Environmental, Social and Corporate Governance (ESG) Policy and Principles
October 2021
1. Introduction and purpose
This policy statement is based on the requirements as set out in the Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability‐related disclosures in the financial services sector (SFDR) specifically relating to the integration of sustainability risks. Environmental, Social and Governance (ESG) investing is used interchangeably with the term “sustainable investing.” We consider that sustainable investing describes the investment process and that ESG is a tool for identifying and informing investment decisions made as part of that process. ESG integration is therefore distinct from the development of sustainable products – the latter which focus on providing a financial outcome alongside or through a stated sustainability related objective. The Fund defines ESG integration as the practice of incorporating material environmental, social, and governance (ESG) data and insights into investment decision-making, alongside traditional financial information, with the objective of improving the long-term financial and ESG outcomes of portfolios. We consider sustainable performance drivers can be as relevant in investment portfolios without a sustainable objective, as in portfolios with a sustainable objective. The Fund considers that it qualifies as an ‘Article 8’; Fund

2. ESG and Remuneration (Art 5, SFDR)
The Fund has remuneration policies which are aligned with and promote sound and effective risk management, and discourage excessive risk taking. In accordance with SFDR, these remuneration policies have been updated to integrate sustainability risk.

3. Transparency of adverse sustainability impacts at entity level (Art 4, SFDR)
In accordance with Article 4 of SFDR, the Fund must disclose where it considers principal adverse impacts of investment decisions on sustainability factors, a statement on due diligence policies with respect to those impacts, taking due account of the size, the nature and scale of the activities and the types of financial products made available. Principal adverse impacts, as well as those that the fund cannot know or cannot be intercepted are covered in the section titled “Sector-specific Sustainability Risks”. The identification and prioritisation of principal adverse sustainability impacts may vary from investment to investment due to the variety of activities covered by the fund objective (from viticulture to wine-making, bottling, distribution etc.) Identification is typically expected to occur at due diligence stage via the completion and assessment of an internally developed ESG Due Diligence Questionnaire. ESG indicators are not well-established yet, but the Fund will continue to seek relevant indicators and research, including such public information published by credible rating agencies. UNGC principles will be followed for qualitative factors.

4. Engagement policy (Art. 3g, Directive 2007/36/EC)
This section describes how we integrate shareholder engagement in the Fund’s investment strategy. Typically the Fund aims for 100% takeover, but in the event that this is not possible, we will monitor investee companies on relevant matters, including strategy, financial and non-financial performance and risk, capital structure, social and environmental impact and corporate governance, conduct dialogues with investee companies, exercise voting rights and other rights attached to shares, cooperate with other shareholders, communicate with relevant stakeholders of the investee companies and manage actual and potential conflicts of interests in relation to their engagement. As responsible investors the Company will start dialogue with holding company management teams, to encourage behaviour and actions that will lead to better company and stock performance. The process is designed to maximise shareholder value. The Company guiding principles in completing dialogue and engagement is to do so
i) in accordance with clients’ best economic interests,
ii) in accordance with ESG goals
iii) when not influenced by conflicts of interest and
iv) with consideration of the cost to the funds.
The Company will initiate a dialogue with a company when it identifies an area of risk, or question about transparency which the Company believes could be addressed to the benefit of shareholders. Engagement will consist of, but not be limited to:
1. Discussions with companies held in the portfolio to better understand ESG risks and opportunities
2. Encouragement of companies to provide more data and better transparency on ESG related policies
3. Encouragement of companies to better communicate and pursue corrective measures following controversies
4. Holding companies to account for their prior commitments related to ESG issues Engagement will not consist of: discussions with companies held in the portfolio to interfere or change the course of the company strategy or its management team; requests to hold a seat on the Board of Directors Engagement will be made in combination with the members of the relevant investment team which will be involved in the entire process.
Engagement events will be logged and reported.

5. Adherence to responsible business conduct codes and internationally recognised standards for due diligence and reporting (Art 4. SFDR)
Being an authorised investment fund, the Fund will endeavour to follow industry and other relevant gudelines and business conduct codes for due diligence and reporting. Typically, these are designed to mitigate risks. Failure to follow these may expose the Fund to reputational risk or the risks they are meant to mitigate. The Fund relies on the fund manager as the regulated AIFM to assist with these matters.

6. Alignment with the objectives of the Paris Agreement (Art 4. SFDR)
The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 Parties at COP 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016. The Paris Agreement is a landmark in the multilateral climate change process because, for the first time, a binding agreement brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects. It is in the interests of the fund, the investors and all stakeholders for the Fund to align its activities with the objectives of the Paris Agreement.

