Sustainability-related disclosures
Summary
The fund is labelled as an Article 9 product according to EU SFDR regulation (2019/2088). The Fund has sustainable investment as an objective by constructing and operating renewable energy production. The Fund will therefore contribute to a significant CO2 emission offset or avoidance and, under the EU Taxonomy, have a substantial contribution to the environmental objective of climate change mitigation. The Fund's strategy is to invest only in activities that make it possible to reduce or avoid CO2 emissions.
The Fund has sustainable investments by the SFDR (2019/2088) and EU Taxonomy regulations (2020/852). Assets the Fund has invested in are targeted to sustainable investments (approx. 100%) with an environmental objective and EU Taxonomy aligned. However, some cash (estimated at max. 2%) may be held in the Fund accounts at the end of any reporting period.
The Fund's investments do not cause significant harm to any other sustainability objectives. This is ensured by a comprehensive internal and external due diligence assessment carried out prior to an investment decision and by considering all mandatory and two additional principal adverse impact indicators. All investments follow good governance practices and are committed to complying with and implementing the minimum safeguard criteria.
The investment strategy targets control investments in utility-scale construction and operational onshore wind farms and photovoltaic (PV) solar parks. The Fund's primary strategy is to invest in Portfolio Companies, primarily in Europe. According to the Fund's strategy, the Fund invests only in activities that make it possible to reduce or avoid CO2 emissions by Article 9, paragraph 3 of the SFDR regulation. The Fund is restricted from making investment decisions in technologies other than onshore wind farms and photovoltaic (PV) solar parks. The list of geographies is also restrictive.
The Fund's sustainable investment objective is monitored by collecting and reporting data on sustainability indicators. The fund investments' performance is monitored regularly and throughout the Fund's lifecycle.
The indicators that measure the Fund's sustainable investment objective have been determined based on the Fund's strategy. These sustainability indicators have been defined by evaluating which quantitative or qualitative quantities best describe the sustainability objective or the impacted sustainability factors and which indicators best describe the characteristics of the investments in the Fund. Investments' lifecycle emission calculations and calculations related to principal adverse impacts may be based on partial forecasts and use multipliers and estimates so that they may involve a small amount of uncertainty or inaccuracy. However, these estimates describe in enough detail the magnitude and scale of measurements and thus sufficiently describe the attainment of the investment objective and do not hamper the attainment of these objectives.
To ensure that the investments fulfil the criteria for sustainable investments, they have undergone thorough ESG-, technical-, financial-, tax, and legal -due diligence assessments. In addition, the manager is committed to reporting financial information and developing and implementing appropriate processes for managing and documenting good governance practices. To achieve the sustainable investment objective, used and monitored data are collected quarterly and reported annually.
The engagement policies concerning the Fund and its investees aim to ensure that the Fund's sustainable investment objective is realised and that the Fund nor its investments cause significant harm to the environment, society or employees, and that the activities do not violate human- or workers' rights, nor participate in corruption and bribery. The manager regularly monitors and audits our own operations and investments. No reference benchmark is designated to attain the sustainable investment objective of the financial product. Thus, the used sustainability indicators and investment targets fulfil the minimum standards common for EU climate transition benchmarks and EU Paris-aligned benchmarks and minimum standards for EU Paris-aligned benchmarks as defined in the (EU) 2020/1818 regulation. Target companies commit to setting and implementing science-based emission reduction plans to achieve net zero emissions by 2030.
No significant harm to the sustainable investment objective
For sustainable investments classified as sustainable investments according to SFDR (EU) 2019/2088, the prevention of significant harm to the environmental or social objectives is ensured by a comprehensive internal and external due diligence assessment carried out before the investment decision. The assessment considers the entire life cycle of the investment and ensures that the investment does not cause significant harm to any sustainable investment objective related to the environment or society. Furthermore, to ensure that the investments’ economic activities do not cause significant harm to the environmental objectives under the EU Taxonomy 2020/852, the fund manager ensures that the investees fulfil the requirements set out in the technical screening criteria (Article 19 of Regulation (EU) 2020/852) if applicable. The fund manager has decided to consider all mandatory Principal Adverse Impacts (PAI) indicators presented in Table 1 and two additional indicators from Table 2 Table 3 (2022/1288, Annex I) and report them annually. The additional indicators in Tables 2 and 3 have been selected using a materiality analysis. The information will be disclosed under Article 11(2) of Regulation (EU) 2019/2088 in a periodic report as referred to in Article 25(6) of Directive 2014/65/EU. In addition, some of the financial products’ operations might be subject to the need for a permit, which can include further environmental assessments.
