At The Faktory Fund, we are aware of our responsibilities towards society, including those relating to environmental, social and governance (“ESG”) matters. The transition to a low-carbon, more sustainable, resource-efficient and circular economy will affect all operators of the economy, including the portfolio entities that we invest in. Even though no environmental or social characteristics are promoted by our funds, in accordance with article 8 of Regulation (EU) no.2019/2088 of the European Parliament (“SFDR”) and the fund managed by us does not have sustainable investments as their purpose in accordance with article 9 of the SFDR, we do believe that, in order to make good investments, sustainability factors should not be entirely overlooked.
Sustainability Risks Integration (art 3 SFDR)
The Faktory Fund understands the potential impact that ESG-related events or conditions could have on the value of our investments. While we neither promote environmental or social characteristics, nor do we have sustainable investments as our sole purpose, we take sustainability risks into account when making investment decisions.
We acknowledge that investing responsibly and considering sustainability risks could increase the value of our investments. In this context, we integrate a sustainability risk assessment into our decision-making process. We aim to mitigate these risks by carefully selecting potential portfolio companies for investment, as well as the sectors in which they operate.
A critical part of our risk assessment involves conducting comprehensive due diligence on potential portfolio entities before making any investment. This due diligence focuses on compliance with applicable legislation, including ESG-related legislation. We consider the results of this assessment when deciding to proceed with an investment.
At The Faktory Fund, we are not just passive investors; we strive to be active contributors. We seek representation on the boards of the companies in our portfolio to influence their activities and policies, aiming to reduce sustainability risks for our investments. Throughout the lifespan of our investments, we monitor these companies’ compliance with ESG legislation and human rights.
We acknowledge the potential impact of sustainability risks on certain sectors. To minimize this impact, our fund avoids investments in entities active in ‘restricted sectors,’ which are more likely to entail sustainability risks. We believe this strategic selection contributes to the responsible growth of our investments.
As The Faktory Fund, we remain dedicated to our role as a responsible investor, keeping sustainability at the forefront of our operations, even as we navigate the ever-evolving landscape of investment risks.
Principal Adverse Sustainability Impacts statement (art 4 SFDR)
At The Faktory Fund, we recognize that our investment decisions, as well as the activities of our portfolio companies, have potential implications for sustainability factors. We believe that through careful and strategic investing, we can contribute to mitigating negative sustainability impacts and fostering a more sustainable economy.
As a responsible investor, we aim to create strategic value beyond financial returns. We are committed to addressing broader socio-economic challenges, as we strive to add value that transcends purely financial considerations. This commitment to sustainability is deeply ingrained in our identity and reflects the values that have guided us since our inception.
However, we also recognize the challenges presented by Article 4 of the Regulation (EU) No 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosure in the financial services sector (SFDR).
Given that The Faktory Fund is a small organization with limited resources and personnel, our capacity to accurately determine the precise adverse impacts of our investment decisions based on the varied criteria set forth in the SFDR and the corresponding implementing legislation is limited.
In addition, our investment focus is predominantly on small and medium-sized enterprises and start-ups. These entities, due to their size and limited resources, often struggle to provide the comprehensive information required to discern the precise adverse impacts of our investment decisions as stipulated by the SFDR and its implementing legislation.
Therefore, while we acknowledge the importance of sustainability factors, we, for the aforementioned reasons, are currently unable to consider the adverse impacts of our investment decisions on sustainability factors in compliance with Article 4 of the SFDR. However, our commitment to fostering a sustainable economy and acting as a responsible investor remains a key part of our mission.
Integration of ESG risks in the remuneration policy (art 5 SFDR)
As a sub-threshold manager of alternative investment funds, we are not obliged to have a formal remuneration policy in accordance with articles 40 et seq. of the Belgian law of 19 April 2014 relating to alternative entities for collective investments and their managers. Sustainability risks are therefore not integrated in our remuneration policy.
Last updated on July 31st 2023