Polar Capital – Future Energy – Website Disclosures

 

Do No Significant Harm Statement

As part of the commitment to the “Do No Significant Harm” (DNSH) principle, as outlined within both the SFDR and the Taxonomy Regulation (i.e. Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment), the investment undertaken by the Fund will exclude companies from the Fund on the basis of controversial behaviour or controversial products.

This includes norm-based exclusions (i.e. excluding from the portfolio companies that have been called into question for violating international convention and standards) on social or environmental issues, as well as exclusions based on controversial activities (tobacco, military contracting, controversial weapons, firearms, alcohol, gambling and adult entertainment).

This strategy implemented in the investment process on a continuous basis? The Investment Manager’s investment strategy is implemented continuously as each company is required to pass all stages of the investment selection process prior to its inclusion in the Fund. The Investment Manager monitors investee companies extensively during the period of the Fund’s investment, and the sustainability impact of these companies is systematically reassessed after any perceived or real change to the company’s strategy, capital allocation, or end-markets exposure.

The Investment Manager monitors such real or perceived changes by following the investee companies’ press, financial and sustainability releases, as well as by assessing potential changes from peers or sector news. This reassessment of the sustainability positioning of an investee company may lead the Investment Manager to divest from the investee company.

The Investment Manager also monitors the performance of the Fund, both from a financial and sustainable perspective, by comparing it to the performance of the eligible investment universe as a whole (i.e. those companies that fall within the industries outlined above, or any other industry that the Investment Manager believes is key to achieving the sustainable investment objective).

The eligible investment universe of the Fund is used to create an internal benchmark, weighted according to the companies’ market caps. This internal benchmark provides the Investment Manager with a tool to continually monitor the performance of the Fund against its eligible investment universe and, in turn, the performance of the eligible investment universe against the global landscape.

 

Fund’s Sustainable Objective –

This Fund has sustainable investment as its objective. Sustainable investment means an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices. The Fund’s sustainable objective is to invest in a portfolio of companies that provide technological solutions and services targeting the decarbonisation of the global energy sector.

As a consequence of the Fund’s sustainable investment objective, as defined above, the Fund shall notably contribute to the following United Nations Sustainable Development Goals: Affordable and Clean Energy (SDG7), Industry, Innovation and Infrastructure (SDG 9), Sustainable Cities and Communities (SDG 11), Responsible Consumption and Production (SDG 12) and Climate Action (SDG 13).

 

 

Fund Investment Strategy

The Fund shall pursue the sustainable investment objective of the Fund by investing in companies that operate in one or more of the industries of the clean energy sector  which, in the Investment Manager’s belief, are key to the transformation and decarbonisation of the global energy sector.

The Investment Manager constructs the initial investment universe of the Fund by identifying companies that operate within the industries closest to the Fund’s sustainable investment objective. The Investment Manager believes that these industries are utilities, energy, materials, semiconductor & semiconductor equipment, technology hardware & equipment, and capital goods.

Companies within these industries are complemented by the addition of companies that, in the Investment Manager’s view, are linked to the Fund’s sustainable investment objective, but that are not within the industries outlined above. These additional companies are those that fall outside these industries but otherwise fulfil the same criteria regarding their sustainable impact and contribution to the clean energy conversion.

The Investment Manager excludes from the initial investment universe of the Fund those companies that have exposure to activities not aligned with the Fund’s sustainable investment objective or that participate in activities linked to the Investment Manager’s exclusions.

The Investment Manager’s analysis and exclusions causes a reduction of the Fund’s initial investment universe by at least 20% and creates the Fund’s eligible investment universe which, in the Investment Manager’s belief, is formed of companies that make a significant contribution to the Fund’s sustainable objective through their exposure to the industries of the clean energy sector identified by the Investment Manager.

For companies within the eligible investment universe of the Fund, the Investment Manager will then carry out a high-level analysis on the companies within the eligible investment universe to determine what sustainability drivers are impacting the industry from a macro perspective. The Investment Manager shall use this macro analysis to reduce the Fund’s eligible investment universe down further. This is done by the Investment Manager’s monitoring of real or perceived updates through following the investee companies’ press, financial and sustainability releases as well as assessing potential changes from peer or sector news.