All investments meet at least the good governance requirements of the EU SFDR (2019/2088) regulation. In addition, active measures are required to fully align with the suggested technical criteria of the minimum safeguards amending the Taxonomy regulation (EU/2020/852 Article 18 and (EU) 2019/2088 Article 2 subsection 17. Thus, investees must comply with the OECD Guidelines for Multinational Enterprises, UN Global Compact, and the UN Guiding Principles on Human Rights. Alignment with these principles will be reported.
Sustainable investment objective of the financial product
The Fund’s objective is to make sustainable investments and contribute to climate change mitigation by constructing renewable energy facilities. The Fund will therefore contribute to a significant CO2 emission offset or avoidance and, under the EU Taxonomy, a substantial contribution to the environmental objective: climate change mitigation. The Fund only invests in activities that make it possible to reduce or avoid CO2 emissions by Article 9, paragraph 3 of the SFDR regulation.
Investment strategy
The investment strategy targets control investments in utility-scale construction and operational phase projects. The investment strategy focuses on onshore wind farms and photovoltaic (PV) solar parks. The fund investments are in Europe. The fund is restricted from making investment decisions in other geographies or technologies.
To ensure the fund investments follow good governance practices, investments have undergone careful ESG, financial, tax, and legal due diligence assessment. In addition, the fund manager has committed to reporting financial information and to developing and putting in place appropriate processes for managing and documenting good governance practices (e.g., policies on anti-corruption and bribery, fair competition, tax, remuneration, as well as Human Rights as well and Laborers’ rights). In addition, the investments are assessed by different policies and regulations. The fund has a grievance mechanism and procedures in place for each investment. The fund manager measures and reports on gender equality among board members and employees, as well as contributions to local communities.
Proportion of investments
Assets the Fund invests in are targeted to sustainable investments (approx. 100%) with an environmental objective and EU Taxonomy aligned. However, some cash (estimated at max. 2%) may be held in the Fund accounts at the end of any reporting period. This objective is to be achieved by the end of the fund’s lifetime. The Fund does not have differences within the direct or other types of exposures related to SFDR regulation when considering the fund manager and investee entities.
Monitoring of sustainable investment objective
The fund’s sustainable investment objective, described in section c), is monitored by collecting and reporting data on sustainability indicators related to measuring the fund investments’ contribution to climate change mitigation. These indicators show how the investments align with the fund’s sustainability objective.
The investments’ performance related to the objective is measured via sustainability indicators. Sustainability and principal adverse impact indicators are monitored regularly throughout the fund’s lifecycle. The fund manager has the ability to control the development of operations through active ownership. The fund manager has the right to perform audits and has developed an environmental and social management system and plans, which ensure the realisation of the sustainable investment objective. In addition, the SFDR and EU Taxonomy reporting requirements are carefully reviewed, and it is ensured that the investments fulfil these requirements prior to the investment decision and are managed during the fund’s lifetime.
The fund’s sustainability indicators used to measure the attainment of the investment objective and good governance practices are listed below:
- Clean Energy Production - Renewable energy capacity (MW)
- Clean Energy Production - Renewable energy produced (MWh)
- Clean Energy Production - Greenhouse Gas reductions or avoidance (tCO2e)*
*The fund manager calculates its investments' emissions offset (CO2e) with EIB’s methodology. Gaia Consulting Oy has audited the manager’s methodology and calculations.
Methodologies
The indicators that measure the fund's investment objective have been determined based on the fund's investment strategy. These sustainability indicators have been defined by evaluating which quantitative or qualitative quantities best describe the sustainability objectives of the financial product or the impacted sustainability factors and which indicators best describe the characteristics of the investments in the portfolio. In addition, when choosing the indicators to be reported annually, the investments reporting abilities and data availability have been considered. Data is collected from the investments and may be partly calculated, verified, and/or modelled by a third party.
Data sources and processing
To ensure the availability of sustainability-related data, the fund manager assessed the maturity of investment data availability as part of the fund’s due diligence analyses. Used and monitored data are collected quarterly to achieve the sustainable investment objective.
