This document sets out how Kepler Partners LLP (“Kepler”) intends to implement Environmental, Social and Governance (“ESG”) initiatives within the firm’s operating model.
Kepler must implement appropriate policies and procedures, where appropriate, to integrate ESG considerations into its investment decision-making or advisory processes in order to make investments more sustainable.
ESG frameworks seek to ensure a harmonised transparency regime to provide investors with a uniform standard to compare financial products for their ESG risks and sustainable investment objectives. The integration of ESG considerations into investment management processes and ownership practices are done so in the belief that these factors can have an impact on financial performance.
ESG processes and procedures focus on non-financial performance indicators that address a company’s approach towards responsible investment, sustainability, its impact on society and the environment, as well as other ethical and corporate governance considerations.
ESG or sustainable investments mean any of the following or a combination of any of the following: Environmental (E) investments in an economic activity that contributes to an environmental objective that relate to the quality and functioning of the natural environment and natural systems; Social (S) investment in an economic activity that contributes to a social objective, and that relate to the rights, well-being and interests of people and communities; and Governance (G) issues relate to investments in companies following good governance practices and in particular companies with sound management structures, employee relations, remuneration of relevant staff and tax compliance.
Sustainability risk is an ESG event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment. Principal adverse impacts are impacts of investment decisions and advice that result in negative effects on ESG factors.
This policy applies to Kepler when providing investment management or advisory services to its clients.
Kepler will adopt the following overarching policies relating to business conducted and ensure it is published on the firm’s website.
The Kepler Board takes ultimate responsibility under its terms of reference for ensuring sustainability risks are embedded within organisational procedures, systems, and controls to ensure that they are properly taken into account in the investment and risk management processes. The governing body will be responsible for ensuring that adequate resource and expertise is allocated within the firm for the integration of ESG risks.
The Kepler Board will be responsible for the identification, recording, management and where necessary disclosure of conflicts of interest relating to the integration of ESG risks and factors in accordance with Kepler’s Conflicts of Interest Policy.
A Senior Partner(s) will be allocated responsibility with their individual Statement of Responsibilities for the integration of ESG risks throughout the business model.
At a firm level, Kepler has an ESG Committee which was established to further our efforts in playing a positive role in the community and to integrate social and environmental concerns in our business operations and interactions with stakeholders. Charitable endeavours always have the aim of bringing team members together through initiatives, and such engagements are suggested and agreed by Kepler’s Social & Engagement Committee, which acts independently of the ESG Committee. Sustainability efforts aim to make Kepler’s operations more sustainable and to minimise / reduce our carbon footprint. The ESG Committee reports its activities and key issues to the Kepler Board each quarter.
Kepler will, where relevant, ensure ESG factors are taken into account when identifying the target market and within the product review process. Where the firm has concerns over the ESG practices of an issuer or its industry or market sector or considers that there is a higher likelihood of sustainability risks materialising during the period where its Funds might be exposed to an investment than in other potential investments being considered for investment by the Fund, this may impact upon Kepler’s decision of whether to pursue a particular proposed investment opportunity.
Kepler shall factor in ESG risks when selecting and monitoring investments. ESG risks will be taken into consideration, where appropriate, when making investment decisions or providing investment advice. Where applicable, Kepler shall develop engagement strategies, including for the exercise of voting rights, where available, with a view to reducing the principal adverse impact of investee companies on sustainability factors.
At a fund level, effective 13 December 2021, the Kepler Liquid Strategies ICAV’s prospectus was updated to include disclosures required pursuant to the Article 6 of EU 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.
While Kepler, as the Investment Manager, strives to embed socially responsible practices and policies into its operations and investment activities wherever possible, the Investment Manager does not regard sustainability factors to be material to the investment strategy of the Tycho BH-DG Systematic Trading UCITS Fund. The following Funds are classified as Article 8 under the regulation: Tycho Arete Macro Fund, Tycho Athos Event Driven Fund, Tycho Scopia Market Neutral Equity Fund and Tycho SGA US Large Cap Growth Fund.
Kepler will disclose how ESG risks are integrated in the investment decision-making and advisory process on its website. It will disclose the integration of sustainability risks to potential investors in its pre-contractual information and will provide periodic reports to investors on the contribution of investment decisions to the sustainable investment objectives and on how the investment strategy is aligned with the sustainable investment objectives.
The firm shall ensure that any information published as per above is kept up to date. Any amendments made shall require a clear explanation of this on the website.
Kepler will ensure that appropriate disclosure is included in client/investor documents which are made available for receipt and review prior to investment. For example, the prospectus for a fund in accordance with the AIF/UCITS requirements and/or pre-investment material under MiFID II concerning portfolio management and/or advisory services. Kepler shall use any relevant ESA approved templates in order to meet this requirement.
In addition to the ongoing internal monitoring of adherence to this policy, Kepler will describe in its periodic reports to investors the sustainability-related impact of the investments by means of relevant indicators. Kepler shall use any relevant ESA approved templates in order to meet this requirement.
Training and awareness on ESG matters is a topic that the Kepler Board regards as essential and all staff are required to complete ESG training modules on an annual basis via our Learning Management System. Kepler Partners LLP is a signatory to the Principles for Responsible Investment supported by the United Nations (www.unpri.org ) and thus undertakes to respect the following 6 principles: Where applicable, we will integrate ESG issues into our decision making and investment analysis processes; We will seek appropriate disclosure on ESG issues by the entities in which we invest; We will promote acceptance and implementation of the Principles within the investment industry; We will be active shareholders and will integrate ESG issues into our ownership policies and procedures; We will work to enhance our effectiveness in implementing the Principles; We will report on our activities and progress towards implementing the Principles.
Last Update: November 2024
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