Evli Impact Forest Fund I

Financial product’s sustainability information in accordance with EU Sustainable Finance Disclosure Regulation (SFDR) 2019/2088 (sustainability‐related disclosures in the financial services sector). This is a financial product in accordance with Article 9 of the SFDR.

Publication date: December 5, 2022
Legal Entity Identifier: 3167043-7 (business identity code)

a) Summary

The objective of the Fund is to make sustainable investments. The sustainable investment objective of the fund's investment activity is to remove carbon dioxide from the atmosphere and store it in growing forests and sustainable timber products in order to mitigate climate change. The fund's strategy supports the long-term goals of the Paris Agreement to limit global warming and contributes to a number of UN Sustainable Development Goals. The fund's sustainable investment objective promotes climate change mitigation. The fund invests in environmentally sustainable economic activities, transitional activities and enabling economic activities that are aligned with the criteria of the EU Taxonomy Regulation. The aim of the fund is to remove 1,500 tCO2e of atmospheric carbon dioxide per each million euros invested. The fund's performance-based fee depends on the achievement of this carbon impact target.

Furthermore, the fund has a direct impact on the UN's Sustainable Development Goal 13: Climate Action. Sustainable forest management also has an impact on Sustainable Development Goal 15: Life on Land by protecting terrestrial ecosystems, and on Goal 12: Responsible Consumption and Production by producing sustainable timber products that can replace non-renewable materials. Other impacts support Goal 6: Clean Water and Sanitation, and Goal 8: Decent Work and Economic Growth, especially in sparsely populated areas.

The fund does not make investments that would cause significant harm to other environmental or social objectives. The fund also takes into account the principal adverse impacts (PAI indicators) on sustainability factors. Particular attention will be paid to the cumulative adverse impacts of investments on various sustainable development factors defined in the PAI indicators. The fund takes into account all mandatory and optional investment-relevant PAI indicators. Additionally, sustainability impacts can also be associated with exclusions, such as of companies operating in the fossil fuels industry. The industries excluded in Evli’s Principles for Responsible Investment have been included in agreements made with target funds to ensure that the funds do not make investments that violate exclusion principles. The agreements also include terms and conditions under which the target fund manager must report on adverse impacts on sustainability and its goals related to carbon reduction to the best of its ability.

In addition, the Forest Stewardship Council (FSC) and the Program for the Endorsement of the Forest Certification (PEFC) certification schemes are used in the “no significant harm” assessment. Forest certification is an audit carried out by an external party that ensures that forest management is sustainable. The certifications ensure that forests are managed in a way that preserves biodiversity and benefits local communities and workers and ensures economic forest management. The fund invests its assets in target funds that certify the majority of their forests. The investment targets are required to comply with the OECD Principles for Multinational Enterprises, the UN Global Compact and the UN Guiding Principles on Business and Human Rights.

The fund invests in other forest funds. Before making an investment decision, the managers of the target funds will be assessed from a sustainability perspective and data will also be collected on principal adverse sustainability impacts with Due Diligence surveys. The survey assesses the fund managers' ESG policy, governance and sustainability resources, the inclusion of ESG criteria in investment decisions and sustainability reporting. The surveys are tailored and based largely on the PRI (Principles for Responsible Investment) survey targeting investors in forestry. The fund requires its investment targets to follow good governance practices, regarding effective governance structures, relationships with employees, remuneration of personnel and compliance with tax provisions, in particular. An assessment of the quality of corporate governance is an integral part of the assessment of the fund’s potential investments. In a financial product, engagement with investment targets can be carried out as part of the promotion of the sustainability objective in the ways permitted by the investment product. Evli’s Responsible Investment Policy sets the framework for Evli’s engagement and conduct in the event of perceived breaches of norms.

The fund’s investments are aligned with the EU Taxonomy Regulation with regard to sustainable economic activities and the mitigation of climate change. To the extent that environmentally sustainable investments are not environmentally sustainable under the Taxonomy Regulation, they are other environmentally sustainable investments. The fund may hold other investments for liquidity purposes, for example, that do not meet the definition of a sustainable investment.

The amount of carbon dioxide sequestered by the fund’s investments is used as a sustainability indicator in measuring and reporting the fund’s achievement of its sustainable investment objective. Data is collected from forest fund management companies. The objective of the carbon impact is obtained by measuring the annual sequestered amount of carbon dioxide (tCO2e) in the underlying assets. Evli verifies that the calculation methods used in forest managers’ reports on the sequestration of carbon dioxide are aligned with good practice. The completeness of the data obtained on the investments is reported in conjunction with the sustainability indicator. All investments of the fund also comply with Evli’s Principles for Responsible Investment. The completeness of the data does not affect compliance with the above principles.

No benchmark index has been designated for the fund to measure the achievement of the sustainable investment objective. The achievement of the sustainable investment objective is measured by the sustainability indicators described above.

b) No significant harm to the sustainable investment objective

The fund does not make investments that would cause significant harm to other environmental or social objectives. The fund also takes into account the principal adverse impacts (PAI indicators) on sustainability factors.