Processes related to the collection of indicators are constantly being developed, and if necessary, third-party expertise and external data sources can be used for quantitative and qualitative analysis, mapping, and monitoring of sustainability effects. Reliable and science-based assessments can be used temporarily as part of sustainability impact assessment to supplement missing data. The proportion of estimated data will be reported as part of the periodic reviews according to the SFDR regulation. The calculation methods specified in the SFDR regulation (2022/1288) are used to calculate PAI indicators. Investment-specific information is treated confidentially, and reported indicators are disclosed as aggregate figures
Limitations to methodologies and data
The fund investments’ indirect lifecycle emissions calculations (Scope 3) are often based on partial forecasts and use multipliers and estimates so they may involve some uncertainty or inaccuracy. In addition, it is possible that, despite best efforts, it is not possible to accurately report or distinguish exact figures for, e.g., generated waste. In such cases, the reported figures may be based on estimates that are proportional to the scope of the activity invested. However, these estimates describe, in enough detail, the magnitude and scale of impacts and thus sufficiently describe the attainment of the investment objective and do not hamper the attainment of these objectives.
Due diligence
To ensure that the investments fulfil the criteria for sustainable investments, they have undergone careful ESG-, technical-, financial-, tax, and legal -due diligence assessments. The fund manager is committed to reporting financial and sustainability-related information and to developing, maintaining, and putting in place appropriate processes for managing and documenting good governance practices (e.g., policies on anti-corruption and bribery, fair competition, tax, remuneration, as well as human rights and labourers’ rights). Suitable grievance mechanisms for internal and external stakeholders are implemented to ensure stakeholders’ needs and concerns are accounted for. Our ESG due diligence process follows the OECD and UNGP’s recommendations for due diligence assessment processes. It includes a double materiality analysis and a sustainability risk analysis, which are regularly carried out by utilising sustainability risk tools and material request lists and data analysis. To support the materiality analysis, the assessment considers universal sustainability themes. The findings of the due diligence report are presented and evaluated by the investment committee and are taken into account as part of investment decision-making.
Engagement policies
The engagement policies concerning the fund and its investees aim to ensure that the fund's sustainable investment objective is realised and that the fund nor its investments cause significant harm to society and employees, and that the activities do not violate human- or workers’ rights, nor participate in corruption and bribery. The fund manager is committed to promoting responsible investment practices. The fund manager makes only controlled investments, in which case the fund manager has full power to implement its policies and practices. The fund manager is committed to taking reasonable steps to reduce the principal adverse impacts on the sustainability factors of its investments. The fund manager regularly monitors and audits its own operations and those of the investment targets. If the adverse impacts described cannot be reduced during two consecutive reference periods, practices and principles for preventing, correcting and mitigating the effects will be changed.
The engagement policies the fund and its investment targets are committed to following are:
- Taaleri Code of Conduct
- Taaleri Sustainability Policy
- Taaleri Energia Partner Code of Conduct
- Taaleri Energia ESG Policy
- Taaleri Energia Stakeholder Engagement Policy
Attainment of sustainable investment objective
No reference benchmark is designated for attaining the fund's sustainable investment objective, so no single benchmark is applicable. However, the manager has decided to follow the Paris Agreement and engages all its investments in the Net Zero Asset Managers Initiative (“NZAM"). Taaleri Energia has a target to be net zero by 2030 with its scope 1 and 2 emissions. Scope 3 emissions are monitored and reported via SFDR RTS annex I Table 1. The methodology used is Science Based Target Initiative ("SBTi) for Financial Institutions, and the target progress will be reported via UNPRI reporting. The SBTi is a sector-specific, clearly defined path to reduce emissions in line with science and the Paris Agreement goals.
In addition, the manager monitors and reports investments’ relative emissions under the EIB Carbon Footprint Methodologies. The relative emissions concern investments emissions from a typical year of operation and reflect the GHG savings achieved by the investment also referred to as an environmental impact or CO2 emissions offset. The manager will use the calculation method defined by the EIB: energy generated country-specific emission factor for electricity combined margin. The manager will report investment performance annually and use the unit CO2e.
The measures identified above fulfil the minimum standards common for EU climate transition benchmarks and EU Paris-aligned benchmarks and minimum standards for EU Paris-aligned benchmarks as defined in (EU) 2020/1818 regulation. Scope 3 emissions, carbon intensity and carbon footprint are measured and reported according to (EU) 2022/1288 annex I Table 1.
Statement on principal adverse impacts of investment decisions on sustainability factors
Sustainability-related disclosures in periodic reporting:
Sustainability-related disclosures 1.1.2023-31.12.2023
Sustainability-related disclosures 1.1.2022-31.12.2022