Just Climate, Natural Climate Solutions Fund I

Section

Summary

No significant harm to the sustainable investment objective

Where Natural Climate Solutions Fund I (NCS 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

The Fund’s sustainable investment objective is to invest in a portfolio of solutions that deliver highest positive climate and nature impact.

Investment strategy

The Fund aims to direct capital at scale to solutions that enable land use transformation and changes in land management practices to generate highest climate impact and attractive financial returns.¹

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 a target of 0% for EU Taxonomy-aligned investments. This reflects that many NCS sectors in which NCS I invests are not yet covered by the EU Taxonomy. The investment team will assess whether a potential investment has eligible EU Taxonomy economic activities and will report on any Taxonomy-aligned investments in annual SFDR periodic reporting.

Monitoring of sustainable investment objective

Just Climate LLP (together with its affiliates, Just Climate) uses expected GHG emissions abatement2 as the primary indicator to measure the outcomes of the actions underlying the attainment of NCS I’s sustainable investment objective. Expected GHG emissions abatement is assessed during due diligence as part of our climate impact assessment. Post-investment, the GHG emissions abatement model will be updated annually based on actual performance.

Methodologies for the sustainable investment objective

The Fund’s climate impact assessment methodology has been prepared with the objective of enabling third-party environmental consultancies to support Just Climate in the assessment of expected GHG emissions abatement during due diligence and over the life of an investment. Just Climate’s methodology builds upon the GHG Protocol for Project Accounting and generally accepted practices in traditional life-cycle assessments and carbon accounting.

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, including specialist environmental consultancies engaged to assess expected GHG emissions abatement, desktop research, as well as interviews and discussions with industry and subject matter experts.

Limitations to methodologies and data

There is no single, globally accepted standard or methodology to measure forward-looking GHG emissions abatement. There remain significant gaps in corporate and project-level sustainability reporting and a lack of relevant, comparable, reliable and publicly available sustainability data.

Sustainability data often relies on the data collection and assessment efforts of third parties and delays in accessing disclosures or inaccuracies will be beyond Just Climate’s control. Even where data is available, its impact and/or interpretation may be disputed.

Due diligence

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 and in Just Climate’s Environmental and Social Management System.

Engagement policies

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

No reference benchmark has been designated for the purpose of attaining the sustainable investment objective. For each NCS I portfolio company, Just Climate intends to assess the forecast GHG emissions abatement expected on investment against the actual GHG emissions abatement achieved over time. In parallel, we will seek to ensure that our portfolio companies measure and report their Scope 1, Scope 2 and Scope 3 GHG emissions and work with them to create and action transition plans in view of limiting global warming to 1.5°C per the Paris Agreement.