Hvitsten believes that the integration of sustainability risks1 is an important part of risk management and embeds sustainability risk considerations into its investment management as appropriate. The sustainability risk considerations form part of the general sustainability analyses that Hvitsten conducts as part of its investment management in relation to the Fund's contemplated and completed investments. Such integration is in line with Hvitsten's belief that a focus on sustainability supports the financial objective of investment strategies by furthering the long-term economic performance of investments and reducing financial risks.
Examples of ESG events or conditions considered where relevant, include, inter alia, controversial business activities, adverse climate impacts, biodiversity impacts, water and waste management, social and employee matters, human rights, health & safety impacts, product impacts and supply chain impacts. Hvitsten seeks to disclose likely impacts of ESG events or conditions on the financial returns graded in a qualitative manner on a "low – medium – high"-scale and may make cash flow adjustments in financial models as appropriate.
Hvitsten also, as the case may be, integrates sustainability risks through active engagement with portfolio companies. Hvitsten will, throughout its investment management, focus on being in a position to provide portfolio companies under its management with appropriate tools and guidance required to assess and manage sustainability risks. Hvitsten will use this position to support portfolio companies to enhance and further develop their ESG related achievements and disclosures.
The current aim of providing such tools and guidance as part the investment management is to reduce the Fund's portfolio's exposure to sustainability risks. Moreover, Hvitsten seeks to mitigate the potential negative impact of ESG-related events or conditions on the Fund's returns by taking both environmental, social and governance considerations in its investment management in the manner described below.