SFDR Article 10 Disclosure
This Fund is categorised as an Article 9 Fund for the purposes of SFDR.
No significant harm to the sustainable investment objective
Where Climate Assets Fund I (CAF I or the Fund) makes SFDR sustainable investments it will seek to ensure through pre-investment due diligence that such investments: (i) do not significantly harm any of the other sustainable investment objectives set out under SFDR, (ii) take into account the Minimum PAI Indicators and the additional voluntary indicators set out in section (b) below, (iii) are appropriately aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, and (iv) where relevant (for potentially EU taxonomy-aligned investments), do not significantly harm any of the other sustainable investment objectives set out under the relevant EU Taxonomy category.
Sustainable investment objective of the financial product
CAF I’s sustainable investment objective is less production of greenhouse gas emissions, which could include a combination of avoidance, reduction and removal of GHG emissions.
The Fund aims to invest in, as determined by the general partner, impactful companies and projects that can catalyse timely decarbonisation and carbon removal at scale while generating appropriate long-term, risk-adjusted returns1.
Proportion of investments
Other than ancillary cash, liquid assets and derivatives, the Fund intends that the whole of its portfolio will be invested in SFDR sustainable investments.
Within that commitment the Fund has also made a minimum commitment of:
· 100% to environmentally sustainable investments; and
· 70% to EU taxonomy aligned investments,
as further described in paragraph (e) “Proportion of investments” below.
Monitoring of sustainable investment objective
Just Climate LLP (together with its affiliates, Just Climate) uses expected GHG mitigation2 as the primary indicator to measure the outcomes of the actions underlying the attainment of CAF I’s sustainable investment objective. Expected GHG mitigation is assessed during due diligence as part of our climate impact assessment. Over the 10 year period, we intend to monitor actual GHG mitigation and update our model to include such actual performance.
The Fund’s climate impact assessment methodology has been prepared with the objective of enabling third party environmental consultancies to support us in the assessment of expected GHG mitigation during due diligence and over the life of an investment.
Data sources and processing
We aim to use primary data sources whenever possible by working closely with the Fund’s portfolio companies. This primary data is supplemented with third party data providers, desktop research, as well as interviews and discussions with industry and subject matter experts.
Limitations to methodologies and data
The breadth of Just Climate’s mission and Generation’s overarching mission makes it hard to quantify the outcomes of all aspects associated with the actions underlying the attainment of the sustainable investment objective of the Fund. Just Climate has selected indicators that focus particularly on avoided GHG emissions, along with other factors.
There remain significant gaps in corporate and project-level sustainability reporting, and a lack of relevant, comparable, reliable and publicly available sustainability data on companies and projects.
Sustainability (including PAI indicator) data often relies on the data collection and assessment efforts of third parties and delays in accessing disclosures or inaccuracies in the data supplied will be beyond Just Climate’s control. Even where data is available, its impact and/or interpretation may be disputed. This is particularly the case for sustainability indicators that draw on third-party assessments.
Due diligence carried out on underlying assets of the Fund and the associated internal and external controls on that due diligence, is set out in Generation’s approach to Sustainability in the Investment Process.
The engagement policies implemented in support of the sustainable investment objective, including any management procedures applicable to sustainability-related controversies in investee companies, are as set out in Generation’s Stewardship and Engagement Policy.
Designated reference benchmark
For each CAF I portfolio company, Just Climate intends to assess the forecast GHG mitigation expected on investment against the actual GHG mitigation achieved over time. In parallel, but separately to this, we will seek to ensure that our portfolio companies are required to measure and report their Scope 1, Scope 2 and Scope 3 GHG emissions (carbon footprint) and we will work with them to seek to create and action transition plans as required to reduce their own carbon footprint in view to limiting global warming to 1.5°C per the Paris Agreement.
1 Although Just Climate seeks to deliver appropriate long-term, risk-adjusted returns, this is an aspiration and there is no guarantee this goal will be achieved.
2 Expected GHG mitigation is assessed over the 10 year period from investment and is calculated as the baseline emissions, i.e., the emissions that would be expected to occur in the baseline scenario in the absence of the project occurring, net of the company or project’s expected emissions and any GHG emission removal.
This section is intended to be treated as a summary of the following disclosures and does not purport to be complete.