ESG Integration Policy of “COLUMBUS VENTURE PARTNERS, SGEIC, S.A.U.”

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1. Policy Objective

This document describes the policy for integrating environmental, social, and corporate governance criteria, collectively known as Environmental, Social, and Governance (ESG) criteria, of COLUMBUS VENTURE PARTNERS, SGEIC, SA. (hereinafter referred to as “the Company“). It outlines the weighting of each of these criteria in the investment decision-making processes concerning financial instruments that the Company must undertake in providing portfolio management services or investment advice to its clients. The Sustainable Development Goals (2015-2030) achieved on September 25, 2015, also known as SDGs, are an initiative promoted by the United Nations to continue the development agenda after the Millennium Development Goals (MDGs). This provides a framework for the Company’s actions in achieving ESG criteria.

Additionally, this policy responds to and establishes the scope of the obligations for its publication, in compliance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019, on sustainability-related disclosures in the financial services sector.

Currently, the Company has decided not to integrate ESG criteria into its investment decision-making processes, as detailed in point 3 of this policy.

2. Definitions

2.1. ESG Criteria

ESG factors refer to all information related to environmental and social issues, as well as matters related to personnel, respect for human rights, and the fight against corruption and bribery.

  • The environmental factor (E), is used to make decisions based on how a company’s activities impact the environment. It focuses on environmental reporting and a company’s environmental footprint, as well as the efforts made by companies to reduce pollution levels or carbon emissions. This encompasses waste management, water handling, and the use of other environmental resources.
  • The social factor (S), is considered to account for the impact of a company’s activities on the community, such as diversity, management, human rights, or healthcare, as well as the connections established with the community (corporate citizenship and philanthropic initiatives).
  • The governance factor (G), assesses the impact of a company’s shareholders and management and is based on issues like board structures, executive compensation, shareholder rights, transparency, and the relationship between shareholders and company management.

2.2. Sustainable Investments

Investments with this consideration include:

  • Economic activities contributing to an environmental objective, measured, for instance, through key indicators of resource efficiency related to energy use, renewable energy, raw material consumption, water and land, waste production, greenhouse gas emissions, and impact on biodiversity and the circular economy.
  • Economic activities contributing to a social objective, particularly any investment that addresses inequality.

Investments that enhance social cohesion, social integration, labor relations, or investments in human capital or economically or socially disadvantaged communities, as long as they do not significantly harm any of these objectives and the beneficiary companies maintain good governance practices, especially concerning their management structures, employee relationships, and staff remuneration, and comply with tax obligations.

This involves adding an analysis of environmental, social, and corporate governance aspects to financial analysis to assess risks and opportunities for the entity and make better decisions.

An environmental objective includes:

  • Mitigating climate change.
  • Adapting to climate change.
  • Sustainable use and protection of water and marine resources.
  • Transition to a circular economy.
  • Pollution prevention and control.
  • Protection and recovery of biodiversity and ecosystems.

3. Objective of the policy

3.1. Our Company’s Position on ESG Factor Integration

The Company recognizes the importance of ESG factors in achieving the Sustainable Development Goals “SDGs” (2015-2030). However, the Company’s current policy is not to consider these factors (“non-financial factors”) in investment decision-making, basing decisions solely on financial factors (profitability, risk, etc.). This does not necessarily mean that the sustainability risks of managed portfolios cannot become significant based on ESG risks indicated in section 3.3 below.

Nevertheless, our Company takes into account ESG factors (“non-financial factors”) with the aim of analyzing the possible integration of these criteria into managed portfolios and future investment proposals.

3.2.  Adverse Impacts

Considering the size, nature, and scale of its activities, the Company declares that it does not take into account the adverse impacts of investment decisions on sustainable factors.

However, the consideration of adverse impacts of investment decisions on sustainable factors may be subject to further development according to the maturity level of ESG risk management methodologies.

3.3.  Sustainability Risks

Notwithstanding the above in sections 3.1 and 3.2, the Company will consider sustainability risks when making decisions, using its methodology and referencing information published by the entities in which its funds will invest. It may also use data provided by external providers. The sustainability risks of investments will depend on factors such as the type of issuer, the industry, or geographical location.

In any case, possible environmental risks, social risks, and governance risks may be taken into account in accordance with the investment policies of the vehicles managed by the Company, even though it does not promote or consider environmental and/or social characteristics in its investment decision-making, and does not pursue a sustainable objective. Below is a non-exhaustive list of such risks.

