Sustainability – Disclosures under Regulation (EU) 2019/2088 (SFDR)

Policy on the integration of sustainability risks

Magnify Afterburner Capital Partners – Sociedade de Capital de Risco, S.A.

Under 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 (SFDR), Magnify Afterburner Capital Partners – Sociedade de Capital de Risco, S.A. (MAGNIFY) is required to disclose information regarding its policies on the integration of sustainability risks in its investment decision‐making process.

For this purpose, according to the SFDR, sustainability risk means 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 the investment.

MAGNIFY is a diligent and responsible management entity, and therefore is committed to its clients and abides by the applicable regulation when conducting its activity. As such, MAGNIFY has defined an investment process and an investment strategy to seek the best possible investments while ensuring a reliable portfolio and a sustainable growth.

 

1. Investment process and strategy

MAGNIFY has an established decision-making process which allows the integration of sustainability risks throughout its several stages until the conclusion of the investment. As a result of its activity, MAGNIFY becomes a shareholder of the invested companies, and for that reason it is committed to make responsible investments and actively contribute to a positive evolution on the environmental, social and governance (ESG) matters in each one of such companies.

The decision making-process comprises the following steps:

  • Screening of the investment opportunities
    MAGNIFY currently seeks investments opportunities in the real estate, retail and education sectors, according to the selection criteria set out in the management regulation of each Fund it manages. MAGNIFY does not intend to invest in other sectors which may be more exposed to sustainability risks.
    When selecting an investment opportunity, apart from other elements such as product analysis and business plan, MAGNIFY takes into account the potential or actual ESG issues that may arise from each of the opportunities previously identified within its preferential sectors of activity. Based on such preliminary evaluation, MAGNIFY may immediately exclude investments that present high risks on ESG issues.
  • Due diligence
    After the initial selection of the investment opportunities that meet MAGNIFY standards, including on ESG conditions (please refer to section 2 below for more details on MAGNIFY’S commitment with sustainability), a due diligence is conducted to the target company selected. MAGNIFY hires an external legal team to perform the aforementioned due diligence which intends, among other things, assess how vulnerable the target company is to the occurrence of ESG events that may negatively impact the value of the envisaged investment.

    The due diligence scope regarding sustainability matters includes:

    • (i) An analysis of the target company’s overall performance;
    • (ii) An analysis of the target company’s internal ESG issues;
    • (iii) The identification of any mitigation measures that can be adopted (before or after the investment has been carried out) to manage, reduce or eliminate the risks identified;
    • (iv) A more detailed assessment of the target company’s activity specific ESG context.
  • Final investment decision
    The information collected in the previous phases is consolidated and analyzed by MAGNIFY’s management and/or the Fund’s investment committee, which take into account the identified sustainability risks and the possibility of adopting the relevant mitigation measures (if existing) and assess them jointly with the remaining risks and other items regarding the investment opportunity. For this purpose, experts from areas related to the activity of the target company may be consulted.In this context, MAGNIFY guides its investment decisions through an integrated approach that advocates the consideration and weighting of all risks, including sustainability risks, in a way adjusted and proportional to the nature, size and complexity of the envisaged investment, as well as to MAGNIFY’S activity and the costs involved.

 

2. Commitment with sustainability

MAGNIFY assumes its role as a market player which has the ability to promote and support responsible investment and sustainable growth. As a management entity and shareholder of the companies in which it invests, MAGNIFY is committed to sustainable development values. Therefore, MAGNIFY guides its investment activity with the responsibility corresponding to such perspective, considering both the timing of the investment and its foreseeable evolution in the future.

As such, MAGNIYFY supports the Sustainable Development Goals defined by the United Nations, and recognizes their relevance in our collective way to achieve better economic, social and environmental conditions, which will globally benefit our society and our planet. In particular, MAGNIFY considers that its activity may especially relate to the goals which advocate sustainable economic growth and decent work for all, quality education, reduction of inequalities, and sustainable industrialization and consumption, which are key to sustain the livelihoods of current and future generations:

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Thus, MAGNIFY wishes to reinforce its business positioning as a reliable, inclusive and responsible management entity. For that, MAGNIFY increasingly integrates sustainability concerns on its activity, notably by considering environmental, social and governing criteria on its investment decisions as detailed in point 1 above.

Bearing in mind the growing relevance of sustainability matters, MAGNIFY permanently monitors the most relevant developments in the area and is available to periodically review and adjust its policies.

 

All the information published on MAGNIFY’s website regarding sustainability matters is permanently updated, and any changes or amendments will be duly explained and published, as required by the SFRD.

Sustainability – Disclosures under Regulation (EU) 2019/2088 (SFDR)

No consideration of adverse impacts of investment decisions on sustainability factors

Magnify Afterburner Capital Partners – Sociedade de Capital de Risco, S.A.

Under 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 (SFDR), Magnify Afterburner Capital Partners – Sociedade de Capital de Risco, S.A. (MAGNIFY) is required to disclose information regarding the adverse impacts of its investment decisions on sustainability factors.

Currently, MAGNIFY does not consider any adverse impacts of its investment decisions on sustainability factors.

For this purpose, according to the SFDR, sustainability factors correspond to environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

MAGNIFY carefully analyzed the regime regarding the consideration of the principal adverse impacts of its investment decisions on sustainability factors and believes is aligned with the objectives that such regime intends to achieve.

However, at this stage MAGNIFY has investments in real estate, retail and education sectors. Considering the nature of such sectors, as well as the size and type of companies in which MAGNIFY usually invests, significant adverse impacts on the sustainability factors are not expected. Additionally, in this context, information on the sustainability factors is not available with sufficient quality and detail to enable MAGNIFY to conduct a proper analysis with a cost and use of resources proportional to its activity and size.

As this is a constantly evolving matter, MAGNIFY is committed to continuously improve its decision-making process, notably by annually review its positioning on sustainability matters. As such, all the information published on MAGNIFY’s website in this regard is permanently updated, and any changes or amendments will be duly explained and published, as required by the SFRD.

Sustainability – Disclosures under Regulation (EU) 2019/2088 (SFDR)

Transparency of remuneration policies in relation to the integration of sustainability risks

Magnify Afterburner Capital Partners – Sociedade de Capital de Risco, S.A.

Under 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 (SFDR), Magnify Afterburner Capital Partners – Sociedade de Capital de Risco, S.A. (MAGNIFY) is required to disclose information on how its remuneration policy is consistent with the integration of sustainability risks.

For this purpose, according to the SFDR, sustainability risk means an environmental, social or governance (ESG) event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.

MAGNIFY has designed a remuneration policy which intends to promote the compliance with the strategies, risk profiles and objectives established for its investment process and decision, which include ESG issues.

In particular, we highlight the following features of the remuneration policy that are consistent with the integration of sustainability risks in MAGNIFY’s activity:

  • The attribution of variable remuneration takes into account whether the policies for integration of sustainability risks in investment decision processes have been complied (or not) by the relevant employees or members of the management body (for example, basing its decision on a previously performed ESG due diligence).
  • The attribution of certain variable remuneration portions is deferred for a defined period, which allows to consider MAGNIFY’s business cycle and the relevant business risks, including sustainability risks.
  • The establishment of limits to the attribution of both fixed and variable remuneration, in order to avoid high risk taking, including sustainability risks.

MAGNIFY is currently reviewing and improving its internal procedures to better accommodate sustainability issues, so its policies, including the remuneration policy, may be amended during such process. Any changes or amendments to the information published on MAGNIFY’s website regarding sustainability matters will be duly explained and published, as required by the SFRD.