1. SFDR DISCLOSURES
H.V.A. Capital Management B.V. (the Manager) is registered with the Dutch Authority for the Financial Markets (the AFM) as an alternative investment fundmanager (beheerder van een beleggingsinstelling) in the meaning of the Dutch act on financial supervision (Wet op het financieel toezicht). The wording below constitutes the Manager’s mandatory website disclosures in accordance with articles 3, 4 and 5 of the EU Sustainable Finance Disclosure Regulation (2019/2088) (the SFDR).
1.1. Integrationof sustainability risks (article 3 paragraph 1 SFDR)
A “sustainability risk” is in the SFDR defined as an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment. Sustainability risks (and sustainability factors) are a critical component of the investment strategy of the Fund managed by the Manager. Past and ongoing negative impacts of environmental, and especially climatological, developments in certain regions of Greece necessitated action and prompted the establishment of the Fund but may, on the other side, also have a negative effect on the investments of the Fund. Therefore, in its investment decision process, the Manager will not only consider, besides of the Fund’s general investment strategy and restrictions, the environmental and other sustainable goals to which an envisaged investment should contribute (by reference to the “Master Plan for Water Management” aimed at investments that address long-term environmental and agricultural challenges and drawn-up by HVA International at the request of the Greek government) but also the threat possibly arising from these same and other environmental challenges for the value of the envisaged investments. This consideration will be a fully integrated part of the Manager’s investment decision process (and consequently of the due diligence process included therein). In doing so,the Manager will make use of a standardized Sustainable Risk Framework, incorporating miscellaneous criteria, among which certain additional regional-specific criteria.
1.2. No consideration of principal adverse impacts of investment decisions on sustainability factors (article 4 paragraph 1 SFDR)
The Managerdoes at entity level not consider (in the meaning of article 4 of the SFDR) principal adverse impacts ("PAI"s) of its investment decisions on sustainability factors. The reason is that the Manager deems that it will not be able to collect sufficient data of satisfactory quality to allow the Fund to provide a meaningful insight into the adverse impact of its investment decisions on sustainability factors. In view of the relatively small size of the organisation of the Manager and the fact that efficient tools for the required data collection, measurement and reporting are not (yet) available at acceptable conditions, compliance with the requirements under above mentioned article 4 would impose a disproportional burden on the Manager, the Fund and its portfolio entities. However, the Manager will annually evaluate the developments that may occur in this respect and on the basis thereof decide to commence considering PAIs after all.
1.3. Integration of sustainability risks in remuneration policy (article 5 SFDR)
The Manager pays its staff a combination of fixed remuneration (salary) and variable remuneration (like performance-related remuneration). In the determination of variablere muneration for staff members will be taken into account, among other factors,the staff member’s compliance with all applicable policies and procedures, including those relating to the integration of sustainability risks in the investment decision making process.
2. SUSTAINABILITY-RELATED DISCLOSURES
H.V.A. Agricultural Development Fund Coöperatief U.A. (the Fund) is a financial product in respect of which H.V.A.Capital Management B.V. (as the manager of the Fund, its Manager) has elected for article 8 status in the meaning of the EU Sustainable Finance Disclosure Regulation (2019/2088) (the SFDR). The wording below constitutes the Manager’s mandatory website disclosures in respect of the Fund as required by article 10 of the SFDR (as further detailed in Commission Delegated Regulation (EU) 2022/1288 (the Delegated Regulation).
2.1. Good Agricultural Practices
Notwithstanding that the Fund does not have sustainable as its objective, the Fund does commit to making one or more sustainable investments. The Fund will apply Good Agricultural Practices (GAP), i.e. a set of standards for the safe and sustainable production of crops and livestock. It aims to maximize yields, and optimize business operations,while also minimizing production costs and environmental impact. The four pillars of GAP are:
- Economic Viability;
- Environmental Stability;
- Social Acceptability, and;
- Food Safety and Quality.
2.2. Principal Adverse Impacts
The Fund will not consider (in the meaning of articles 4 and 6 of the SFDR) principal adverse impacts ("PAI"s) of its investment decisions on sustainability factors. The reason is that the Manager deems that it will not be able to collect sufficient data of satisfactory quality to allow the Fund to provide a meaningful insight into the adverse impact of its investment decisions on sustainability factors. In view of the relatively small size of the organisation of the Manager and the fact that efficient tools for the required data collection, measurement and reporting are not (yet) available at acceptable conditions, compliance with the requirements under abovementioned article 4 would impose a disproportional burden on the Manager, the Fund and its Portfolio companies. However, the Manager will annually evaluate the developments that may occur in this respect and on the basis thereof decide to commence considering PAIs after all.
The Fund will not be involved in the extraction, storage, transport or manufacturing of fossil fuels and therefore complies with Table 1 of Annex I (sub 17) of the Delegated Regulation. Next, to this the Fund has set thresholds for indicator18 of Table 1 of Annex I of the Delegated Regulation and the relevant adverse sustainability indicators from Table 2 and 3 of Annex I of the Delegated Regulation. The Fund Administrator will ensure the proper application of these policies, although the ultimate responsibility rests with the Manager and the Fund.
