportunities  in  the  investment  decision  making process. DECA takes into consideration following ESG steps in its investment process:

  • ESG Assessment & Screening at pre-investment phase.
  • ESG Evaluation by the Investment Committee. The Investment Committee is responsible for ensuring  that  the  ESG  principles  and  policy of  DECA  are  extended  to  the  portfolio companies.
  • DECA Investment Universe.
  • ESG Due Diligence.
  • DECA Portfolio Construction, decided by Investment Committee
  • Ongoing ESG Review & Improvement. Ongoing active shareholder engagement (ESG post- set Questionnaire).

DECA’s scope is to integrate ESG metrics, into the existing investment philosophy of the funds for which  it  performs  investment  management  services  to  the  extent  allowed  by the  investment management  agreement,  and  process  both  at  pre-investment  and  post-investment  phases. DECA’s focus is to adopt and apply the DECA ESG principles. This will be accomplished through incorporating ESG assessment at pre- and post-investment phases. Most important aspect is the ongoing ESG monitoring and review.

 

6.DECA’s Implementation Stages of ESG Investment Strategy

Pre-Investment  Phase.  Assessment  and  analysis  of  markets,  sectors,  ESG  assessment  (ESG Questionnaire). Application of ESG filters on the specific companies in the investment pipeline. ESG due diligence with approval by Investment Committee.

Post-Investment Phase: Portfolio ESG performance. Portfolio monitoring, review, improvement based on pre-set ESG strategy & ESG metrics, ESG performance measurement, attribution and evaluation, active shareholder. ESG monitoring, review & improvement, exit & re-investment.

 

7. DECA’s ESG Investment Strategy Filters:

DECA will consider the following ESG investment filters at its ESG Investment Strategy:

  • Negative - Exclusionary ESG screening strategy (pre-defined sectors, segments, countries, regions excluded).
  • Positive / Best in Class ESG screening strategy (pre-defined preferred sectors, segments selected). Norms – based sub – strategy.
  • Proactive application of DECA pre-set and listed ESG metrics.
  • Active shareholder engagement.

Transparency and Disclosure

This ESG Investment Policy and Strategy is in accordance with Articles 3 and 4 of the EU SFDR Regulation (EU 2019/2088).

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