Sustainability information in context.

An important part of our fund policy is that we invest for the long term. In doing so, we aim to generate a superior risk-adjusted return in the funds we manage. In our view, evaluating ESG factors is part of a sound investment process. We are convinced that, within the framework of long-term investment in portfolio companies, ESG factors should be taken into account.

A clearly visible trend, both in the investment world and in society, is that sustainability (or ESG) is becoming an increasingly important theme. Given current developments, this means that external effects can influence the results of companies that fall short in this area. The sale of a portfolio company may also be put at risk if it does not meet the ESG requirements of a potential buyer. As an investor, it is important to take this into account, not only with a view to sustainability, but also with a view to returns.

The Sustainable Finance Disclosure Regulation (“SFDR”), a European regulation, requires financial market participants such as BlueMill Management B.V. to provide ESG-related information to (prospective) investors. This information relates to the integration of sustainability risks into policy, the assessment of adverse sustainability impacts, the remuneration policy in relation to sustainability risks and the disclosure of sustainability risks. In that context, and in accordance with Articles 3, 4 and 5 of the SFDR, BlueMill Management B.V. makes the following disclosures.

“An environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.”

Definition of “sustainability risk”, Article 2 of the SFDR

For BlueMill Management B.V., this means that sustainability risks are risks that, if they were to materialise, would have a material negative effect on the value of the portfolios of its alternative investment funds (AIFs).

Examples of such sustainability risks

How sustainability risks are assessed

Before an investment decision is taken in a fund managed by BlueMill Management B.V., a decision-making process is followed. Among other things, this means:

1. An extensive due diligence analysis is carried out.
2. The Investment Committee of the relevant fund reviews the investment proposal and advises on it.
3. BlueMill Management B.V. identifies all risks of an investment, including sustainability risks, and then weighs the likelihood that each risk will materialise.
4. The (negative) impact that this could have on the value of the investment is also assessed.

Sustainability risks are thereby addressed and mitigated in this process.

BlueMill Management B.V. rewards its staff through a combination of fixed remuneration (salary and other employment benefits) and variable remuneration (including a bonus). The variable remuneration of relevant employees is subject to the policy documents and procedures of BlueMill Management B.V., including the ESG policy.

Article 4(1) of the SFDR states that financial market participants must publish a statement on their website showing whether they consider the adverse sustainability impacts of their investments. If they do, they must make clear how their due diligence policy takes this into account. Financial market participants are then also required to measure the principal adverse impacts of investment decisions against a set of sustainability factors and to report on this to their clients.

Given the small size of the organisation of BlueMill Management B.V., considering the principal adverse impacts of investment decisions on sustainability factors, and the administrative burden associated with it, would not be proportionate.