Lastly, the Investment Manager undertakes a fundamental analysis of the companies that remain within the eligible investment universe of the Fund. This fundamental analysis includes the integration of sustainability, such as analysis of the company’s management of risks and opportunities associated with the Fund’s sustainable investment objective and of the sustainability criteria material to the relevant company.

Factors that may be assessed by the Investment Manager as part of this fundamental analysis include, for example, a company’s supply chain management, human capital management, its capacity for innovation, its environmental and social impact, including any ESG controversies and its corporate governance structure.

Where the Investment Manager is satisfied with the fundamentals of a company, from both a financial and a sustainability perspective, and believes that the valuation of the company is reasonable, after consideration of the financial metrics that the Investment Manager deems relevant and of the Investment Manager’s own scenario analysis, the company will be a candidate for inclusion in the Fund.

What are the binding elements of the investment strategy used to select the investments to attain the sustainable investment objective?

The Investment Manager will only invest in companies for the Fund that fall within the eligible investment universe outlined above. For the avoidance of doubt, the Investment Manager’s investment strategy does not apply to those investments, such as cash and money market funds, that are held for liquidity purposes.

Further, as part of the Investment Manager’s commitment to the “Do No Significant Harm” (DNSH) principle, as outlined within both the SFDR and the Taxonomy Regulation (i.e. Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment), the Investment Manager excludes companies from the Fund on the basis of controversial behaviour or controversial products.

This includes norm-based exclusions (i.e. excluding from the portfolio companies that have been called into question for violating international convention and standards) on social or environmental issues, as well as exclusions based on controversial activities (tobacco, military contracting, controversial weapons, firearms, alcohol, gambling and adult entertainment).

How is that strategy implemented in the investment process on a continuous basis?

The Investment Manager’s investment strategy is implemented continuously as each company is required to pass all stages of the process outlined above prior to its inclusion in the Fund. The Investment Manager monitors investee companies extensively during the period of the Fund’s investment, and the sustainability impact of these companies is systematically reassessed after any perceived or real change to the company’s strategy, capital allocation, end-markets exposure, etc.

The Investment Manager monitors such real or perceived changes by following the investee companies’ press, financial and sustainability releases, as well as by assessing potential changes from peers or sector news. This reassessment of the sustainability positioning of an investee company may lead the Investment Manager to divest from the investee company.

The Investment Manager also monitors the performance of the Fund, both from a financial and sustainable perspective, by comparing it to the performance of the eligible investment universe as a whole (i.e. those companies that fall within the industries outlined above, or any other industry that the Investment Manager believes is key to achieving the sustainable investment objective).

The eligible investment universe of the Fund is used to create an internal benchmark, weighted according to the companies’ market caps. This internal benchmark provides the Investment Manager with a tool to continually monitor the performance of the Fund against its eligible investment universe and, in turn, the performance of the eligible investment universe against the global landscape.

What is the policy to assess good governance practices of the investee companies?

The Investment Manager’s assessment of the governance practices of investee companies is carried out at the sustainability due diligence phase of the investment strategy outlined above and is monitored and reassessed after any perceived or real change to the company’s strategy, capital allocation, end-markets exposure, etc.

The Investment Manager will assess the corporate governance structure of companies within the Fund’s eligible investment universe, or of investee companies within the Fund, according to the good governance criteria as outlined in the SFDR (sound management structures, employee relations, staff remuneration, tax compliance). Where relevant, the Investment Manager may assess additional governance factors, such as business ethics, transparency, board independence, quality, diversity and accountability, shareholders’ rights, ownership structure.

