This statement is based on requirements as set out in the Regulation (EU) 2019/2088 of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector.
This statement sets out how Monarch Alternative Capital LP (“Monarch”) assesses and integrates sustainability risk information into its investment process.
Monarch’s approach to integration of sustainability risks in investment decision-making
Monarch undertakes extensive and bespoke investment specific research and due-diligence when evaluating potential investments. Where Monarch determines relevant to a potential investment, Monarch will undertake due diligence and conduct research regarding specific environmental, social or governance factors that may have a bearing on the potential or projected value or performance of the portfolio. Further, Monarch monitors risks relevant to specific investments on an on-going basis. As part of its wider risk monitoring and risk management framework, Monarch will consider sustainability risk where it has determined it to be relevant to an investment. The assessment of sustainability risk as part of the investment decision-making process reflects factors identified as relevant at the outset as well as factors which may become relevant due to changes in environmental or social conditions, changes in law or policy, market expectation, new information or research and other similar developments.
“Sustainability risks” are environmental, social or governance events or conditions, which, were they to occur, could have a material negative impact on the value of an investment.
Alignment of remuneration with integration of sustainability risks
Monarch’s approach to remuneration includes a broad range of factors considered in order to determine the appropriate level of remuneration for its personnel. However, sustainability risk is not considered as a discrete and separate performance component. Rather, insofar as it may be assessed, it is done so as an integrated part of the performance review of an investment professional’s research and analysis.
No consideration of sustainability adverse impacts
Monarch does not consider the adverse impacts of its investment decisions on sustainability factors.
Monarch seeks to understand the environmental and social impact of its investments insofar as such information is relevant to its ongoing assessment and monitoring of such investments. Consistent and comparable information is not currently produced in respect of its investments to allow Monarch to undertake a meaningful comprehensive assessment of the adverse impacts of the portfolios it manages on specific environmental, social and other non-financial factors.
Accordingly, Monarch does not consider the adverse impacts of its investment decisions on sustainability factors, other than as part of its wider risk management and risk monitoring processes. Where relevant, and , assuming sufficient data is available, such risk monitoring processes may include monitoring certain identified sustainability related issues affecting specific investments.
Monarch will continue to review the developments in the market and the availability of information and tools in order to assess the viability of more broadly considering the adverse impacts of investment decisions on sustainability factors.