Sustainability-related Disclosure at Creas
The European Parliament and the Council have published a regulation aimed at regulating Sustainability-related disclosures in the financial services sector – Regulation 2019/2088 (SFDR). The purpose of this regulation is to improve transparency and give greater clarity to investments that take sustainability into account in their investment decisions with the ultimate goal of protecting end investors.
Creas Impacto FESE, S.A., hereinafter “Creas”, is an impact fund, and therefore seeks not only to analyse and mitigate sustainability risks, but also to go one step further, by proactively seeking to invest in projects that have a positive impact on people and the planet. More specifically, Creas embraces all aspects of sustainability in the following manner:
Transparency of sustainability risk policies
Creas integrates sustainability risks in its decision-making process by carrying out an in-depth analysis of all aspects concerning ESG (Environment, Social and Governance) for all its investments. These aspects are assessed from the first analysis carried out for each investment, with the aim of identifying not only any risk areas, but also the areas where a positive impact is already being seen and those where impact could be enhanced.
To ensure that the companies meet the highest standards in terms of sustainability, we take into account the following principles when carrying out our analysis and in our decision-making process: IFC’s “Operating Principles for Impact Management”, the “Principles for Responsible Investment” (PRI), Social Value’s “Principles of Social Value”, and UNEP’s “Principles for Positive Impact Finance”, as well as the following standards: standards set forth by the Impact Management Project (IMP), the processes recommended by EVPA, IRIS+ Impact Reporting and Investment Standards, and the reporting standards recommended by the “Sustainability Accounting Standards Board” (SASB) and the “Global Reporting Initiative Sustainability Reporting Standards” (GRI Standards).
Creas also relies on the tool developed by B Corporation to assess the social and environmental impact of companies in connection with 5 key axes: consumers, community, workers, governance and environment. This allows us to prepare an improvement plan in social and sustainability areas for each company.
The following link contains a description of our principles and impact analysis processes.
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Transparency of adverse sustainability impacts
Creas takes into account the Principal Adverse Impacts (PAIs) affecting sustainability factors in its investees, according to their size and nature and the scale of their activities, as well as the types of financial products offered.
As regards the due diligence process, Creas conducts an ESG risk assessment and prepares an improvement plan for different aspects, which is adapted to the size, nature and scope of our investees. Over the life of the investment, Creas supervises and manages both the most relevant KPIs in terms of ESG and the impact KPIs that are directly related to the impact goal and the purpose of the company. These impact KPIs and their evolution are shared with Creas’ investors, so that they may obtain an adequate follow-up of the impact achieved through the company’s activity. In preparing these reports, the principles and standards referred to in the preceding paragraph are taken into account.
Transparency of remuneration policies in relation to the integration of sustainability risks
Creas links the achievement of its impact objectives with its variable remuneration policy, also known as “carry”, applicable to its management team. When making an investment, Creas defines between 3 and 5 key impact indicators per investee and defines a specific objective during the investment period. These indicators and the corresponding objectives are agreed upon with the “Supervision Committee” of the fund, made up of the main investors in the fund, which ensures that said objectives are ambitious and in line with the company’s strategic plan. Once a company’s disinvestment process is completed, Creas measures the rate of achievement of each of these impact indicators, thus defining its Social Impact Multiple (SIM), which allows Creas to calculate its achieved impact rate. A higher or lower achievement level in respect of this Social Impact Multiple is directly linked to the payment of a carry to the management team.
Transparency of the promotion of environmental or social characteristics and of sustainable investments
Creas Impacto FESE, S.A. was set up as a European Social Entrepreneurship Fund (EuSEF), whose goal is therefore to invest in social enterprises, as defined by the European Commission.
As an impact fund, Creas purposely invests in companies that are clearly solving a social or environmental problem in sectors identified as critical for social and environmental well-being in Spain and Europe. In addition to investing only in companies that are already generating positive impact, Creas is actively involved in the creation of value within the company by supporting the management team in maximising said impact and ensuring that the company’s strategic decisions are aligned with the positive impact sought.
As to this day there is no market index that measures the positive social and environmental impact of companies, Creas has adopted the measurement provided by the Social Impact Multiple (SIM) described in the preceding paragraph, as the benchmark for its relative impact.