The Sustainable Finance Disclosure Regulation (”SFDR” or “the Regulation”) applied from 10 March 2021. This Sustainability Risk Policy specifically addresses the obligation in Article 3 of the Regulation which requires either financial market participants and/or financial advisers (as applicable) to:

“…publish on their websites information about their policies on the integration of sustainability risks in their [in the case of financial market participants] investment decision‐making process or [in the case of financial advisers] investment advice or insurance advice [(as applicable)].”

Sustainability Risks

“Sustainability Risks” as defined in Article 2(22) of the Regulation: “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 impact 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 portfolio companies; and governance risks such as inadequate management oversight of portfolio companies.

Integration of sustainability risks in investment processes

Entrepreneur First is a signatory to the United Nations Principles for Responsible Investing (UNPRI) and includes environmental, social and governance issues (ESG) in decision-making, investing, and monitoring processes where appropriate. ESG related factors are one of many factors that Entrepreneur First considers when evaluating an investment decision.

Further, the framework for sustainability risk-integration at EF includes both negative screening against controversial sectors such as weapons, and the provision and consideration of certain sustainability risk data at the investment committee.

Negative screening – We perform negative screening against our investment suitability checklist ahead of each investment decision, to ensure that any red flags are identified at an early stage. The investment suitability checklist is reviewed and updated for each of our funds, based on exclusions criteria determined by EF as well as by our investors.

Sustainability risk data – Our investment committee panel is provided with specific ESG and sustainability-risk data which are considered in investment decisions. The relevant data is derived from an ESG analysis of a company’s sector, operations, and objectives.

Review of the policy

EF is currently conducting a review of its ESG policy which sets out further details of the framework for sustainability risk integration at EF.