Sustainability

Arsenale Real Estate SGR spa (hereinafter also referred to as “SGR” or the “Company”) publishes this disclosure in accordance with the provisions of Articles 3, 4 and 5 of Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 (the “Sustainable Finance Disclosure Regulation” or “SFDR”) on environmental, social and governance (hereinafter also referred to as “ESG”) sustainability factors.

This document relates to sustainability disclosure in the financial services sector with respect to information on the policy on the integration of sustainability risks into the investment decision-making process (Art. 3 SFDR) on the consideration or otherwise of the negative impact of investment decisions on sustainability factors – so-called PAI (Art. 4 of the SFDR); the consistency of remuneration policies with the integration of sustainability risks (Art. 5 SFDR).

Transparency of sustainability risk policies (Art. 3 SFDR)

As part of the process of integrating ESG principles into the conduct of its activities, Arsenale has adopted an internal sustainability policy, which defines the principles and guidelines relating to the company’s environmental, social and governance issues.

Before making any investment decision, Arsenale SGR identifies the material risks associated with each proposed investment, including certain sustainability risks. Sustainability risk is defined as “an event or condition of an environmental, social or governance nature which, if it occurs, could have a significant actual or potential negative impact on the value of the investment”, including investments in funds managed by the SGR.

To this end, SGR will carry out

• a “pre-feasibility study” to identify the constraints or opportunities to intervene on the asset to improve its environmental performance;
• where deemed appropriate, a due diligence process, carried out by an external professional, to analyse ESG aspects in addition to those specific to real estate investment;
• an analysis of the risk profile of the investment opportunity in question, including an assessment of sustainability risks.

As part of its risk management policy, Arsenale SGR has drawn up a specific policy on sustainability risks, defining appropriate procedures for identifying, assessing, managing and monitoring relevant sustainability risks and their potential impact.

SGR has also supplemented its pre-contractual transparency documents to inform investors about sustainability risks and their potential relevance and impact on investments.

Failure to consider the negative impact of investment decisions on sustainability factors (Article 4 of the SFDR)

Arsenale SGR does not consider the negative impact of investment decisions on sustainability factors, as required by Article 4 of the SFDR, although it carries out independent assessments.

This is due, on the one hand, to the recent entry into force of Delegated Regulation (EU) 2022/1288 (so-called “RTS”), which complements Regulation (EU) 2019/2088 as far as regulatory technical standards are concerned, and the lack of established interpretative guidelines and/or operational practices. On the other hand, the limited availability of reliable market data does not allow for an adequate assessment of the potential negative impact of investment decisions on sustainability factors in line with the metrics outlined in the RTS.

Such an approach is in line with SGR’s investment strategy; indeed, Arsenale SGR does not currently manage any funds under Article 9 of the SFDR, the only ones for which the competent authorities have signaled an expectation to disclose the PAI of investment decisions.

Notwithstanding its formal position, Arsenale SGR is starting a process to consider the main negative impacts of investment decisions on sustainability factors and to define related due diligence policies. This means that the company is working to ensure that sustainability aspects are consistently taken into account at all stages of the investment process and that they are adequately disclosed to clients and investors in accordance with the transparency requirements of the relevant regulations.

Arsenale SGR reserves the right to change its position on the consideration of PAI and to update this disclosure as necessary.

Transparency of remuneration policies with regard to the integration of sustainability risks (Article 5 of the SFDR)

It should be noted that the SGR is not subject to any constraints in terms of remuneration, being a sub-threshold AIFM. That being said, the variable component does not include elements related to sustainability parameters or risks.