SFDR product disclosure - Ambienta Sustainable Credit Opportunities
The sustainable investment objective of Ambienta Sustainable Credit Opportunities SCSp, classified as Art. 9, is achieved through corporate credit investments, with a focus on senior debt, in companies and projects that contribute to Resource Efficiency and Pollution Control.
The fund’s investment strategy involves selecting companies or projects based on their positive environmental impact, as assessed through the 11 Resource Efficiency and Pollution Control metrics of Ambienta’s proprietary Environmental Impact Analysis (EIA) methodology. Assessment and ongoing monitoring is conducted by the Sustainability and Strategy team. Data is sourced directly from target companies or from third-party sources, with occasional estimations, when necessary and with an emphasis on transparency and accuracy.
The Fund aims to achieve a ratio of sustainable investments equal to 100% of invested assets.
Additionally, the integration of Environmental, Social, and Governance (ESG) factors into the investment process, pre-deal and during holding period, ensures respect of minimum safeguards, good governance principles, and the management of potential negative effects on ESG objectives. A defined process including integration of ESG covenants in financing documentation, engagement, and monitoring is in place to manage and mitigate risks.
Sustainable investment objective of the financial product
Ambienta Sustainable Credit Opportunities SCSp (“AmSCO” or the “Fund”) is classified as an art. 9 product pursuant of Regulation (EU) 2019/2088 (the “SFDR Regulation”), i.e. a fund with sustainability objectives.
The sustainable objective will be achieved by investing in companies and projects where environmental sustainability is a measurable and meaningful business driver and whose current or prospective activities improve natural resource usage (“Resource Efficiency”) and/or control of environmental pollution (“Pollution Control”).
The Fund invests in corporate credit with an all-weather approach but has a focus on senior debt. Positive environmental impact is assessed through contribution to at least one of Ambienta’s 11 metrics related to Resource Efficiency or Pollution Control, measured through its “Environmental Impact Analysis for Credit” (“EIA”) methodology. When lending to projects, the loan contract will set out that proceeds will be used to invest in projects which have a positive environmental impact, as measured by the EIA.
To assess good governance, the Fund uses Ambienta’s ESG in Action programme both in due diligence and during the life of the deal. This takes place through governance ratings provided by third party data providers, where available, or the Fund’s own analysis.
Proportion of investments
All of the Fund’s holdings will be in line with its sustainable investment objective, with the purpose of achieving a ratio of sustainable investments equal to 100% of invested assets.
Monitoring of sustainable investment objective
The Fund monitors environmental impact as it makes its investments on an ongoing basis. This is done with Ambienta’s Sustainability and Strategy (“S&S”) team.
The EIA analyses how companies improve Resource Efficiency and/or Pollution Control in their respective sector and this gets reassessed at least annually.
The Fund uses the EIA to measure achievement of its sustainable objective and quantify Resource Efficiency and Pollution Control for portfolio companies. There are 5 metrics to evaluate Resource Efficiency (i.e., Energy Saved, Water Saved, Food Saved, Materials Saved, Land (fill) Saved) and 6 to evaluate Pollution Control (i.e., CO2 Emissions Reduced, Air Cleaned, Water Cleaned, Pollutants Avoided, Materials Recycled, Biodiversity Preserved).
Data sources and processing
Data to calculate contribution under the EIA are collected directly from companies, accredited third-party sources, discussions with experts or occasionally estimated by the S&S team. Environmental impact is compared with market standards for the sectors in which companies operate. The Fund estimates net environmental impact, after considering both positive and negative environmental effects of business activities. The process is set out in an internal policy to ensure transparency, consistency and accuracy.
Limitations to methodologies and data
The analysis has some limitations, relying on third party information, and target companies’ disclosures. To offset these limitations, the S&S team validates data against multiple sources and performs its own analysis based on available industrial benchmarks and sectorial knowledge.
No significant harm to the sustainable investment objective
The EIA assesses positive or negative contributions across multiple metrics and is a first test of do no significant harm to the environmental objective.
ESG is also key to the investment process and identifies potential social, governance and other concerns. This is done through Ambienta’s ESG in Action programme.
The analysis considers:
- the principal adverse impact indicators (i.e., mandatory and relevant additional indicators);
- the guiding principles of the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles of Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights.
Prior to investing, due diligence is composed by two main workstreams: (1) EIA ensures the attainment of a net positive environmental impact, and (2) ESG in Action programme ensures the absence of negative impact, in accordance with the do no significant harm principle (“DNSH”) and compliance with good governance and minimum safeguard principles. This second step will be conducted through a dedicated ESG questionnaire prior to lending. All workstreams are conducted internally at Ambienta. External validation may be requested for potentially complex cases.
There will be regular interaction with portfolio companies to exert influence and verify compliance with best practices of business conduct and integrity, particularly referencing the absence of significant harm to the sustainable objective. The above can be accomplished with (1) ESG covenants in financing documentation, (2) dedicated ESG engagement sessions with management, and (3) monitoring and reporting of specific ESG indicators.
Attainment of the sustainable investment objective
Given the Fund’s strategy of investing primarily into private companies, no benchmarks or reference indices are used. The sustainable investment objective is pursued through monitoring environmental performance measured through the EIA.