PGIM PRIVATE CAPITAL (IRELAND) LIMITED
Explanation of non-compliance with SFDR’s principal adverse impacts regime
10 March 2021
This document sets out disclosures by PGIM Private Capital (Ireland) Limited (the “Firm”), in respect of the principal adverse impacts of our investment decisions on sustainability factors.
The EU Sustainable Finance Disclosure Regulation (“SFDR”) requires the Firm to make a “comply or explain” decision whether to consider the principal adverse impacts (“PAIs”) of our investment decisions on sustainability factors, in accordance with a specific regime as outlined in SFDR. The Firm has decided not to comply with that SFDR regime. The firm is therefore required to publish and maintain on our website a statement to explain our reasons for not complying with the PAI regime in SFDR, and information as to whether and when we intend to comply with such regime.
Non-compliance with the PAI regime in SFDR
- The Firm has carefully evaluated the requirements of the PAI regime in Article 4 SFDR, and in the draft Regulatory Technical Standards which were published in April 2020 (the “PAI regime”).
- The Firm 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 their investment decisions on sustainability factors. However, taking account of the nature and scope of our activities, we have elected not to comply with the regime at this time.
- The Firm is also concerned about the lack of readily available data to comply with the technical reporting requirements of the PAI regime. We are an active investor in private enterprises for which limited public data exists. Many private enterprises do not currently track such data. Furthermore, given the large number of complex metrics set out in the technical reporting requirements of the PAI regime, we believe many small and medium sized enterprises are unlikely to be able to produce such data in a cost-effective manner.
- The Firm will keep its decision not to comply with the PAI regime under regular review.
- Notwithstanding our decision not to comply with the PAI regime, the Firm also wishes to re-affirm our overall commitment to ESG matters. Please see a summary of our firm’s Sustainability Risks Policy available on our website at: www.pgimprivatecapital.com. Under this policy, the firm has integrated consideration of ESG issues into our investment processes.