Introduction
Under the Sustainable Finance Disclosure Regulation (“SFDR”) and the Taxonomy Regulation, investment fund managers, such as ClimbPace Capital B.V., must provide sustainability related information.
ClimbPace Capital is aware of the importance of sustainability and the role of the financial sector in it. ClimbPace Capital does not specifically focus on sustainable investments or promoting environmental or social features. As a result, the fund managed by ClimbPace Capital does not promote ecological or social characteristics (as referred to in Article 8 SFDR) nor does it have a sustainable investment objective (as referred to in Article 9 SFDR). This does not alter the fact that ClimbPace Capital is aware of sustainability risks and their possible effects on the return of the fund it manages. Sustainability risks are therefore taken into account by ClimbPace Capital in its investment decisions.
Policy regarding sustainability risks
A “sustainability risk” (as defined in SFDR) is 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. These risks include, but are not limited to, climate change transition and physical risks, natural resources depletion, waste intensity, labour retention, turnover and unrest, supply chain disruption, corruption and fraud and human rights violations. A sustainability risk trend may arise and impact a specific investment or may have a broader impact on an economic sector, geography or political region or country. The impacts following the occurrence of a sustainability risk may be numerous and vary depending on the specific risk, region and asset class.
The investment strategy of the fund managed by ClimbPace Capital is an income strategy in relation to single securities and portfolios of assets that produce income, (such as but not limited) to (pools (ETF’s/funds) of) bonds (government, agency and corporate), mortgage-backed securities/asset backed securities, loans/collateralized loan obligations/bank loans, (preferred) equities, and securitized sectors). This means that the fund managed by ClimbPace Capital mainly focusses on the interest paid by the (underlying) borrower(s). Contrary to equity instruments, Climbpace Capital (and the fund) does to a lesser degree depend on profits (upside) for its return on investment (which might be affected by the manifestation of sustainability risks).
The main risk in relation to debt instruments is that the borrower goes bankrupt. Considering this risk, the due diligence of ClimbPace Capital in relation to its investments focusses primarily on credibility of the borrower, based on international credit rating agencies. ClimbPace Capital acknowledges that possible sustainability risks might affect the financial soundness of borrowers. However, ClimbPace Capital is not in the position to assess potential sustainability risks in relation to borrowers due to a lack of information. Especially in relation to pools of income assets (structured finance products), it is very hard to obtain necessary information to assess risks in relation to the (individual) borrowers. In addition, such products exist of numerous individual borrowers. The non-repayment of one individual, will not affect the pool (structured product) in a substantial manner.
Considering the characteristics of the fund managed by ClimbPace Capital as described above, ClimbPace Capital does not take sustainability risks into account when making investment decisions.
Sustainability risks and remuneration policy
Under the AIFMD registration regime, ClimbPace Capital is not required to adopt a remuneration policy. Given the limited size of the organization (no employees), it has not been decided to draw up a specific (voluntary) remuneration policy. Due to the absence of (an obligation to draw up) a remuneration policy, ClimbPace Capital will not integrate sustainability risks in such policy.
Dated 1 June 2025