Cross Ocean Adviser LLP and Cross Ocean Partners Management LP (together, “Cross Ocean”) Sustainability-Related Disclosures
Cross Ocean is required by the Sustainable Finance Disclosure Regulation (Regulation 2019/2088) (“SFDR”) to make certain disclosures on its website, including information about the firm’s policies on the integration of sustainability risks into its investment decision-making process; its approach to adverse sustainability impacts; and the consistency of its remuneration policies with the integration of sustainability risks. For the purpose of this disclosure, sustainability risk means an environmental, social or governance issue or event that, if it occurs, could cause a potential negative impact to the value of an investment.
Policies on the integration of sustainability risks into the investment decision-making process (Article 3)
Cross Ocean has implemented an ESG Policy which covers the approach to responsible investing for all assets under management of Cross Ocean. The primary objective of incorporating ESG factors into investment analysis and decisions is to manage potential risks and opportunities which may have a financial impact and maximise returns. This aligns with the overall investment objective of the funds that Cross Ocean advises as well as our fiduciary duty to maximise returns for investors. In addition, considering ESG factors helps Cross Ocean to develop a deeper understanding of sustainability issues and potentially reduces detrimental sustainability outcomes. Our investment products do not have sustainable objectives as part of their investment objectives.
Due to the nature of the asset classes that Cross Ocean primarily invests in and timing of certain investment opportunities, in some cases, access to detailed research relating to ESG risks and opportunities can be limited. As such, Cross Ocean has developed a four-stage ESG integration process which seeks to capture relevant material ESG risks throughout the investment process where applicable. The four-stage process uses a combination of two responsible investment strategies to consider ESG factors: screening and integration. Depending on the availability of information and ability to request additional information from an underlying company, different strategies are deployed based on different asset classes.
No consideration of principal adverse impacts (Article 4)
The EU’s Sustainable Finance Disclosure Regulation (“SFDR”) requires financial market participants to make a ‘comply or explain’ decision as to whether they consider principal adverse impacts (“PAIs”) of investment decisions on sustainability factors in accordance with a specific regime outlined in SFDR (the “PAI Regime”).
Cross Ocean is supportive of the general 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. Taking into account the size, nature and scale of Cross Ocean’s activities, Cross Ocean has decided not to comply with the PAI Regime to date at an entity level.
Remuneration Policy (Article 5)
The annual review and remuneration process for employees takes into consideration all aspects of employee performance and development throughout the year, where relevant, this includes assessing employee participation in developing and adhering to Cross Ocean’s ESG Policy and responsible investing process. Specific sustainability risk factors do not play a direct role in determining remuneration.