Principal Adverse Sustainability Impacts
At Fondita, we consider the investment decisions’ principal adverse sustainability impacts. Before investing, we evaluate the ESG risks associated with the company. If we perceive the risk to be higher, it affects our return requirement on the company. This evaluation is done based on the ESG risk metrics from our databases. Our own evaluation also influences the decision. The evaluation is based on the company’s history, the industry, third-party analysis, and our dialogue with the company. We form an overall picture of the company from an ESG risk perspective. In our small and micro cap funds, we do not have access to the same amount of data from the databases, so in these cases, we form an overall picture mainly based on the dialogue with the management and through our own ESG analysis.
In order to assess the potential principle adverse sustainability impacts on an investment, we pay close attention to the sector in which the holding belongs, the geographical location of production, and what the company produces. Certain sectors and geographical areas are associated with a higher risk of ESG related incidents. We also take into account a number of qualitative and quantitative indicators of the company’s management and their prioritisation of ESG. In addition, we monitor the company’s data points regarding CO2 emissions and its ambitions to reduce them. We also clarify management’s approach to ESG in the company during meetings with them.
We strive to form a holistic picture with the data we have, thereby minimising these ESG-related risks in our investments. We avoid companies where the risks of principle adverse sustainability impacts are, in our judgment, high.
Fondita