The methodologies or the sustainability indicators used to measure the attainment of the promoted characteristics are the Fund’s carbon footprint, exposure to companies active in the fossil fuel sector, exposure to controversial weapons, and violations of UN Global Compact principles (“UNGC”) and Organisation for Economic Cooperation and Development (“OECD”) Guidelines for Multinational Enterprises.
2.3. Environmental and/or Social Characteristics
The environmental and/or social characteristics promoted by the Fund are Environmental Sustainability by aiming to support technologies, products and solutions that contribute to environmental sustainability, climate mitigation and adaptation. Such investment activities can include, but are not limited to, the subsectors below at every stage of development:
- water resources;
- agri-tech and sustainable agriculture;
- food-tech;
- circular economy, resource efficiency and waste management;
- energy, and;
- prevention/management of extreme weather events and environmental disasters.
In addition, the Fund will promote Social Impact, as the Fund will aim to support enterprises delivering social impact in their path to scale. The main objective of such enterprises is to make intentional and positive social change through expansion and scale-up of their business model and related impact strategy and can reasonably be expected to be active:
- skills and education, and;
- employment.
2.4. Fund Investment Strategy
The Fund invests in agricultural assets. The overall long-term goal for the Fund is to have a near-energy-neutral portfolio (also called Paris-proof aligned) before the end of 2050. The Fund makes each of the assets energy efficient in line with our Paris Proof ambition.
Acquisitions - Brownfield
All investment proposals contain an ESG section, which includes the relevant ESG information, such as the availability of technical measures and a climate riskassessment including transition and physical climate risks.
Acquisitions - Greenfield
For new greenfield assets, stringent sustainability-specific requirements are included in the annually updated Schedule of Requirements. For example, there is a preference for establishing assets that are primarily reliant on renewable energy such as solar energy, which is feasible in Thessaly and throughout Greece.
Portfolio Management
In order to ensure continuous alignment with the environmental characteristics in the portfolio the Fund is implementing Paris-proof roadmaps to structure all the assets in order to ensure that they become aligned with the Paris Proof ambition. Per portfolio entity, the Roadmaps Paris Proof (decarbonisation pathways) that has been developed in the acquisition stage, will ensure progress against the set target. Measures will be translated into multi-year maintenance planning (MY-MP), which is central part of the portfolio plans.
A three-layered implementation approach (saving, greening, generating) will be implementedtowards lowering the Fund’s climate change mitigation exposure:
- Savings: focuses on the on reduced energy requirements of the assets by developing and implementing energy efficient measures
- Generating: focuses on the production of positive carbon offset and renewable energy, e.g. via Greenhouses and solar energy.
- Greening: is the purchase of (the remaining required) green electricity and gas (or available substitutes), where available.
2.5. Environmental and Social (E&S) characteristics
The Fund promotes environmental and social characteristics and while it does not have as its objective sustainable investment, it will have a minimum proportion of 50% of sustainable investments with an environmental objective in economic activities that qualify as environmentally sustainable under the EU Taxonomy. The Fund shall in principle only have direct exposures to its portfolio entities.
2.6. Attainment of the social or environmental characteristics
In order to measure the attainment of the social or environmental characteristics promoted by the Fund, the Manager shall use and apply the following:
- The Manager cannot ascertain that adequateavailable data for all measuring purposes will always be available. Where a lack of available data exists, the Manager will make use of estimates. These estimates will be made on a reasonable best effort basis and will aim to reflect reality as closely as possible.
- Furthermore, data may be based on certain assumptions, forecasts, calculations, views and opinions of the portfolio entities or the Manager that refer to knowledge and insights as existing on that moment. Given the developing and innovative nature of such knowledge and insights and the inherent uncertainty in predicting forward developments herein,it cannot be guaranteed that such data are always absolute accurate or correct.
- Any opinions, calculations or forecasts are not a guarantee of future developments.External factors and limitations on the data may result in differences betweenactual and calculated figures.
Notwithstanding the above, the Manager believes that, predominantly, the availability and quality of data that are availableand used are such that limitations on available data and methodologies will not affect (appropriate measuring of) how the environmental or social characteristics promoted by the Fund are met.
2.7. Sustainability Policies and Practices
The of the Fund is to before making an investmentand after an investment has been made on a continuing basis thereafter, assess thinability-related policies and practices of each (prospective) portfolio entity(which must be in compatible with those of the Fund) as well as good governancepractices of the portfolio entities by evaluating their adherence to keygovernance principles, such as transparency, accountability, and ethicalconduct. This includes reviewing their board structure, management practices,stakeholder relations, and compliance with legal and regulatory requirements.The assessment aims to ensure that the portfolio entities operate responsiblyand sustainably, aligning with the Fund's standards and objectives. Anysustainability-related controversies that might arise will be solved throughdiscussion between the Manager and the portfolio entity’s management and,ultimately, where this cannot be avoided, through exercise of any legal rightsavailable to the Fund