SFDR Disclosures

Transparency of sustainability risk policies (SFDR Art. 3)

Commitment to ESG

Wellington Partners is convinced that responsible investment creates a closer alignment of objectives among investors, investee companies and society at large and will lead to enhanced and more sustainable financial returns in the long run. Understanding ESG risks and opportunities can be critical when assessing a company’s value and addressing ESG risks systematically after investment can act as an important lever to add value to our portfolio.

Since Wellington Partners makes investments in the life science sector – one of the most regulated industries with high ethical standards – many important ESG issues have always been an integral part of investment considerations. Nevertheless, Wellington Partners is committed to further broaden its perspective on ESG in line with stronger societal demands. Therefore, with the support of independent, external ESG advisors Wellington Partners has established a customized ESG framework and respective processes.

ESG Framework & Processes

In order to evaluate the ESG compliance of investment targets during the due diligence process, Wellington Partners applies a customized ESG rating tool which allows it to engage with the investee companies’ management to identify and evaluate relevant ESG risks and opportunities. The tool also allows to define specific ESG targets and performance indicators, and track the progress over time. Wellington Partners will seek firm commitments from the investment targets to track and report on applicable ESG performance indicators, which will be monitored during the holding period and regularly assessed and discussed at board level. An appraisal of the prospective portfolio company’s ESG status will be incorporated into Wellington Partner’s internal investment documentation and discussed as part of the approval process.

Wellington Partners will periodically report on the status and progress of ESG implementation in its portfolio against pre-defined KPIs. The periodic ESG report will become part of internal discussion on portfolio progress and be shared with interested LPs.

ESG at Wellington Partners

Wellington Partner’s ESG activities are coordinated by an internal ESG team, supported by independent, external ESG consultants, which is responsible for developing the ESG Policy, establishing analytical ESG frameworks and processes, as well as leading internal advocacy. Since each investment manager is responsible for ensuring that ESG criteria are integrated into an investment decision and followed through by a portfolio company, the ESG team will organize regular trainings for the investment teams in order to stay informed in regard to regulatory requirements, investor expectations, market developments and internal sustainability commitments. All team members at Wellington Partners have signed up and adhere to the firm’s compliance regulation, which comprises several separate policies adopted by Wellington Partners according to its commitment to responsible investment and compliance management.

Transparency of adverse sustainability (SFDR Art. 4)

No consideration of adverse impacts

The SFDR requires Wellington to make a "comply or explain" decision whether to consider the principal adverse impacts ("PAIs") of its investment decisions on sustainability factors, in accordance with a specific regime outlined in the SFDR.

Wellington has carefully evaluated the requirements of the PAI regime in Article 4 of the SFDR, and in the final report on draft Regulatory Technical Standards which were published on February 2nd, 2021 (the "PAI regime"). Wellington is supportive of the policy aims of the PAI regime, to improve transparency to clients, investors and the market, as to how financial market participants integrate consideration of the adverse impacts of investment decisions on sustainability factors. However, Wellington is concerned about the lack of readily available data to comply with many of the reporting requirements of the PAI regime, as Wellington believes that companies and market data providers are not yet ready to make available all necessary data for the PAI regime. Furthermore, especially companies in the seed and early stages may not be able to provide the required data as it is not applicable to them in these stages and could only be estimated and scaled up to represent potential future adverse impacts of their business models.

Taking these considerations into account, at this stage Wellington has opted not to comply with that regime, both generally and in relation to the Funds. However, Wellington will continuously seek to obtain relevant information on potential sustainability risks and evaluate to which extent this information can fulfill the PAI requirements. Therefore, Wellington will keep its decision not to comply with the PAI regime under regular review.

Transparency of remuneration policies in relation to the integration of sustainability risks (SFDR Art. 5)

Wellington Partner’s compensation policies are structured to incentivize investment managers to promote sustainable growth within investments. Consequently, the remuneration model includes a variable component that qualitatively takes into account compliance with the Firm’s sustainability principles such as successful internal training on these principles, the application of ESG processes and methodologies in the investment process, as well as the regular monitoring and communication of ESG measures.

Furthermore, the compensation model of Wellington Partner’s comprises a carried interest component which, among others, reflects the sustainability performance of investments.