Implementation and monitoring of ESG issues for responsible investment
Armònia understands that the process of long-term value creation requires careful management of environmental, social and governance risks that can enhance the value of a company for all stakeholders involved.
Since 2020, Armònia has been a signatory to the Principles for Responsible Investments (“PRI”), the six Principles for Responsible Investment promoted by the United Nations with the aim of helping to develop a more sustainable financial system through the incorporation of ESG factors into investment practices.
In 2020, Armònia also prepared and approved an ESG policy
Fund II qualifies as a financial product that promotes environmental and social characteristics, among others, and makes investments in companies that comply with good governance practices, according to Art. 8 of the SFDR Regulations.
Article 3 – Transparency of sustainability risk policies.
By subscribing to the PRIs and preparing the ESG policy, Armònia has committed to include environmental, social and governance considerations during the analysis activities of an investment by concretizing this commitment both directly through the SGR’s activities and indirectly through the companies involved in investment transactions
Armònia excludes from investment activity companies involved in criminal or illegal activities or involved in serious and systematic violations of human rights, serious damage to the environment or cases of manifest corruption, as well as in activities or sectors considered controversial as explicated within the regulations of the funds from time to time managed
For each investment opportunity, through ESG due diligence entrusted to leading specialized advisors, Armònia analyzes the risks and opportunities related to ESG issues relevant to the individual target company and its sector, considering current and future trends in sustainability, along with a careful and thorough assessment of the ethics and reputation of the relevant corporate management.
Based on the findings of this due diligence, Armònia identifies the most relevant ESG risks and areas of improvement for the target company by formulating a corrective action plan (ESG Action Plan) broken down into specific refinement goals
The highlighted sustainability risks are also monitored and managed during the holding period, through the portfolio company’s implementation of the ESG Action Plan and periodic review of the company’s performance in relation to the developed adaptation plan
Art. 4 – Transparency of adverse sustainability effects at the subject level.
Pursuant to Article 4(1)(b) of Regulation 2019/2088 (SFDR). – Transparency of negative sustainability effects at the “entity” level. – Armonia SGR does not currently consider the negative effects of its investment decisions on sustainability factors. This approach is applied in consideration of the current size of the SGR’s investment activity, as required by the SFDR Regulations.
Harmony will continue to review its approach from time to time, and if it deems it appropriate, negative impacts of its investment decisions on sustainability factors at the overall entity level will be considered.
The assessment of the main negative effects of investment choices (so-called “PAI” – Principal Adverse Impacts) may also be an integral part of the approach to the management of investment funds that promote, among others, environmental and/or social characteristics, pursuant to Article 8 of the SFDR Regulations. In selecting the negative impact indicators to be monitored, the SGR makes direct reference to the material issues of the sectors in which the companies in the portfolio of funds classified as defined in Article 8 SFDR operate from time to time. Therefore, the SGR may consider and manage PAIs in accordance with the principle of relevance and materiality at the individual product level, according to the provision of Article 7 of the SFDR.
