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Sustainability-related disclosures: Mill Reef Capital GP SARL

The statements below are made on behalf of Mill Reef Capital GP SARL. Mill Reef Capital GP SARL (hereinafter "MRC GP" or "Company") is registered as an alternative investment fund manager (hereinafter "Registered AIFM") pursuant to Article 3 (1) of the Luxembourg Law of 12 July 2013 on Alternative Investment Fund Managers (hereinafter "AIFM Law"). The Company acts as the AIFM of Mill Reef Capital Fund SCS and WUP Investment Opportunity SCS (collectively, the "Fund").

On November 27, 2019, Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019, on sustainability-related disclosures in the financial services sector (hereinafter "SFDR") was published and entered into force on March 10, 2021. The European Commission clarified in an official communication in July 2021 that the requirements of the SFDR also apply to registered AIFMs - qualifying as financial market participants under the SFDR. One of these requirements is that registered AIFMs must provide disclosures on the following requirements:

 

  • Article 3 - Transparency of sustainability risk policies

  • Article 4 - Transparency of adverse sustainability impacts at entity level

  • Article 5 - Transparency of remuneration policies in relation to the integration of sustainability risks

 

The Company implements the requirements of Articles 3 - 5 SFDR as set out below. It should be noted that required disclosures are kept up to date and are accessible at the Company's registered office at any time and investors will be informed of any changes accordingly. The Company will not create a separate website for the purpose of disclosing this information but ensures that the investors are at all times up to date with respect to the Company’s implementation of the afore mentioned SFDR requirements.

 

Article 3 SFDR – Transparency of sustainability risk policies

According to Article 2 (22) of the SFDR, a sustainability risk is an environmental, social or governance (hereinafter "ESG") event or condition, if it occurs, could have an actual or potential material adverse effect on the value of the investment.

The financial product managed by the Company is qualified as a financial product under Article 6 SFDR.

Sustainability due diligence may be conducted on an ad hoc basis for the Fund before making an investment to assess potential ESG risks, the status of regulatory compliance, determine the potential for positive contribution to social and/or environmental issues and set up the management structures to measure, report and verify performance. There can be no assurance, however, that such due diligence will reveal all ESG risks or sustainability liabilities relating to an investment that could emerge from adverse impact or from the failure to perform and positively contribute to environmental or social issues.

Based on the Fund’s investment objective and investment strategy, the Company considers that ESG risks will have a limited impact on the returns of the Fund.

 

Article 4 – Transparency of adverse sustainability impacts at entity level

Although ESG and sustainability risks are important to the Company, the latter does not consider the adverse impacts of investment decisions on sustainability factors in the manner prescribed by article 4(1) SFDR, in particular due to the fact that (i) no reliable and sufficiently available or accessible data are available to perform such impact measurement and provide the mandatory reporting imposed by the regulatory technical standards in a consistent manner; (ii) the investment strategy and objectives of the Fund and thus its overall portfolio are neither ESG-focused nor, in the opinion of the Company, likely to have an impact on sustainability factors; and (iii) the underlying investments are not generally required to, and may not currently, report on such factors.

The Company does not intend to consider principal adverse impacts of investment decisions on sustainability factors in the near future.

Article 5 - Transparency of remuneration policies in relation to the integration of sustainability risks

The Company, in accordance with the requirements of the AIFM Law, does not fall within the scope of the provisions of Article 12 of the AIFM Law, among others, which requires the preparation and implementation of a remuneration policy. The Company does not consider it appropriate to draw up a formal remuneration policy, as

  • the Board of Directors of the Company only receives a fixed remuneration in line with market practice and is basing its formal investment decisions on the work of the investment advisor;

  • the remuneration of the investment advisor is disclosed transparently to all investors in the Limited Partnership Agreement and the remuneration is materially influenced by the performance of the investments, i.e. also by the materialisation of sustainability risks;

  • the compliance of the compensation with the requirements of the Limited Partnership Agreement is reviewed annually by an independent auditor.

The compensation structure of the company thus reflects and takes into account sustainability risks or their occurrence directly in the compensation of the investment advisor.

Sustainability-related disclosures: Mill Reef Capital GP II SARL

The statements below are made on behalf of Mill Reef Capital GP II SARL. Mill Reef Capital GP II SARL (hereinafter "MRC GP II" or "Company") is registered as an alternative investment fund manager (hereinafter "Registered AIFM") pursuant to Article 3 (1) of the Luxembourg Law of 12 July 2013 on Alternative Investment Fund Managers (hereinafter "AIFM Law"). 

