EU Sustainable Finance Disclosure Regulation Entity-Level Disclosure

Published September 2023

Background

These disclosures (“Statement”) are made pursuant to Articles 3, 4 and 5 of the EU Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088) (the “SFDR”) and relate to one or more general partners of certain PAG funds that are marketed in one or more member states of the EU under the national private placement regimes made available under Article 42 of AIFMD^[1]. Such general partners have been designated as the AIFMs of their respective funds (AIFs) for the purposes of AIFMD and thereby as “financial market participants” for the purposes of SFDR. References to “PAG” should therefore be understood to refer to such general partners in their capacity as AIFMs of their respective AIFs.

This Statement outlines PAG’s approach in respect of the integration of sustainability risks throughout investment-decision making processes; the consideration of principal adverse impacts of investment decisions on sustainability factors; and how remuneration policies are consistent with the integration of sustainability risks.

Integration of sustainability risks in investment decisions (Article 3 SFDR)

A sustainability risk is an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of an investment. 

Consistent with PAG’s Group Environmental, Social, and Governance (“ESG”) Policy, PAG aims to investigate sustainability risks during investment due diligence and consider material sustainability risks when making investment decisions.

PAG’s approach to investigating and addressing sustainability risks is tailored to each investment strategy, taking into consideration factors such as asset class, geography, and industry.

While PAG adopts strategy-specific approaches to investigating and addressing sustainability risks, sustainability risks are generally identified upfront during new investment screening and due diligence. PAG may undertake desktop information reviews, utilise third-party or proprietary tools, and/or engage with counterparties and advisers (where feasible and permitted by the investment strategy) to investigate sustainability risks as part of investment decision-making. Any material sustainability risks identified during screening and due diligence are considered as part of the investment decision. Where feasible and permitted by the investment strategy, PAG may seek to manage material sustainability risks when structuring an investment. PAG may, for example, aim to incorporate sustainability risks into financial analyses or incorporate specific clauses in transaction documentation.

No consideration of adverse impacts of investment decisions on sustainability factors (Article 4 SFDR)

PAG does not currently consider the principal adverse impacts of investment decisions on sustainability factors across all its products and services, as defined under and in accordance with the SFDR (hereafter “PAI”).

PAG currently monitors a range of sustainability-related information and is actively working to enhance its monitoring and reporting of sustainability-related information. However, PAG considers that its existing ESG policies and procedures are appropriate, proportional and tailored to the investment strategies of the funds it manages.

While PAG does not currently intend to consider PAI, PAG aims to continuously enhance its ESG approach, periodically review its preparedness to consider PAI, and continue monitoring regulatory developments and guidance relating to the reporting of sustainability-related information.

Consistency between remuneration policies and the integration of sustainability risks (Article 5 SFDR)

As described in the remuneration policy, PAG pays employees a combination of base salary and bonus. Bonus allocations to employees reflect both individual and firm performance. An individual’s judgement and integrity, which considers appropriate sustainability risk identification and management, including sustainability risks, where applicable, are taken into account in assessing the level of an individual’s bonus.

[1] Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (the “AIFMD”).