Disclosures for the Sustainable Finance Disclosure Regulation (“SFDR”) [1]
These disclosures are made for the purposes of Articles 3(1), 4and 5 Regulation (EU) 2019/2088, known as the Sustainable Finance Disclosure Regulation or SFDR. It is made by Hercules Manager (“Hercules”), a Société à responsabilité limitée established in Luxembourg, with R.C.S. number B 192729. Hercules is an alternative investment fund manager registered with the Commission de Surveillance du Secteur Financier (hereinafter “CSSF”) in Luxembourg under article 3 (2) of Luxembourg AIFM Law.
1. Information on the integration of sustainability risks in investment decision‐making process (article 3 SFDR)
· Hercules identifies and analyses environmental, social or governance events or conditions that, if they occur, could cause an actual or a potential material negative impact on the value of an investment (“Sustainability Risks”) as part of its risk management process. Hercules believes that the integration of this risk analysis could help to enhance long-term risk adjusted returns for investors, in accordance with the investment objectives and policies of the alternative investment funds under Hercules’s management. Where Sustainability Risks occur for assets of a specific alternative investment fund, there will be a negative impact on such alternative investment fund that may result in a negative impact on the returns for the investors of such alternative investment fund.
· Sustainability Risks may not be considered by Hercules to be relevant because Sustainability Risks are not (a) systematically integrated by Hercules in the investment decisions of the relevant alternative investment fund; and/or (b) a core part of the investment strategy of the alternative investment funds, due to the nature of the investment objectives of the alternative investment funds. However it cannot be excluded that among other counterparties or sectors in which such alternative investment funds will invest may have bigger exposure to such Sustainability Risks than others. Sustainability Risks do not form a separate risk category, but the effects of Sustainability Risks are manifesting themselves in the different risk categories (e.g. market risk). An ESG event or condition that, if it occurs, could potentially or actually cause a material negative impact on the value of an alternative investment fund’s investment. Sustainability risks can either represent a risk of their own or have an impact on other risks and may contribute significantly to risks, such as market risks, operational risks, liquidity risks or counterparty risks. Consequent impacts to the occurrence of Sustainability Risks can be many and varied according to a specific risk, region or asset class.
2. Information on the integration of Sustainability Risks in the remuneration policy (article 5 SFDR)
· If Hercules's were to employ any staff it would establish a remuneration policy that supports appropriate management of all relevant business risks by including Sustainability Risks in accordance with the SFDR. Hercules would define key risk indicators to assess Sustainability Risks related to variable compensation (if any). These risk indicators would be quantitative or qualitative and reflect the relevant environmental, social and governance aspects as well as the main principal adverse impacts and would be defined in such a way that the remuneration structure does not encourage excessive risk-taking in relation to direct or indirect Sustainability Risks. The remuneration policy would be designed to be consistent with and to promote sound and effective risk management including Sustainability Risks and would not encourage risk-taking, which is inconsistent with the risk profile of the alternative investment funds under Hercules’s management.
· If and where applicable, all Hercules staff would receive a combination of fixed and variable remuneration with the ratio of fixed to variable remuneration, among other factors, ensuring that the remuneration structure applicable to the Hercules staff would have a limited impact on the risk profile of the alternative investment funds under Hercules’s management.
· In light of the potentially limited impact of the Hercules’s remuneration structure in respect of its potential staff on the risk profile of the alternative investment funds, in addition to the nature of the business of Hercules, Hercules believes there is no risk of misalignment with the Sustainability Risks associated with the investment decision making process of Hercules in respect of the alternative investment funds.
3. Principal adverse impact statement – No consideration at entity level
· Hercules has chosen for the time being not to consider principal adverse impacts of investment decisions on sustainability factors. The main reason for which the Company is currently not considering adverse impacts is the absence of sufficient data and data of a sufficient quality to allow the Company to define material metrics for disclosure. Hercules will continue to assess its position as the market practice develops in this area. This decision will be reassessed on a regular basis.
This page was last updated on 01July 2023. [2]
[1] SFDR means 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”.
[2] The Company reserves the right to update this disclosure from time to time at its discretion.