ACT Fund - SFDR Article 8 Disclosure (No PAIs Considered)

The Agricultural Commodity Transformation Fund (ACT)

The Agricultural Commodity Transformation Fund (ACT)

ACT Fund - SFDR Article 8 Disclosure (No PAIs Considered)

1. Fund Classification under SFDR

The ACT Fund (“the Fund”) is classified as an Article 8 Fund under the EU Sustainable Finance Disclosure Regulation (SFDR). The Fund promotes environmental and/or social characteristics in its investment strategy by integrating ESG (environmental, social, and governance) factors into the investment process.

The Fund does not have sustainable investment as its sole objective within the meaning of Article 9 SFDR. Instead, it pursues a combination of financial returns alongside the promotion of specific environmental and social characteristics, including focus areas such as smallholder farmer income, promoting gender inclusion, and strengthening climate resilience.

 

2. Integration of Sustainability Risks

The Fund integrates sustainability risks into its investment decision-making by:

  • Applying ESG due diligence screens prior to investment;
  • Monitoring investee companies against defined ESG criteria during the investment period;
  • Engaging with portfolio companies to address identified ESG risks.

Sustainability risks are therefore considered to the extent that they are likely to have a material impact on the investment policy and other relevant core policies of the Fund.

 

3. Principal Adverse Impacts (PAIs)

In line with Article 7 of the SFDR, the Fund does not currently consider the Principal Adverse Impacts (PAIs) of its investment decisions on sustainability factors.

This decision reflects the current limitations in data availability, consistency, and quality from portfolio companies, particularly in emerging markets, as well as the significant administrative burden associated with reporting across all mandatory indicators under the SFDR Regulatory Technical Standards (RTS).

The Fund remains committed to transparency and responsible investment practices. It will periodically review this position and may adopt the consideration of PAIs in the future as data quality, reporting standards, and methodologies improve.

Aside from the decision to consider PAIs, ESG reporting plays an important role in assessing how the Fund’s investees address E&S risks, particularly for high-risk investments and those with specific undertakings outlined in their loan agreements. For investees classified as high risk  or those with specific E&S undertakings, the Fund expects investees to develop an Social and Environmental Action Plan and establish an effective monitoring system to address these risks. This Social and Environmental Action Plan must outline all necessary measures to prevent, mitigate, offset, and monitor adverse ESG impacts identified during due diligence.

To track progress, Annual E&S Performance Reports will be required. These reports will assess the implementation of the Social and Environmental Action Plan, document risk mitigation measures, and highlight any newly emerging E&S issues that may require attention. Depending on the risk and impact profile of the investee, the ACT Fund will determine the necessary level of engagement and monitoring, adjusting its oversight as needed. Additionally, as stipulated in the loan agreement, investees will be required to report any financial claims against them, including environmental or social claims that could result in financial liabilities. However, reporting is not required solely on the basis of an ESG issue arising unless it poses a potential financial risk.

 

4. Periodic Reporting

As an Article 8 Fund, the Fund will publish annual reports disclosing:

  • How the promoted environmental and social characteristics have been met;
  • ESG indicators used to measure performance against these characteristics;
  • Narrative examples of ESG engagement and improvements within the portfolio.

 

Website Disclosure

Further information on the Fund’s ESG strategy, investment process, and sustainability-related disclosures will be made available on the Fund’s website in accordance with SFDR requirements.

Fund Classification

This Fund is classified as an Article 8 Fund under the EU Sustainable Finance Disclosure Regulation (SFDR). The Fund promotes environmental and/or social characteristics by integrating ESG (environmental, social, and governance) considerations into its investment process. The Fund does not have sustainable investment as its sole objective within the meaning of Article 9 SFDR.

Sustainability Risks

Sustainability risks are integrated into the Fund’s investment decision-making and monitoring. These include risks related to climate change, resource use, labour conditions, and governance practices that may materially affect the financial performance of portfolio companies.

Principal Adverse Impacts (PAIs)

The Fund does not currently consider the Principal Adverse Impacts (PAIs) of its investment decisions on sustainability factors. This decision reflects current limitations in the availability and consistency of data from portfolio companies. The Fund will review this position periodically and may adopt PAI reporting in the future as data quality and methodologies improve.

Further details on the Fund’s ESG approach, investment process, and periodic reporting will be published in the Fund’s annual reports and made available to investors.

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