SFDR
Information required under the EU Sustainable Finance Disclosure Regulation (the “SFDR”)
Integration of sustainability risks into the investment decision-making process
KCM is authorised in Ireland by the Central Bank of Ireland (the “Central Bank”) as an Alternative Investment Fund Manager (“AIFM”) pursuant to the European Union (Alternative Investment Fund Managers) Regulations 2013 (the “Irish AIFM Regulations”) as amended.
As of March 2021, the KCM acts as AIFM to Multi Fund 10 Umbrella ICAV, an open-ended umbrella type Irish Collective Asset-management Vehicle (“ICAV”) fund with the following sub-Funds:
-Kinsale Compass Fund
-Kinsale Navigator Fund
Kinsale Compass Fund
Kinsale Compass Fund does not have as its objective sustainable investment, nor does it promote environmental or social characteristics. As a result, Kinsale Compass Fund does not fall within the scope of Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment. The investments underlying Kinsale Compass Fund does not take into account the EU criteria for environmentally sustainable economic activities.
Sustainability risks are defined in the SFDR as environmental, social or governance events or conditions that, if they were to occur, could have actual or potential material negative impacts on the value of the investments of Kinsale Compass Fund.
Integration
Kinney Asset Management LLC (“KAM”) acts as sub-investment manager to Kinsale Compass Fund. KAM accounts for sustainability risks within its investment decision making process, both at the initial due-diligence stage and as part of its ongoing monitoring.
KCM and KAM consider such environmental, social and governance risks in conjunction with the financial analysis undertaken on the issuer and will take a balanced approach with regards to the merits of investing in the relevant security.
Where, in the view of KAM, an issuer’s risk profile changes, this will cause a review of the assessment of the relevant issuer, the value of its stock, and possibly the merits of owning it.
Impact of Sustainability Risks on the Returns of Kinsale Compass Fund
It is anticipated that the occurrence of the sustainability risks stated above could have an impact on the financial returns of Kinsale Compass Fund.
Kinsale Navigator Fund
Kinsale Navigator Fund does not have as its objective sustainable investment, nor does it promote environmental or social characteristics. As a result, Kinsale Navigator Fund does not fall within the scope of Regulation (EU) 2020/852 of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment. The investments underlying Kinsale Navigator Fund do not take into account the EU criteria for environmentally sustainable economic activities.
Sustainability risks are defined in the SFDR as environmental, social or governance events or conditions that, if they were to occur, could have actual or potential material negative impacts on the value of the investments of Kinsale Navigator Fund.
Integration
Phaeacian Partners, LLC (“Phaeacian”) acts as sub-investment manager to Kinsale Navigator Fund. Phaeacian accounts for sustainability risks within its investment decision making process, both at the initial due-diligence stage and as part of its ongoing monitoring.
KCM and Phaeacian consider such environmental, social and governance risks in conjunction with the financial analysis undertaken on the issuer and will take a balanced approach with regards to the merits of investing in the relevant security.
Where, in the view of Phaeacian, an issuer’s risk profile changes, this will cause a review of the assessment of the relevant issuer, the value of its stock, and possibly the merits of owning it.
Impact of Sustainability Risks on the Returns of Kinsale Navigator Fund
It is anticipated that the occurrence of the sustainability risks stated above could have an impact on the financial returns of Kinsale Navigator Fund.
Individual Portfolio Management services
KCM is authorised by the Central Bank to provide the following services pursuant to Regulation 7(4) of the Irish AIFM Regulations:
a) Management of portfolios of investments
b) Investment advice
c) Receipt and transmission of orders
To the extent that KCM is providing portfolio management services under Regulation 7(4), it will communicate with each client on the relevance of sustainability risk in the investment decision-making process and on the impact of this risk on returns given each client’s own circumstances and objectives.
The above will not apply when KCM is providing non-discretionary investment services such as receipt and transmission of orders.
Remuneration policy
KCM confirms that its remuneration policy is consistent with the integration of sustainability risks and does not seek to encourage or reward the assumption of excessive sustainability risks relating to environmental, social or governance issues.
Where KCM delegates portfolio management activity to a suitably qualified investment manager, it shall ensure that the appointed investment manager adopts remuneration policies and procedures which are consistent with the integration of sustainability risks in its investment decision making process and does not seek to encourage or reward the assumption of excessive sustainability risks.
No Consideration of Sustainability Adverse Impacts
Kinsale Capital Management Limited (‘Kinsale’) does not currently consider the adverse impact of investment decisions on sustainability factors. Kinsale supports the aim of this requirement which is to increase transparency around the adverse impact of investments on sustainability factors. The assessment of sustainability risks forms part of the underlying investment processes of the funds where Kinsale acts as AIFM. However, given the nature and scale of the investment objectives and strategies of the funds under management and the level of data currently available from companies and issuers it is not believed the data required under the regulations could be obtained and assessed at a reasonable cost to investors. It is therefore believed that a focus on the selection of investment opportunities is a more efficient use of resources currently. The adverse impact of investment decisions on sustainability factors may be considered in the future when there is sufficient information readily available. Kinsale confirms that this matter will be kept under ongoing review and processes may be developed in this regard to the extent permitted by the investment policy of each fund as more comprehensive data on the various sustainability factors becomes available and further guidance is published.