SCG & Sustainable Investment Fund: Defining SFDR Disclosures
Keeping up with the latest EU regulations can be daunting, especially for a Brazil-based investor dedicated to sustainable agriculture and forestry. However, through collaboration and strategic guidance from Sustainable Capital Group (SCG), the fund successfully structured their new Fund IV in compliance with SFDR Article 9 standards. This alignment positions them perfectly for raising sustainable capital within the EU. Discover how our tailored approach helped the fund meet regulatory requirements and strengthen their sustainability strategy!
About the Fund
The Sustainable Investment Fund is a seasoned Fund manager based in São Paulo, specialising in sustainable forest management and ecological restoration projects in Brazil. With extensive experience managing three prior Funds, they are now setting up their fourth Fund, which will be fundraising in Europe and therefore must comply with SFDR Regulation.
The Challenge: Navigating a New Investing Landscape
With setting up its fourth Fund that will also raise funds in Europe, they faced the challenge of navigating the complex European regulatory landscape as this fund would fall under SFDR Regulation. They needed help in defining how their fund would classify under SFDR Disclosure levels and setting up the mandatory Fund disclosures.
How Sustainable Capital Group Stepped In
SCG’s team worked closely with the Fund to conduct a thorough assessment of their sustainability objectives and the relevant international sustainability frameworks. Our approach included:
- Materiality and Regulatory Scan: Conducting an in-depth assessment of sustainability objectives and frameworks, including the EU Taxonomy, IRIS+, TNFD, and SASB.
- Detailed SFDR Questionnaire: Utilizing a comprehensive questionnaire, based on the above frameworks, to determine the Fund’s disclosure levels in line with their activities.
- SFDR Disclosures and Sustainability Reporting Foundation: Drafting pre-contractual and website disclosures compliant with SFDR Article 9 standards, outlining the Fund’s sustainability ambitions and methodologies for impact measurement and reporting.
- ESG Datasheet: Establishing sustainability KPIs that support the sustainable investment objective and processing them in the ESG Datasheet, a template that helps the Fund collect and report on their sustainability data.
Outcome: Compliance with SFDR Article 9 Principles
After SCG’s thorough assessment, it was confirmed that the Fund’s new structure complies with the SFDR Sustainable Investment Criteria (find out more about this in our blog). This allowed them to position themselves under SFDR Article 9, which requires extensive disclosures.
SCG subsequently collaborated with the Fund to deliver essential documents for their disclosures: pre-contractual and website disclosures for the Fund and the Fund manager. Through these documents, we helped them outline their sustainability ambitions and how they would measure their impact throughout the investment lifecycle.
Equipped with the insights from the assessments conducted by SCG and the necessary documents, the new Fund was determined to have a sustainable investment objective under SFDR and is ready to fundraise in the EU.
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