KJK Capital Luxembourg S.A.– EU Sustainable Finance Disclosure Regulation
KJK Capital Luxembourg S.A. makes the following disclosures in accordance with the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR”).
Pursuant to Article 3 of the SFDR, KJK Capital Luxembourg S.A. is required to disclose the manner in which sustainability risks (as defined hereafter) are integrated into the investment decision-making process.
A sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investments made by KJK Capital Luxembourg S.A. In the context of the firm, sustainability risks are risks which, if they were to crystallise, would cause a material negative impact on the value of the portfolios of the firm’s funds.
Such risk is principally linked to climate-related events resulting from climate change (i.e. physical risks) or to the society’s response to climate change (i.e. transition risks), which may result in unanticipated losses that could affect an investment. Sustainability risks can also affect companies by introducing social risks (i.e. gender gaps, social inequality) and governance risks (i.e. bribery issues, selling practices).
The impacts following the occurrence of a sustainability risk event may be numerous and vary in significance depending on industries, regions and asset classes.
Such sustainability risks are integrated into the investment decision-making and risk monitoring to the extent that they represent potential or actual material risks and/or opportunities to maximize the long-term risk-adjusted returns.
Pre-investment phase, KJK Capital Luxembourg S.A. has adopted an exclusion- and risk-based strategy. Controversial sectors such as weapons, coal mining, tobacco, alcohol, gambling, and adult entertainment are excluded from the investment universe. Applicable companies, where investments are considered, are analysed for their risk/return potential. Sustainability factors are among the risk factors considered.
Post-investment phase, KJK Capital Luxembourg S.A. follows an active ownership strategy. During the holding period of a portfolio company, the management of sustainability related risks is integrated in our value creation path and risk management strategy. In private companies under our control, we manage such sustainability related risks by identifying and monitoring company specific environmental factors, as well as social and governance practices. We then proceed to mitigate identified risks or potential risk areas by exercising our controlling rights. In public companies where we exercise our voting rights at annual general shareholder meetings (proxy voting), we apply our voting rights policy which includes sustainability factors.
KJK Capital Luxembourg S.A. has an ESG policy and process approved by the board of directors, who also monitor the effectiveness of the policy. Furthermore, KJK Capital Luxembourg S.A. has been a signatory of United Nations Principles of Responsible Investment (UNPRI) since April 2018.
No consideration of sustainability adverse impacts
KJK Capital Luxembourg S.A. does not consider the adverse impacts of investment decisions on sustainability factors (as defined hereafter) in the manner prescribed by Article 4 of the SFDR considering that non-financial data is still not available in satisfactory quality and quantity to allow the firm to adequately assess the potential adverse impact of its investment decision on sustainability factors.
The position will be kept under review as the underlying rules are finalised and are embedded in the short to medium term.
Sustainability factors means environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters.
Remuneration policy
The firm pays its staff a combination of fixed remuneration (salary and benefits) and variable remuneration (including bonus). Variable remuneration for relevant staff takes into account compliance with all of the firm’s policies and procedures as well as with the firm’s internal risk management framework and risk limits, including those relating to the integration of sustainability risks. In this regard, KJK Capital Luxembourg S.A. remuneration policies do not encourage risk-taking which is inconsistent with its internal risk limits or with the risk profile of the funds that KJK Capital Luxembourg S.A. manages, including sustainability risks stemming in particular from climate-related events or from the society’s response to climate change.