- Sustainability-related disclosures
This statement is published by SocialAlpha Investment Fund (SAIF) SICAV-SIF, a company organised as a société anonyme, société d’investissement à capital variable – fonds d’investissement spécialisé (the “Fund”) in accordance with Article 10 of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (the “SFDR”). Its purpose is to provide transparency on the promotion of environmental or social characteristics and, as applicable to the Fund, of sustainable investments on websites.
No significant harm to the sustainable investment objective
The Fund strives to ensure the effective management of potential sustainability risks associated with its investments to do no significant harm to any area of environmental or social concern. The Fund is an umbrella impact investing fund with only one sub-fund being named “BASTION” (the “Sub-Fund”). Toward that end, the Sub-Fund follows a very strict investment process.
The investment advisor of the Sub-Fund, AlphaMundi Group AG (the “investment Advisor”), takes an active approach ensuring that all investments of the Fund meet adequate environmental and social sustainability criteria, consistent with IFC’s international environmental, health, and safety guidelines. In addition to complying with international standards, the Investment Advisor embeds additional environmental screening in the due diligence process and uses the IRIS + system when monitoring investments. In addition, The Fund has also put in place an environmental standards policy detailing prohibited investments.
Additional information on the investment process and prohibited investments are detailed in the environmental standards policy of the Fund.
Sustainable investment objective of the financial product
The Sub-Fund aims at improving the lives of the poor by scaling investment in strategic and sustainable impact ventures in sectors such as microfinance, affordable education, fair trade agriculture and renewable energy. The Sub-Fund will primarily but not exclusively focus on impact ventures in Latin America and in Africa, in particular non-governmental organizations and unlisted small and middle-sized companies. The Sub-Fund has a sustainable investment as its objective and falls within the scope of Art. 9.2 of the SFDR.
Considering the challenges described above in section “Sustainable investment objective of the financial product” and building on researches and financing of impact ventures in Latin America and Africa, the Sub-Fund has the following investment strategy:
The Sub-Fund seeks to achieve its sustainable investment objectives by investing at least 80% of its assets into debt and convertible debt in impact ventures. At least 80% of its assets will be invested in Latin America and in Africa. Up to 25% of the Sub-Fund’s assets can be leveraged as collateral for loan guarantees to impact ventures.
The Sub-Fund may hold warrants, mezzanine and convertible loans as part of a loan contract with an impact venture. The Sub-Fund may not invest directly in new equity instruments. The Sub-Fund may however temporarily hold equity instruments, in particular as a result of a conversion from another type of financial instrument. Any equity instrument held by the Sub-Fund shall in principle be disposed of within two calendar quarters unless otherwise decided by the Board of Directors on an exceptional basis.
The Sub-Fund is committed to actively promoting good governance, integrity and transparency standards in its financing/investment activities, most importantly in the selection of impact ventures.
Impact ventures may include commercial companies, cooperatives, nonprofit institutions or projects, and will be selected on the basis of, inter alia, the following criteria: established operational track record over several years, financial profitability and growth perspectives, quality of products and services when compared to their peers, quality and stability of management team, soundness of governance structure and practices , measurability of the social and/or environmental impact of their activities, responsible corporate behavior, reporting capacity, alignment of vision between the aspirations and objectives of their main shareholders and those of the Sub-Fund, as well as country and sector risk.
Investments are guided by the following principles:
– Work with the best and most promising institutions in order to minimize risk and maximize outreach and sustainability of impact;
– Encourage best practices and insist on a high degree of transparency and quality of reporting;
– Consider institutions as long-term partners who will be accompanied in their growth while they continue to meet the standards of the Sub-Fund.
Remuneration of members of the Board of directors shall not favour excessive risk taking, not limited to but explicitly with respect to sustainability risks.
Monitoring of sustainable investment objectives
The Investment Advisor monitors the sustainable investment objective and the sustainability indicators of the Sub-Fund. A set of impact indicators has been defined in section “Methodologies” and these indicators are monitored at investee level. The expected performance of potential investments against these indicators is assessed during the investment selection phase and actual performance is monitored post investment on a quarterly basis, as detailed in the environmental standards policy of the Fund and reported in the Sub-Fund’s annual impact report. Within one hundred eighty (180) days of the end of each financial year, the Fund will send to all shareholders of the Sub-Fund the most recent annual impact report of the Sub-Fund.
The Sub-Fund intends to deliver a positive impact and it expects from portfolio companies the highest standards in terms of corporate social responsibility.
AlphaMundi Group is a signatory to the IFC Operating Principles for Impact Management (the “Principles”). The Principles describe the essential features of managing investment funds with the intent to contribute to measurable positive social, economic, or environmental impact, alongside financial returns. This goes beyond asset selection that aligns investment portfolios with impact goals, to requiring a robust investment thesis of how the investment contributes to the achievement of impact. As a signatory, the Investment Advisor, with the consent of the Fund, agrees to independent verification of its impact management system in alignment with the Principles. This includes verification of the impact reporting on the Sub-Fund.
In addition to complying with IFC Operating Principles, the Investment Advisor embeds additional environmental screening in the due diligence process. Additionnal information are detailed in the environmental standards policy of the Fund.
Data sources and processing
Data sources used to measure the achievement of the sustainable investment objective of the Sub-Fund are internally sourced, relying on direct due diligence on and engagement with the investee companies. The Investment Advisor however uses the IRIS + system when monitoring investments’ impact.
Attainment of the sustainable investment objective
No index has been designated as a reference benchmark for the purpose of attaining the sustainable investment objective of the Fund.