 

On November 27, 2019, Regulation (EU) 2019/2088 of the European Parliament and of the Council of November 27, 2019, on sustainability-related disclosures in the financial services sector (hereinafter "SFDR") was published and entered into force on March 10, 2021. The European Commission clarified in an official communication in July 2021 that the requirements of the SFDR also apply to registered AIFMs - qualifying as financial market participants under the SFDR. One of these requirements is that registered AIFMs must provide disclosures on the following requirements: 

 

  • Article 3 - Transparency of sustainability risk policies 

  • Article 4 - Transparency of adverse sustainability impacts at entity level 

  • Article 5 - Transparency of remuneration policies in relation to the integration of sustainability risks 

 

The Company implements the requirements of Articles 3 - 5 SFDR as set out below. It should be noted that required disclosures are kept up to date and are accessible at the Company's registered office at any time and investors will be informed of any changes accordingly. The Company will not create a separate website for the purpose of disclosing this information but ensures that the investors are at all times up to date with respect to the Company’s implementation of the aforementioned SFDR requirements. 

  

Article 3 – Transparency of sustainability risk policies 

The Company considers sustainability risks in its investment decision-making processes. According to Article 2 (22) of the SFDR, a sustainability risk is an environmental, social or governance (hereinafter "ESG") event or condition, if it occurs, could have an actual or potential material adverse effect on the value of the investment. 

The sustainability risks deemed relevant according to the investment strategy shall be taken into account in the investment decision. The financial product managed by the Company is qualified as a financial product under Article 8 SFDR and is addressing sustainability risks by applying a defined ESG investment strategy, see pre-contractual disclosure template for further reference, on a consistent basis.  

The Company incorporates analysis of ESG factors into all stages of its investment management process, from sourcing, through to screening opportunities, and finally monitoring of closed investments. For each investment, the Company is assessing the ESG adoption team before any commitment is made. The assessment is based on a checklist referencing best practices and covers policy, industry association membership, value creation, progress tracking and reporting from an ESG perspective. Fund managers and portfolio companies with significant ESG issues or insufficient commitment to ESG will be excluded from the financial product’s investment universe. 

The pre-investment ESG assessment will be monitored on an ongoing basis once an investment has been closed. The Company performs a formal assessment based on the ESG questionnaire of each fund manager on an annual basis. This assessment reviews a fund manager’s execution relative to its stated ESG strategy and operations. The Company further monitors and assesses the ESG activities within a portfolio and the fund manager’s ongoing adoption of responsible investing practices. The Companies will engage with fund managers that do not show sufficient commitment to or progress with regards to ESG.

 

Article 4 – Transparency of adverse sustainability impacts at entity level 

The Company has elected not to consider all principal adverse impact indicators of investment decisions on sustainability factors (i.e., type of assets invested, classification related to SFDR, and unsustainable investment strategies) considering the inherent limitations related to information and data on these principal adverse impact indicators. Nevertheless, the Company has decided to consider the principal adverse impact indicators “Exposure to companies active in the fossil fuel sector” and “Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons)” within the investment management process through exclusions for all investments of the Company. The information regarding these principal adverse impact indicators is disclosed in the annual report pursuant to Article 11 (2) SFDR. 

The Company will monitor the data availability and quality for other principal adverse impact indicators and will inform the investors in case other principal adverse impact indicators will be considered in the future. 

Article 5 - Transparency of remuneration policies in relation to the integration of sustainability risks 

The Company, in accordance with the requirements of the AIFM Law, does not fall within the scope of the provisions of Article 12 of the AIFM Law, among others, which requires the preparation and implementation of a remuneration policy. The Company does not consider it appropriate to draw up a formal remuneration policy, as 

  • the Board of Directors of the Company only receives a fixed remuneration in line with market practice and is basing its formal investment decisions on the work of the investment advisor; 

  • the remuneration of the investment advisor is disclosed transparently to all investors in the Limited Partnership Agreement and the remuneration is materially influenced by the performance of the investments, i.e. also by the materialisation of sustainability risks; 

  • the compliance of the compensation with the requirements of the Limited Partnership Agreement is reviewed annually by an independent auditor. 

The compensation structure of the company thus reflects and takes into account sustainability risks or their occurrence directly in the compensation of the investment advisor. 

Mill Reef Capital Fund II SCS Summary Disclosures

Mill Reef Capital Fund II SCS 2 Pager DE

Mill Reef Capital Fund II SCS 2 Pager EN

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