Environmental, Social, and Governance
Fasanara Capital Limited strongly believes that it has a moral obligation to play a role in making the world a better place through responsible investing and that incorporating environmental, social and governance (ESG) considerations in its business decisions is essential to creating value for its stakeholders. To support this philosophy, Fasanara has established an internal operations group responsible for the review of ESG policies, assessment of investments and reporting to stakeholders.
ESG Rating Methodology
Fasanara developed a proprietary methodology to formulate the ESG profile of the 55 countries where it does origination: Fasanara Cardo AI engine. The model is based on numerous statistical indicators provided by international organisations, universities and government bodies and external data providers. We use the ESG factors to analyse our individual line-items in the portfolios, numerically against each specific SDG criteria. Learn more.
As a signatory to the United Nations Principles of Responsible Investment (UNPRI), we are committed to incorporating ESG issues in our decision-making and ownership practices and have used the UNPRI as a framework to develop our ESG policy across all investment activities.
Sustainable Finance Disclosure Regulation
In addition to our efforts to serve the underbanked SME sector and our R&D investment in developing the Fasanara Cardo AI SME-ESG Ratings tool, we have gone a step further in our ESG commitment by classifying our alternative credit funds as ‘Article 8 Funds’ in accordance with the new EU regulation on sustainability-related disclosure in the financial services sector (the “SFDR”). Our alternative credit funds are financial products that promote environmental or social characteristics, but do not have sustainable investment as its objective. That said, Fasanara will opt to invest in suitable assets that have ESG objectives from time to time since it is our view that building more resilient portfolios linked to ESG and sustainable investments will create more stable and higher returns.
Climate Action 100+
Climate Action 100+ is an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. Fasanara Capital is among the over 540 investors, with more than $51 trillion in assets under management, that are engaging with companies on improving climate change governance, cutting emissions and strengthening climate-related financial disclosures. Learn more.
The TCFD framework aligns with Fasanara’s belief that climate change is an important business issue that can impact long-term financial performance. For more information on how Fasanara aims to assess, monitor, and manage the potential effects of climate change on our investment processes and portfolios, as well as on our business operations, please see our latest TCFD Update here.
Fasanara is proud to be among the 587 investors with US$46 trillion in assets, who have signed the Global Investor Statement to Governments on the Climate Crisis, calling for all governments to commit to ambitious climate policy action by COP27.
Fasanara ESG Policies
Our Environmental Values:
We make every effort to meet stakeholders’ expectations, facilitate their access to information and provide them with clear and transparent information based on regular and value-added reporting. We also inform our them of our ESG Policy and keep them updated on our approach to ESG issues.
Selecting and Monitoring Investments
We systematically incorporate ESG criteria into our investment and operational due diligence processes. The ESG findings of the Investment Team are formally documented within the due diligence reports produced for our Investment Committee, with potential concerns flagged for consideration. All investments are subject to varying degrees of ongoing ESG monitoring.
We encourage greater ESG awareness across our wide network through relationships which are forged over years of working together. To the extent possible and relevant, we will discuss with network partner originators how our ESG Policy or a similar policy can be implemented by them.
When it comes to corporate governance, we conform with best practice. In addition, we believe that we should at all times behave ethically and should have regard to and monitor the ESG consequences of our own business operations, paying particular concern to our role in the wider community.
2021-2022 Sustainability Report
Fasanara Sustainability Report outlines our philosophy and strategy when it comes to integrating environmental, social and governance (ESG) factors within our existing investment processes and operations; it highlights the key steps that we have taken so far to integrate sustainability both at the firm and portfolio level; and it sets out our sustainability-related targets for the coming years.
2021 and 2022 were pivotal years for responsible investment, as the pandemic, deep-rooted social inequality, climate change and economic recession have put sustainability high up on the agenda for governments and corporates alike. Furthermore, the rollout of sustainability disclosure regulations across the world is boosting corporate transparency and leveling the ESG playing field for financial players. In this context, we believe we have a moral obligation to play a role in generating positive societal impact through sustainable financing, and that incorporating ESG considerations in our investment decisions are essential to creating long-term value for our stakeholders.
We also believe that innovation is the single most significant way to combat critical ESG risks. For over a decade now, banks have been progressively pulling up the drawbridge to small and medium-sized enterprises (SMEs), retrenching to mainstream large corporates, stifling economic growth and creating a funding gap in the trillions. Our alternative credit strategies aim to generate a strong positive societal impact when it comes to the real economy, by harnessing our international ecosystem of fintechs to lend to unbanked/underbanked SMEs globally at scale in ways that are sustainable, and thus putting at the heart of our investment strategy the support of small businesses.
Fasanara ESG Report
Fasanara Alternative Credit | Foundation Share Class
Last year, Fasanara Capital launched a new “social impact” share class for the Fasanara Alternative Credit Fund. The Fasanara Foundation Share Class aims to deliver returns that go beyond financial returns by giving investors an opportunity to make a high social impact.
Aligning Fasanara’s interests with its investors’ interests is the key to all our investment decisions. That’s why Fasanara Capital, in addition to complying with our existing environmental, social and governmental (ESG) filters and parameters in our investment decision making and monitoring processes, has decided to donate a fixed percentage of our fees for this new share class to support a range of environmental and social charities, including Stand By Me and Synchronicity Earth.