 

Methodology and Data Limitations

The Investment Manager’s approach to evaluating the ESG profiles of issuers within its eligible investment universe for the Fund may be constrained by the availability, quality and relevance of sustainability related data available to the Investment Manager. 17

The availability, quality and relevance of data relating to sustainability within the eligible investment universe may be limited, both in an absolute sense and in comparison to data on sustainability within other sectors or markets, due to a lack of sustainability related regulations and reporting standards in the countries that the Investment Manager can invest in, changes in sustainability related regulations and reporting standards in the countries that the Investment Manager can invest in, inconsistencies in sustainability related regulations and reporting standards between jurisdictions, a lack of historic information available on sustainability for issuers, low coverage on, or inconsistencies with respect to the evaluation of, particular issuers by third party research and data providers or material inaccuracies in the sustainability related information reported by issuers.

Limitations in the availability, quality and relevance of the sustainability related data outlined above may make it difficult for the Investment Manager to ascertain the sustainability profile of an issuer, to assess the progress of an issuer from a sustainability perspective over a certain time frame, to carry out consistent analysis on issuers from a sustainability perspective against its industry peers in the same or other jurisdictions or to verify the Investment Manager’s assumptions and calculations concerning a particular issuer.

 

Benchmark

The Fund is actively managed by the Investment Manager with respect to the MSCI ACWI Net Total Return USD Index (the “Benchmark”). The Benchmark as currently constituted, is a free float-adjusted market capitalisation weighted index that is designed to measure the equity market performance of developed and emerging markets. The Benchmark measures the price performance of markets with the income from constituent dividend payments. The dividends are reinvested after the deduction of withholding taxes, using a tax rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. For the avoidance of doubt, the Benchmark does not measure the sustainable performance of the Fund and the Investment Manager has not designated a sustainable reference benchmark against which to measure the sustainability performance of the Fund. The Benchmark is quoted in US dollars. Further information can be found on www.msci.com.

The Fund is considered to be actively managed in reference to the Benchmark by virtue of the fact that it seeks to outperform the Benchmark. While certain of the Fund’s securities may be components of and may have similar weightings to the Benchmark, the Investment Manager will use its discretion to invest in securities or sectors not included in the Benchmark in order to take advantage of investment opportunities. The investment strategy does not restrict the extent to which the Fund’s holdings may deviate from the Benchmark and deviations may be significant. This is likely to increase the extent to which the Fund can outperform or underperform the Benchmark.

The list of benchmark administrators that are included in the Benchmark Regulation Register is available on ESMA’s website at www.esma.europa.eu. As at the date of this Supplement, the following benchmark administrator appear on the Benchmark Register in accordance with the requirements of the Benchmark Regulations: MCSI Limited.

 

Carbon emissions reduction objective

The Investment Manager seeks to ensure the Fund’s objective of supporting the decarbonisation of the energy sector, in view of achieving the long-term global warming objectives of the Paris Agreement, by investing in companies for the Fund that are exposed to the industries outlined in Section 5 of this Annex, “What investment strategy does this financial product follow?”.

The Investment Manager believes that investment in companies whose business models transform the way that the energy sector produces, stores and provides energy to homes and businesses will not only reduce the dependency of global society on carbon intensive energy sources, such as fossil fuels, but will also ensure that global society uses energy in a more efficient way than it has done previously.

Adverse Impacts of Investment Decisions on Sustainability Factors

The Investment Manager does not consider the adverse impacts of investment decisions on Sustainability Factors on the basis that it is not a financial market participant that is required to do so, being a non-EU Investment Manager with fewer than an average number of 500 employees on its balance sheet during the financial year. The Investment Manager may choose at a later date to consider and publish the consideration of principal adverse impacts of investment decisions on Sustainability Factors. The Investment Manager will review its approach to considering the principal adverse impacts of investment decisions on Sustainability Factors under the SFDR once the regulatory technical standards come into effect, which is expected to occur on 1 July 2022.

Link to Summary Document:

PSUI Polar Capital Future Energy – SFDR disclosures – Summary

Links to Translations of Summary Document:

PSUI Polar Capital Future Energy – SFDR disclosures – Summary (Italian)

PSUI Polar Capital Future Energy – SFDR disclosures – Summary (Spanish)

PSUI Polar Capital Future Energy – SFDR disclosures – Summary (German)

PSUI Polar Capital Future Energy – SFDR disclosures – Summary (Danish)