The European Council and European Parliament Regulation (EU) 2019/2088 (“SFDR” or the “Disclosure Regulation”), seeks to establish a pan-European framework to facilitate Sustainable Investment. The Disclosure Regulation provides for a harmonised approach in respect of sustainability-related disclosures to investors within the EEA's financial services sector. In the absence of such harmonisation, individual EU Member States would be free to adopt divergent disclosure standards or develop different approaches, resulting in an uneven playing field and/or creating barriers to entry for asset managers looking to make available financial products within the internal market of the European Union. The scope of the Disclosure Regulation is extremely broad, covering a very wide range of financial products and financial market participants. It seeks to achieve more transparency regarding how financial market participants integrate Sustainability Risks into their investment decisions and consideration of adverse sustainability impacts in the investment process. Its objectives are to: a) strengthen protection for investors of financial products; b) improve the disclosures made available to investors from financial market participants; and c) improve the disclosures made available to investors regarding the financial products, to amongst other things, enable investors to make informed investment decisions. For the purposes of the Disclosure Regulation, West 53 Capital Limited, trading as West 53 meets the criteria of a financial market participant. This document fulfils the disclosure requirements under Articles 3, 4, 5, 7 and 10 of SFDR for West 53 as a financial market participant. In accordance with Article 3 of the SFDR, financial market participants are required to publish information on their due diligence strategies for integrating sustainability risks in their investment decision-making processes on their websites. In accordance with Article 4 (1) of the SFDR, financial market participants shall make a statement on due diligence strategies related to the main adverse sustainability impacts of investment decisions on sustainability factors. Furthermore, in accordance with Article 5 (1) of the SFDR, financial market participants shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks and shall publish that information on their websites. In accordance with Article 7 (1) of the SFDR, financial market participants shall include on a product level, disclosure in pre-contractual financial product documentation, such as fund information memoranda or prospectuses. Furthermore, for Article 8 and 9 Funds and in accordance with Article 10 of the SFDR, which mandates that FMPs managing financial products with sustainability characteristics (Article 8 funds) or sustainable investment objectives (Article 9 funds) must provide specific disclosures. These disclosures should be made publicly on their websites and must detail how sustainability risks and objectives are integrated into their investment decision-making processes.
Under SFDR, funds have to be classified in one of the following categories: a) Funds with sustainable investment objectives (article 9); b) Funds promoting environmental or social characteristics (article 8); and c) Funds which either only integrate or do not take into account environmentally sustainable economic activities (article 6). Article 6 products do not require sustainability disclosures, as they do not take into account environmentally sustainable economic activities. Article 8 products require disclosures on how environmental and/or social characteristics are met. For Article 9 products, Managers must disclose how the product aims to achieve sustainable investment objectives and provide measurable evidence of sustainability outcomes. Key disclosure requirements under SFDR Article 10 include:
For Article 6 funds, the Manager takes a “best efforts” approach to assessing the principle of Do No Significant Harm (“DNSH”). To this end, the Manager will, where appropriate and as disclosed in the relevant fund documentation, take into account guidance from the Taxonomy Regulation on environmental objectives. For Article 8 and Article 9 funds, investments must not cause significant harm to environmental or social objectives. The methodology for DNSH assessment follows EU Taxonomy criteria and Principal Adverse Impact (PAI) Indicators.
In accordance with article 4 of the Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector the Company, taking due account of their size, the nature and scale of their activities and the types of financial products they make available, considers the principal adverse impacts of their investment decisions on sustainability factors within the relevant field and/or practices. According to the SDFR, principal adverse impacts should be understood as those impacts of investment decisions and advice that result in negative effects on sustainability factors. The Company takes a “best efforts” approach to assessing the adverse impact of investment decisions on sustainability. The Company will, where appropriate and as disclosed in the relevant fund documentation, take into account guidance from the Taxonomy Regulation on environmental objectives.
The Manager acknowledges that sustainability risks may be relevant to the investments held by the Funds it manages, including those classified under Article 6, Article 8, and Article 9 of the SFDR. For Article 6 funds, where sustainability risks are not systematically integrated, remuneration continues to be determined based on financial and market-based performance criteria, subject to the Manager’s overall risk management framework. As such the Manager’s Remuneration Policy for Article 6 Funds, does not provide for the assessment of variable remuneration arising from the performance of sustainable or market factors. For Article 8 and Article 9 funds, the Manager integrates sustainability risks into its investment decision-making processes, ensuring that variable remuneration reflects the achievement of sustainability-related objectives where applicable. Performance assessments for delegated Investment Managers, Investment Advisors, or relevant staff within the Manager, include criteria linked to the integration of ESG factors, alignment with the sustainability characteristics or objectives of the funds, and adherence to responsible investment policies. The Manager’s Remuneration Policy is reviewed periodically to ensure alignment with evolving regulatory requirements and best practices in sustainable finance.
Article 6 Funds are not obliged to account for sustainability risks and as such the Company does not include these factors in the portfolio management process. However, to the extent that sustainability risks have an adverse impact on performance of the Funds, they are likely to be reflected in the overall portfolio management. Managers with Funds categorised as either Article 8 or Article 9 are subject to enhanced disclosure requirements to increase transparency and inform end investors about the sustainability-related performance of those funds relative to the ESG characteristics promoted or the sustainability objectives pursued. For Article 8 and Article 9 funds, sustainability risks are integrated through:
Article 6 Funds are not obliged to account for sustainability risks and as such the Company does not include these factors in the portfolio management process. However, to the extent that sustainability risks have an adverse impact on performance of the Funds, they are likely to be reflected in the overall portfolio management. For Article 8 and Article 9 funds, the Manager ensures that all investments consider and mitigate adverse sustainability impacts at the financial product level.
The Manager’s range of funds includes; Article 6, Article 8, and Article 9 funds under the SFDR framework.
The Manager remains committed to regulatory compliance and transparency regarding ESG factors across its fund range.
The Company manages Article 6 funds, as such no qualification on sustainable characteristics is made in pre-contractual disclosures. For Articles 8 and 9 Funds that the Manager manages, the following criteria must be met.
SFDR Article 10 requires that the Manager must publish on our website information about this policy. The Manager satisfies this requirement by disclosing a separate summary of this policy on our website. SFDR also requires that the Manager must include, in the pre-contractual disclosures for our Article 8 and 9 financial products, a description of the manner in which sustainability risks are integrated into our investment decisions. The Manager satisfies this requirement by disclosing a separate summary of this policy in pre-contractual disclosures. For these purposes, “pre-contractual disclosures” means the prospectus or offering document for a fund, and the investment management agreement or other terms and conditions for a portfolio management service.
For Article 6 funds that the Manager manages, no qualification on environmental or social characteristics is made in Periodic Reports. For Article 8 & 9, Periodic reporting (SFDR Article 11) must demonstrate how ESG characteristics are met.
Both fund types must ensure clear, transparent, and data-driven disclosures, helping investors assess the real impact of ESG strategies.