Principal Adverse Sustainability Impact Statement
Although Goodwell seeks to intentionally generate social and environmental impact with its investments, we also consider potential adverse impacts of our investment decisions on sustainability factors. We track this under our risk management framework. This Principle Adverse Impact statement covers the reference period from 10 March 2021 to 31 December 2022.
Principal adverse sustainability impacts are described in Article 20 of the SFDR as “Those impacts of investment decisions that result in negative effects on sustainability factors, with sustainability factors referring to environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.”
Decisions that negatively impact climate or other environment-related resources, or have negative implications for society, are detrimental to value creation.
The principal adverse sustainability impacts of our decisions are considered throughout our investment process and investment holding period.
Description of Principal Adverse Impacts
We are gathering information to monitor and report on the principal adverse sustainability impact (PAI) indicators listed below. We will update this statement by 30 June 2023 with indicators reported over reporting year 2022. From 2024 onwards, historical comparisons with previous reference periods will be provided. We will also seek to detail actions taken and actions planned, as well as targets set for each PAI indicator to avoid or reduce the PAI identified where possible.
The following are the PAIs that we are tracking from table 1 of Annex I of the Regulatory Technical Standards of the Regulation:
- Violations of UN Global Compact principles and OECD Guidelines for Multinational Enterprises
- Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact principles and OECD Guidelines for Multinational Enterprises
- Unadjusted gender pay gap
- Board gender diversity
- Exposure to controversial weapons (antipersonnel mines, cluster munitions, chemical weapons and biological weapons)
In addition, we consider biodiversity and GHG emissions to water as relevant PAIs, however, at present the relevant portfolio companies have not yet formalised the tracking of these indicators. These indicators will be tracked as soon as feasible.
Description of Policies to Identify and Prioritise Principal Adverse Impacts
As a firm with its roots in impact investing, Goodwell has developed an extensive Impact and ESG policy contained in our Impact and ESG Management System.
Using this Impact and ESG Management System, Goodwell Investments will, in addition to the extensive ESG and impact measurement and management (IMM) reporting, report on indicators 10 – 14 related to principal adverse impact on sustainability factors as set out in Table 1 of Annex I of the Regulatory Technical Standards of the Regulation.
Goodwell Investments will also report on additional indicators related to principal adverse impacts on a social, employee, human rights, anti-corruption or anti-bribery sustainability factor that qualifies as principal as set out in Table 3 of Annex I.
Goodwell Investments will select these additional indicators based on the probability of occurrence and severity of the adverse impacts.
We are gathering data over the 2022 period and will report on the same during the period of 2023. In 2024 we will be able to provide historical comparisons. Goodwell Investments performs independent impact evaluations on most funds, offering further confirmation on the validity and accuracy of the impact collected data.
Goodwell Investment’s compliance and ESG & IMM teams are primarily responsible for the implementation of these policies. However, all investment team members have been educated with regards to principal adverse impacts on sustainability factors as these considerations are integrated into the investment process.
Regarding engagement with our portfolio companies, prior to investment all potential portfolio companies are assessed using our IFC based ESG Risk Matrix, sector focused and gender forward DD checklists to assess whether the company meets our impact mandate. During this process the Investment manager identifies key priority areas regarding ESG, IMM and principal adverse impacts on sustainability factors. An ‘ESG Action Plan’ is created alongside the company where all of the aforementioned factors are considered, and reporting processes are outlined. The investment team supports where gaps are outlined, whether it be governance, capacity building or access to networks. Through these engagements, portfolio companies aim to deepen their impact as well as better measure and report on relevant information in the context of the principal adverse impacts affecting their businesses.
We are not a listed company and it should be noted that Goodwell Investments falls under the exemption of Art 3 (2) b of the AIFM Directive 2011/61/EU and as such is exempted from having an engagement policy. This means that we do not have a specific engagement policy in respect to shareholders. That said investors share our vision to minimise negative impact while maximising positive impact and the consideration of sustainability risks on financial returns. We engage with shareholders through quarterly and annual reporting as well as shareholder meetings.
Adherence to international standards
Goodwell Investment’s Responsible Investment Policy looks to incorporate and align with several recognised global standards for responsible business operations and investment practices. These include, but are not limited to, the Principles for Responsible Investment and United Nations Global Compact, UNPRI Principles of Investors in Inclusive Finance, Investor Guidelines for Responsible Investing Digital Financial Services, the Global Impact Investing Networks Iris+ and Goodwell is a signatory to the Principles for Responsible Investment (PRI) and as a signatory we abide by all of the requirements and expectations.