Particular attention will be paid to the cumulative adverse impacts of investments on various sustainable development factors defined in the PAI indicators. The fund takes into account all mandatory and optional investment-relevant PAI indicators. Additionally, sustainability impacts can also be associated with exclusions, such as of companies operating in the fossil fuels industry. The industries excluded in Evli’s Principles for Responsible Investment have been included in agreements made with target funds to ensure that the funds do not make investments that violate exclusion principles. The agreements also include terms and conditions under which the target fund manager must report on adverse impacts on sustainability and its goals related to carbon reduction to the best of its ability.

In addition, the Forest Stewardship Council (FSC) and the Program for the Endorsement of the Forest Certification (PEFC) certification schemes are used in the “no significant harm” assessment. Forest certification is an audit carried out by an external party that ensures that forest management is sustainable. The certifications ensure that forests are managed in a way that preserves biodiversity and benefits local communities and workers and ensures economic forest management. The fund invests its assets in target funds that certify the majority of their forests.

The investment targets are required to comply with the OECD Principles for Multinational Enterprises, the UN Global Compact and the UN Guiding Principles on Business and Human Rights.

c) The financial product’s sustainable investment objective

The objective of the Fund is to make sustainable investments. The sustainable investment objective of the fund's investment activity is to remove carbon dioxide from the atmosphere and store it in growing forests and sustainable timber products in order to mitigate climate change. The fund's strategy supports the long-term goals of the Paris Agreement to limit global warming and contributes to a number of UN Sustainable Development Goals. The fund's sustainable investment objective promotes climate change mitigation. The fund invests in environmentally sustainable economic activities, transitional activities and enabling economic activities that are aligned with the criteria of the EU Taxonomy Regulation. The aim of the fund is to remove 1,500 tCO2e of atmospheric carbon dioxide per each million euros invested. The fund's performance-based fee depends on the achievement of this carbon impact target.

Furthermore, the fund has a direct impact on the UN's Sustainable Development Goal 13: Climate Action. Sustainable forest management also has an impact on Sustainable Development Goal 15: Life on Land by protecting terrestrial ecosystems, and on Goal 12: Responsible Consumption and Production by producing sustainable timber products that can replace non-renewable materials. Other impacts support Goal 6: Clean Water and Sanitation, and Goal 8: Decent Work and Economic Growth, especially in sparsely populated areas.

d) Investment strategy

The fund invests in other forest funds. Before making an investment decision, the managers of the target funds will be assessed from a sustainability perspective and data will also be collected on principal adverse sustainability impacts with Due Diligence surveys. The survey assesses the fund managers' ESG policy, governance and sustainability resources, the inclusion of ESG criteria in investment decisions and sustainability reporting. The surveys are tailored and based largely on the PRI (Principles for Responsible Investment) survey targeting investors in forestry.

The fund requires its investment targets to follow good governance practices, regarding effective governance structures, relationships with employees, remuneration of personnel and compliance with tax provisions, in particular. An assessment of the quality of corporate governance is an integral part of the assessment of the fund’s potential investments. The assessment of the quality of corporate governance considers the ability of the target fund manager to assess and manage risks, the corporate structure, ethical principles and health and safety practices.

e) Proportions of investments

The fund’s investments are aligned with the EU Taxonomy Regulation with regard to sustainable economic activities and the mitigation of climate change. To the extent that environmentally sustainable investments are not environmentally sustainable under the Taxonomy Regulation, they are other environmentally sustainable investments.

The fund may hold other investments for liquidity purposes, for example, that do not meet the definition of a sustainable investment.

f) Monitoring the sustainable investment objective

The amount of carbon dioxide sequestered by the fund’s investments is used as a sustainability indicator in measuring and reporting the fund’s achievement of its sustainable investment objective.

g) Methods

The sustainability characteristics of the financial product are monitored and reported using the sustainability indicator mentioned above.

h) Data sources and processing

Data is collected from forest fund management companies. The objective of the carbon impact is obtained by measuring the annual sequestered amount of carbon dioxide (tCO2e) in the underlying assets. Evli verifies that the calculation methods used in forest managers’ reports on the sequestration of carbon dioxide are aligned with good practice. Models for assessing carbon stocks are becoming better. The reporting complies with identified and approved carbon accounting standards, such as the Greenhouse Gas (GHG) protocol.

i) Limitations of methods and data

The achievement of the fund’s sustainability characteristics is reported annually through the sustainability indicators mentioned above, in conjunction with which the completeness of the data from the investment target is also reported. All investments of the fund also comply with Evli’s Principles for Responsible Investment. The completeness of the data does not affect compliance with the above principles.

j) Due diligence

The fund’s investments are analyzed before an investment decision is made and at regular intervals during the investment period with regard to environmental, social and corporate governance matters, or ESG factors. ESG factors are integrated into the analysis of investment targets and their selection for investment by the fund.

k) Engagement policies

In a financial product, engagement with investment targets can be carried out as part of the promotion of the sustainability objective in the ways permitted by the investment product. Evli’s Principles of Responsible Investment sets the framework for Evli’s engagement and conduct in the event of perceived breaches of norms.

l) Achieving the sustainable investment objective

No benchmark index has been designated for the fund to measure the achievement of the sustainable investment objective. The achievement of the sustainable investment objective is measured by the sustainability indicators described above.