Disclosures in accordance with Articles 3(1), 4(1)(b) and 5(1) of the Regulation 2019/2088 on sustainability-related disclosures in the financial services sector dated 27 November 2019 (“SFDR”)
Our approach to sustainability risk
A sustainability risk means an environmental, social or governance (“ESG”) event or condition that, if it occurs, could cause a negative material impact on the value of an investment. For Endless, sustainability risks are those which, if they were to crystallise, would cause a material negative impact on the value of the portfolio companies in our funds.
Endless has developed an ESG Policy to target and manage sustainability risk across our firm and our portfolio companies. Our mission is simple – to maximise the positive impact that our investments have on the economy and society by creating more sustainable businesses and enhancing long term value creation for its investors.
Endless has a strong sense of social conscience and responsibility, and in July 2019 became a signatory to the United Nations Principles of Responsible Investment (“UNPRI”). We are committed to ensuring alignment between the six principles of responsible investment and our organisation and business.
An important aspect of our investment process involves incorporating ESG considerations throughout our investment cycle. As part of our due diligence process when looking at new prospects, our investment team evaluates the potential ESG risks and opportunities, identifying whether positive change is possible and whether we can improve its overall ESG credentials. We are committed to not investing in fossil fuels or any business that presents too many ESG or reputational risks that cannot be rectified. Only opportunities where we believe positive change is possible during our holding period will advance to Investment Committee stage.
During our ownership we want all our businesses to live and breathe ESG. Endless is an active owner of our businesses and ensures that ESG discussions continue during our ownership, promoting the development of ESG opportunities and risks. We also encourage company managers to actively voice their opinions, so we can learn more about how they view these factors.
We have also partnered with a trusted provider of sustainability ratings to undertake annual sustainability assessments and benchmarking on both ourselves, and our portfolio. Further, we set annual ESG objectives, annually report information to investors, and require portfolio companies to provide the same information to us. We believe such policies and practices are essential for a culture of good governance and continuous improvement.
No Consideration of sustainability adverse impacts
Article 4 of SFDR requires Endless to make a clear statement as to whether or not it considers the principal adverse impact of investment decisions on sustainability factors. Whilst, as described above, ESG and sustainability is an important investment consideration for Endless as part of our investment activities, we believe that our existing due diligence process and ESG policies are appropriate and proportional to the specific investment strategies of our funds. Endless therefore does not consider the principal adverse impacts of its investment decisions on sustainability factors in the manner prescribed by Article 4 SFDR. We will continue to monitor regulatory developments with regards to SFDR and will, where required, or otherwise appropriate, make changes to our existing policies and procedures.
Remuneration and sustainability risk
Remuneration of staff is considered annually by our remuneration committee as part of our annual staff appraisal process. Personnel are paid a combination of fixed and variable remuneration, with the variable allocation reflecting personal, team, and firm performance across a number of metrics. Personnel also participate in variable remuneration which is directly linked to the long-term performance of the funds which we manage. Individual performance includes an assessment of compliance with our investment processes, which includes the assessment of ESG risk and the managing of that risk in investments once made. Endless believes these elements align remuneration with long-term financial and non-financial value creation, including ESG factors and managing sustainability risk.