Remuneration Policy – Sustainability Risks (SFDR Article 5)

The Sustainable Finance Disclosure Regulation (”SFDR” or “the Regulation”) applied from 10 March 2021. This Remuneration Policy (Sustainability Risks) specifically addresses the obligation in Article 5 of the Regulation:

“Financial market participants and financial advisers shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks, and shall publish that information on their websites.”

Sustainability Risks

A “Sustainability Risk” as defined in Article 2(22) of the Regulation is: “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 an investment”.

Sustainability Risks include (but are not limited to) the following:

  • environmental risks such as the impacts of environmental events such as increased flooding risks on operations of portfolio companies;
  • social risks such as impact of non-compliance with anti-slavery or working conditions laws and regulations by a portfolio companies; and
  • governance risks such as inadequate management oversight of portfolio companies.

Remuneration and sustainability risks

Entrepreneur First does not currently have a remuneration policy that is consistent with the integration of sustainability risks, except to the extent described below. Among other forms of remuneration that are provided on a fixed basis, the firm awards employees variable discretionary bonuses on an annual basis. Remuneration levels are justified according to the performance of the individual concerned. The total amount of variable remuneration is based on a combination of the assessment of the performance of the employee and the overall results of the product (where relevant), as well as the conduct of the employee under any relevant internal procedures, policies and compliance requirements (which may, to the extent applicable, include factors relating to Sustainability Risks). This will be reviewed as appropriate on a regular basis.

EF benefits from insights from Option Impact to understand our position in relation to the market. EF sets out for its salary model to be fair, comprehensible, motivating and aligned. Our focus in 2021 remains to bring our existing salary model further in line with the integration of sustainability risk, and we are reviewing approaches to this in 2021.