SFDR

Disclosures

INTEGRATION OF SUSTAINABILITY RISKS into the investment decision-making process

Lichtenberg Capital integrates the identification of environmental, social, and governance (ESG) related risks and opportunities into its due diligence process for all potential investments managed by Lichtenberg Capital. Each potential investment must align with Lichtenberg Capital’s responsible investment principles and commitments, as outlined in its ESG Policy, and comply with the Fund’s investment restrictions and criteria. Lichtenberg Capital maintains a comprehensive ESG Policy that outlines the consideration of sustainability risks in the decision-making process. It also highlights Lichtenberg Capital’s ongoing monitoring and oversight of portfolio companies concerning ESG risks and opportunities. In evaluating investment opportunities, Lichtenberg Capital consistently incorporates the identification and assessment of pertinent ESG-related risks. Additionally, Lichtenberg Capital designates at least one team member as an ESG Ambassador, who takes on a heightened responsibility for ESG-related issues and developments. This individual serves as the primary contact for other investment team members regarding questions related to ESG topics.
Every prospective investment opportunity in the Lichtenberg Capital Fund undergoes a thorough negative screening process aligned with our exclusion list, which outlines restricted sectors and primary business activities. Specifically, we strive to avoid investing in companies primarily engaged in:

Statement regarding transparency of adverse sustainability impacts at entity level

Article 4 of Regulation (EU) 2019/2088, the Sustainable Finance Disclosure Regulation (SFDR), aims to enhance transparency in the financial services sector by disclosing the primary adverse impacts of investment decisions on sustainability factors. Financial market participants, including Lichtenberg Capital, are mandated to disclose specific information, taking into account the detailed provisions of Commission Delegated Regulation (EU) 2022/1288 (RTS) related to regulatory technical standards. At present, Lichtenberg Capital does not encompass all the principal adverse impacts of investment decisions on sustainability factors as prescribed by the RTS. The reason for this is that as at the time of the acquisition of a portfolio company the information provided by the portfolio companies might be insufficient to adequately describe the principal adverse impacts, as required by the RTS. Lichtenberg Capital commits to monitoring developments concerning available information and will assess the appropriateness of disclosing the required information under Article 4 of SFDR, including adherence to the RTS, in the future.

TRANSPARENCY OF REMUNERATION POLICIES IN RELATION TO THE INTEGRATION OF SUSTAINABILITY RISKS

Lichtenberg Capital personnel undergo an annual performance review, serving as the foundation for potential variable remuneration and determining its extent. Within this assessment, Environmental, Social, and Governance (ESG) risk management is integrated, evaluating each relevant individual’s adherence to Lichtenberg Capita’s ESG Policy. This policy delineates Lichtenberg Capital’s approach to considering sustainability risks in decision-making and outlines the monitoring and oversight of portfolio companies concerning the management, mitigation of ESG risks, and the pursuit of ESG-related opportunities.

INTEGRATION OF SUSTAINABILITY RISKS: METHODOLOGY

After an investment successfully clears the exclusion criteria and progresses to the due diligence stage of the investment process, we conduct a comprehensive evaluation of sustainability risks and opportunities. This is accomplished through a dedicated Environmental, Social, and Governance (ESG) due diligence. This approach allows us to pinpoint ESG-related risks and assess the potential for value creation early in the investment process. However, the focus of the ESG Due Diligence will vary depending on the target company’s business model (e.g. the relevant ESG factors for manufacturing businesses might differ to relevant factors for service companies). A mandatory ESG risk-screening and a summary assessment of relevant ESG factors are integral components of the detailed presentation, presented to the Investment Committee before any investment decision is made. If the Investment Committee determines that the ESG-related risks linked to a target company are too elevated or cannot be adequately mitigated, the investment opportunity will not be pursued. The data gathered in these processes also contributes to Environmental, Social, and Governance Key Performance Indicators (ESG KPIs).

After acquiring a target company, as part of the Program Office a set of internal compliance guidelines are established. This shall ensure that the portfolio company integrates and complies with established Environmental, Social, and Governance (ESG) standards.

The second facet of Lichtenberg Capital‘s engagement strategy involves encouraging portfolio company management teams to formulate annual, specific ESG performance improvement targets. First and foremost this is guaranteed, by establishing a Program Office which works out a clear defined ESG-roadmap and monitors the compliance thereof on a regular basis. Examples of such targets may include reducing energy consumption, minimizing waste volumes, lowering absenteeism rates, or implementing an anti-bribery policy with corresponding employee training. Achieving these targets not only positively impacts profitability, such as through reduced energy costs, but also addresses potential obstacles to growth by enhancing the company’s appeal as an employer for highly qualified individuals.

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