Thus, environmental risks are considered to include any potential harm or catastrophe in the environment due to both natural phenomena and human activities. Among them, the following are considered:

  • Carbon Footprint Risk: Uncertainty arising from a possible contribution of the company being invested in to global warming through its greenhouse gas emissions or toxic emissions.
  • Clean Energy (Zero Emissions) / Renewable Energy (Energy Efficiency) Risk: Uncertainty arising from the situation of the company being invested in regarding the use of renewable energies (limited or nonexistent) in its business, the alternative use of renewable energies, or, if feasible, clean energies.
  • Pollution Risk: Uncertainty arising from inadequate or nonexistent effective waste management or non-compliance with recycling actions regarding the company’s activities.
  • Efficient Water and Natural Resource Management and Discharge Risk: Uncertainty arising from inadequate or, where applicable, a lack of efficient water and natural resource management, as well as controlling discharges into the environment.
  • Climate Change and Energy Transition Risk: Uncertainty arising from energy transition and physical and/or transition impacts related to climate change. The former occurs due to climate events and changes in ecosystem balance (such as heatwaves, landslides, floods, forest fires, and storms) as well as long-term climate changes (such as changes in precipitation, extreme climatic variability, ocean acidification, rising sea levels, and average temperatures); and the latter (transition) is linked to the transition to a low greenhouse gas emissions economy (e.g., due to the adoption or relatively sudden emergence of environmental policies, technological advancements, or changes in market preferences).

Social risk includes any harm or potential negative impact within the company’s social sphere, its personnel, the population, or the environment in which the company operates. In this sense, it generally encompasses all risks related to elements such as human rights, compliance with labor regulations at each stage of the company’s activities, workplace safety, diversity, non-discrimination, and aspects related to the company’s integration into the local community where it operates. Among them, the following are considered:

  • Human Rights Risk: Uncertainty stemming from practices within the company being invested in that may involve (i) the use of child labor and/or all forms of forced labor, (ii) human trafficking, slavery, or servitude in all phases of the goods and services contracted, and (iii) discrimination based on nationality, race, ethnicity, religion, political affiliation, marital status, social status, age, disability, culture, gender, gender identity, sexual orientation, or any other status.
  • Working Conditions Risk: Uncertainty stemming from the proper management of personnel and workplace conditions, as well as the establishment of health and safety measures at work.
  • Diversity and Gender Equality in the Workplace Risk: Uncertainty stemming from internal labor discrimination within the company being invested in, comparing one or more employees in the same job category and under the same general labor conditions.
  • Local Integration Risk: Uncertainty stemming from actions that do not promote or consider the integration and development of the local area or geographical region in which the company being invested in operates.

Finally, with regard to the governance risk, this shall be understood as any damage or potential negative impact in the field of corporate governance of the company, as well as in the relationships with shareholders, stakeholders, or stakeholders (executives, directors, etc.), arising from their rights, responsibilities, and expectations in the corporate governance of the companies. Among these, the following shall be taken into account:

  • Risk related to Governance Structure: Uncertainty stemming from an inadequate or non-existent internal corporate governance structure in accordance with legal requirements, as applicable, and/or best governance practices established by national/international institutions related to the industry to which the investee company belongs.
  • Risk related to Compensation of Executive Directors and Senior Management: Uncertainty stemming from inadequate or non-existent management of the compensation policy of the investee company, as well as the policy not taking into consideration ESG criteria for determining remuneration.
  • Risk related to Funds Misappropriation, Fraud, Corruption, and Similar Wrongdoings: Uncertainty arising from possible corrupt practices or improper fund management within the investee company, its personnel, or entities and other parties associated with it.
  • Risk related to Political Lobbying/Political Influence: Uncertainty arising from possible efforts by the investee company to gain favor within the political sphere or to benefit in relation to regulatory aspects applicable to its activities.
  • Risk related to Business Ethics and Compliance: Uncertainty stemming from inadequate business ethics behavior within the organization and its constituents, as well as inadequate compliance with or, as applicable, non-compliance with legal requirements in various areas related to the potential investment company (e.g., legal obligations in criminal matters, labor, data protection, competition, anti-money laundering, and counter-terrorism financing, etc.).
  • Tax Transparency: Uncertainty arising from a lack of transparency regarding the tax information of the investee company towards its shareholders and/or, where applicable, stakeholders.

4. Publication of the policy and ESG documentation

In compliance with Article 3 of Regulation (EU) 2019/2088, the Company publishes this policy on its website with a commitment to incorporate any advancements resulting from regulatory changes or its stance on this policy.

5. Applied Regulations

  • 2019 Regulation on the Disclosure of Sustainability Information in the Financial Services Sector.
  • Law 11/2018, of December 28, amending the Commercial Code, the consolidated text of the Capital Companies Law approved by Royal Decree-Law 1/2010, of July 2, and Law 22/2015, of July 20, on Audit of Accounts, regarding non-financial information and diversity.
  • Directive 2007/36/EC of the European Parliament and of the Council of July 11, 2007, on the exercise of certain rights of shareholders in listed companies.
  • Sustainable Development Goals (SDGs).