Sustainability

I. Introduction

NOVARIS CAPITAL ALTERNATYWNA SPÓŁKA INWESTYCYJNA SPÓŁKA AKCYJNA (hereinafter ‘ZASI’ or ‘ASI’) falls within the scope of the SFDR as:

§ a financial market participant, as it is a manager of alternative investment companies (ZASI), i.e. under European law, a manager of alternative investment funds (AIFM);

§ a financial product, as it is an alternative investment company (ASI), i.e. an alternative investment fund (AIF) under European law.

Given that ZASI operates solely on the basis of its entry in the register maintained by the Polish Financial Supervision Authority (hereinafter ‘KNF’), certain provisions of the SFDR will be applied by analogy in accordance with the guidelines of the European Securities and Markets Authority and the positions of the Polish Financial Supervision Authority.

II. Transparency of sustainability-related risk strategies

(Article 3(1) of the SFDR)

In accordance with ASI’s current Investment Strategy (point V), ASI will assess, amongst other things, sustainability risks. This means it will examine whether there are any environmental, social or governance situations or conditions which, if they were to occur, could have an actual or potential material adverse impact on the value of the investment.

III. Transparency regarding adverse sustainability impacts at the entity level

(Articles 4(1) and 7(2) of the SFDR)

ASI does not provide for the consideration of the main adverse effects of investment decisions on sustainability factors from the perspective of the investment’s impact on the environment, as this would significantly increase the costs of the investment process, which – given the nature of ASI, the type of products offered and the scale of its operations – would reduce ASI’s profitability.

(Article 5(1) of the SFDR)

ZASI hereby states that it is not an entity required to adopt a remuneration policy; consequently, the above requirement does not apply to it.

In accordance with Article 13(1) of Directive 2011/61/EU (hereinafter the ‘AIFM Directive’)- Member States shall require AIFMs to have remuneration policies and practices; such remuneration policies and practices must be consistent with, and promote, sound and effective risk management, and must not encourage risk-taking that is inconsistent with the risk profiles, rules or instruments of incorporation of the AIFs they manage.

AIFMs are not required to adopt a remuneration policy, as, pursuant to Article 3(2) of the AIFM Directive, the above provisions do not apply to AIFMs managing portfolios of AIFs where the total value of assets under management, including assets acquired through leverage, does not exceed the threshold of EUR 100 million in total; or does not exceed the threshold of EUR 500 million where the AIF portfolios consist of AIFs that do not use leverage and in which redemption rights may not be exercised for a period of five years from the date of the initial investment in each AIF.

Under Polish law, in accordance with Article 70zb(4) of the Act of 27 May 2004

on investment funds and the management of alternative investment funds (Journal of Laws of 2022, item 1523, as amended), ZASI is also exempt from the obligation to draw up and implement a remuneration policy.

V. Transparency regarding the integration of sustainability risks into business activities

(Article 6(1) of the SFDR)

a) the manner in which sustainability risks are integrated into their investment decisions; and

b) the results of the assessment of the likely impact of sustainability risks on the returns from the financial products they offer.

Where financial market participants consider that sustainability risks are immaterial, the description of the elements referred to in the first subparagraph shall include a clear and concise explanation of the reasons for considering those risks to be immaterial.

ASI, in its investment policy—which is disclosed to every investor prior to joining ASI—provides information on the matters described above.

VI. Transparency regarding the promotion of environmental or social aspects in pre-contractual disclosures

(Articles 8, 9 and 10(1) of the SFDR)

a) AIFM resources (Article 22 of Regulation 231/2013);

b) types of conflicts of interest (Article 30 of Regulation 231/2013);

c) risk management policy (Article 40 of Regulation 231/2013);

d) organisational requirements (Article 57 of Regulation 231/2013);

e) controls (Article 60 of Regulation 231/2013).

The above changes will not apply to ZASI/ASI, as, in accordance with Article 3(2) of the AIFM Directive, these provisions do not apply to AIFMs managing portfolios of AIFs where the total value of assets under management, including assets acquired through leverage, in total does not exceed the threshold of EUR 100 million; or does not exceed the threshold of EUR 500 million where the AIF portfolios consist of AIFs that do not use leverage and in which redemption rights may not be exercised for a period of five years from the date of the initial investment in each AIF.

Investments under this financial product (ASI) do not take into account the EU criteria for environmentally sustainable economic activity.