7. Investment decision‐making process and ESG Assessments
As mentioned previously, due diligence of an investment will include the completion and assessment of an internally developed ESG Due Diligence Questionnaire. Below is the non-exhaustive list of ESG Criteria that the Company expects its delegated Investment Manager to integrate within its investment decision making process, alongside other financial factors:
Environment
Climate change risk; Energy Transition; CO2 Emissions Management; Impact on Ecosystems; Resource Efficiency; Pollution Prevention; Use of Recyclable; Waste Management. Social Fundamental Labour Rights; Health and Safety; Supply Chain Management; Product Safety; Gender Diversity; Impact on Local Communities; Human Capital Management; Social Dialogue. Governance Corruption and Bribery Prevention; Remuneration Policies; Audit and Internal Controls; Ownership Structure; Level of Transparency; Voting Structure; Independence of the Board; Independence of the Committees. The Company duly recognizes how global and compelling is the challenge to shape a more sustainable future for everyone and we welcome the growing commitment of business and finance to Environmental, Social, and Governance (ESG) issues, in line with the UN Sustainable Development Goals (SDG) and EU legislation, such Sustainable Finance Disclosure Regulation (EU) 2019/2088 (SFDR). However, it is possible that investment decisions undertaken by the Fund may result in adverse impacts on sustainability factors (so called, Principal Adverse Impact), like promoting energy-intensive or companies that fail to disclose or do not engage enough towards Paris Climate Agreement goals1.
Although the Fund has delegated the portfolio management function to a third party, the Company aims to ensure that assessment and monitoring of sustainability risks are integrated within the risk management approach and the general investment process. 1 The Paris Climate Agreement has been signed by 196 countries in 2015. It aims, among other things, to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees (https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement).

8. Exclusion policy
The Fund applies a principles-based approach to responsible investment matters. As part of this, investments which are regarded as unsuitable investments will be put on an Exclusion list maintained by Neology the Fund.
The Fund will act in accordance with the United Nations Global Compact (UNGC) as well as international treaties on controversial weapons. Those companies that are deemed to be in severe and systemic breach of these principles are excluded from the Company’s investment screens. The Company will focus on the following areas to screen companies:
a) Human Rights and their application
While protecting and fulfilling human rights is a legal obligation and the responsibility of governments, it is widely recognized that all businesses have the potential to impact human rights.
Companies are expected to obey internationally recognized human rights principles and to prevent and manage its impact on human rights. Human rights related issues include complicity in human right abuses, modern slavery, the rights of indigenous people and displacement of local communities, and
international humanitarian law. The Fund will exclude the use of companies that are deemed to have severely and systemically breached the UNGC principles regarding human rights.
b) Labour Standards and their usage
Companies have a responsibility to uphold internationally recognised standards and rights for their labour force. This applies to issues such as abolition of child labour, elimination of all forms of forced and compulsory labour, defence of the freedom of association and effective recognition of the right to collective bargain, and elimination of discrimination. The Fund will exclude the use of companies that are deemed to have severely and systemically breached the UNGC principles regarding labour standards.
c) Corruption
Correlation between corrupt business practices and the negative effects on long term financial return is growing. Corruption induces business-related costs and market inefficiency and hinders economic, political and social development. Companies are expected to take a proactive approach towards corruption, including extortion and bribery, implement adequate anti-corruption measures and improve transparency. The Fund will exclude the use of companies that are deemed to have severely and systemically breached the UNGC principles regarding corruption.
d) Environment
Preserving the environment and biodiversity are important business responsibilities. The Fund seeks to operate and/or work with companies that take a precautionary approach to environmental challenges, promote greater environmental responsibility, and encourage environmentally friendly technologies. The Fund will exclude the use of companies which are deemed to have severely and systemically breached UNGC principles regarding the environment.
e) Sanctions
The Company will not invest in areas which are subject to broad sanctions and fail to respect human rights.

9. Due Diligence and Reporting
The Fund works closely with the external portfolio manager to efficiently incorporate ESG alongside financial factors in the investment decision process and to promote active engagement, collaboration, transparent disclosure and reporting.
Dialogue and engagement events will be logged by the Company, and reported to the Management and Investment Committees once a year.

10. Implementation and Review
The Board of the Fund is responsible for reviewing and approving this policy and the exclusions at least annually.