SUSTAINABLE FINANCE DISCLOSURE REGULATION
Integration of sustainability risks: Albion Capital Group LLP (Albion Capital) is a signatory of United Nations Principles for Responsible Investments (UNPRI) and incorporates environmental, social and governance (ESG) considerations into its investment decisions. This forms part of our process to create value for investors and develop sustainable long-term strategies for our portfolio companies. We report against ESG criteria to UNPRI (annually) and to the boards of Albion Capital’s funds (quarterly).
We integrate ESG principles at the pre-investment, investment and exit stages.
Pre-investment stage: An exclusion list is used to rule out investments in high risk/ unsustainable areas. ESG due diligence is performed on each potential portfolio company to identify any sustainability risks associated with the investment. Identified sustainability risks are ranked from low to high and are reported to the relevant investment committee. The investment committee considers each potential investment. If sustainable risks are identified mitigations are assessed and, if necessary, mitigation plans are put in place. If this is not deemed sufficient, the committee would consider the appropriate level and structure of funding to balance the associated risks. If this is not possible, investment committee approval will not be provided, and the investment will not proceed.
Investment stage: An ESG clause is integrated into the shareholders agreement for all new investments. The clause outlines the portfolio company’s commitment to combine economic success with ecological and social success.
All new and existing portfolio companies are asked to report against an ESG Balanced Score Card (BSC) annually. The BSC contains a number of sustainability factors against which a portfolio company will be assessed in order to determine the potential sustainability risks and opportunities arising from the investment. Each company’s BSC is scored, anonymised, and combined with the rest of the investee companies to provide a portfolio level ESG view. Every company is provided with their performance across the E, S and G relative to the rest of the portfolio and best in class performance. In addition, every company has access to their individual spider diagram which further breakdown company performance across the key areas and benchmarks it across target and the rest of the portfolio. Such detailed overview and communication plan helps each company understand how they are performing relative to their peers and vs best in class performance, plus helps drive engagement and plan for future improvements.
As minority investors in our investee companies, we have identified five ESG material factors, known internally as ESG baseline factors, that all companies are expected to meet. All companies are at different levels in their 5 ESG pillar journey. We provide resources and hands-on support for all companies to tackle each of the five pillars. Where a given company has achieved all the five base ESG factors, we look to support their leadership team with other sustainability initiatives.
Exit stage: We aim to ensure that good ESG practices remain in place following exit. For example, by ensuring that the portfolio company creates a self-sustaining ESG management system during our period of ownership, wherever feasible.
Principal adverse impact statement: The EU Sustainable Finance Disclosure Regulation (SFDR) requires us to make a “comply or explain” decision whether to consider the principal adverse impacts (PAIs) of our investment decisions on sustainability factors. Albion Capital has decided not to comply with that PAI regime at present. We are therefore required to publish and maintain on our website a statement to explain our reasons for not complying with the PAI regime, and information as to whether and when we intend to comply with such regime.
Albion Capital is supportive of the policy aims of the PAI regime, to improve transparency to clients, investors, and the market, as to how financial market participants integrate consideration of the adverse impacts of their investment decisions on sustainability factors. However, we have chosen not to comply with the regime for the time being. We manage funds that invest primarily in early-stage private companies and the data required to comply with the technical reporting requirements of the PAI regime is not readily available.
Remuneration statement: Albion Capital’s remuneration policies, procedures and practices have been designed to promote sound and effective risk management and do not encourage risk-taking which is inconsistent with the risk profiles or rules of the funds we manage. The polices are designed to encourage the alignment of the risks taken by staff with those of the funds, the investors in the funds and the firm itself and in line with the business strategy, objectives, values, and interests of the firm. Albion Capital also has policies and procedures in place to mitigate any potential conflict that may arise.
Annual staff appraisals are carried out to assess individual performance, both financial and non-financial criteria are considered when assessing performance.
We believe that sound and effective risk management will not encourage excessive risk taking with respect to sustainability risks. Our policies and procedures on mitigating conflicts are consistent with the integration of sustainability risk in the firm’s investment process. Further, the annual staff appraisals include a compliance review of any breaches or errors of any of our policies or procedures, including the ESG policy.
OUR FIRM – ESG – Shareholder engagement
Rules of the Financial Conduct Authority, implementing the Shareholder Rights Directive (EU 2017/828), impose requirements on Albion Capital Group LLP to the extent it invests or has invested, on behalf of investors, in shares listed on a regulated market.
Albion Capital manages several venture capital trusts and private limited funds all of which pursue a venture capital investment strategy, investing in unlisted early stage or growth companies. Shares listed on a regulated market are generally only held as a result of an investment in unlisted securities and are not expected to be held on a long-term basis. Accordingly, Albion Capital has determined that it is not appropriate to develop an engagement policy for the purposes of the Shareholder Rights Directive.
VCT HUB – Shareholder & IFA information – Pop- up fraud warning
ALBION CAPITAL GROUP LLP Fraud Warning
Please be aware that shareholders are sometimes contacted in connection with increasingly sophisticated but fraudulent financial scams. Shareholders are called from an international number by someone claiming to represent a corporate finance firm. The caller may sound professional and will typically offer to buy your VCT shares at an inflated price in connection with a possible takeover bid or acquisition.
The claims made are false and are invariably an attempt to obtain more information from you with a view to extracting money. If you are contacted, we strongly suggest that you do not provide any personal information and that you end the call. Your contact information has not been passed on by us.
For more information on how to protect yourself from investment scams please visit FCAs ScamSmart website.