Sustainable Finance Disclosure
Sustainable Finance Disclosure Regulation (2019/2088) (the “Disclosure Regulation”)
Orlando Management AG (“Orlando”), advisor to the Funds Special Situations Venture Partners II, Special Situations Venture Partners III, and ESSVP IV (“SSVP Funds”) makes the following disclosures in accordance with Articles 3(1), 4(1)(a) and 5(1) of the Disclosure Regulation.
Sustainability risk policies: No consideration of adverse impacts
The SFDR requires Orlando to make a “comply or explain” decision whether to consider the principal adverse impacts (“PAIs”) of its investment recommendations on sustainability factors, in accordance with a specific regime outlined in SFDR. Orlando has opted not to comply with that regime, both generally and in its role as advisor to the various general partners of the SSVP Funds.
Orlando will keep its decision not to comply with the PAI regime under regular review.
Orlando has carefully evaluated the requirements of the PAI regime in Article 4 of the SFDR, and in the draft Regulatory Technical Standards which were published in April 2020 (the “PAI regime”). Orlando 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 investment recommendations and decisions on sustainability factors. However, Orlando is concerned about the lack of readily available data to comply with many of the reporting requirements of the PAI regime, as Orlando believes that companies and market data providers are not yet ready to make available all necessary data for the PAI regime.
Notwithstanding Orlando’s decision not to comply with the PAI regime, Orlando, in its role as advisor to the various general partners of the SSVP Funds, has implemented positive ESG-related initiatives and policies, as part of its overall commitment to ESG matters, as summarised in this section. For the avoidance of doubt, none of the following information is intended to suggest that Orlando complies with the PAI regime.
Orlando (in its role as advisor to the various general partners of the SSVP Funds has established a remuneration policy (the “Policy”). The Policy is developed, approved, implemented, and monitored by a series of bodies within the Orlando structure. The Policy applies to all employees of Orlando, save for limited exceptions.
The Policy has been developed with the aim of supporting Orlando’s business strategy, corporate values, and long‐term interests, including by facilitating the identification, assessment and management of sustainability risks when determining individual remuneration packages. The key principles of the Policy include fostering appropriate risk culture (including with respect to the management of actual and potential conflicts of interest) and compliance with applicable law and regulation.
The performance management and rewards framework envisioned by the Policy has been designed to promote effective risk management, including in particular by:
- Ensuring that assessment of performance takes full account of adherence to risk management requirements, covering all relevant types of current and future risks, including sustainability risks;
- Implementing deferral arrangements using co‐investment and carried interest arrangements for senior personnel, facilitating alignment of interests between staff‐members and third-party investors. If the value of the relevant underlying investment portfolio should decrease (whether arising as a result of a sustainability risk or otherwise), the value of the employee’s holdings will be reduced accordingly; and
- Providing for reduction of deferred variable remuneration awards to senior personnel in certain circumstances, such as in the event that the entity in which the relevant employee works suffers a significant failure of risk management, or experiences a significant downturn in its financial performance (as determined in the sole discretion of Orlando), including in connection with a sustainability risk concerning an investment.