ESG — Maven Funds Management

Maven Funds Management ESG Policy

Introduction

Maven Funds Management (Maven) acknowledges the potential impact of environmental, social, and governance (ESG) factors on long-term financial performance and risk management. The Fund is not designed for investors who wish to exclude particular types of companies or investments based on environment, social and governance (ESG) considerations or are looking for funds that meet specific ESG goals. The Fund does not have ESG targets and on that basis is not designed for investors who are looking for funds that meet particular ESG targets.

This policy outlines the key principles and considerations related to ESG factors and provides additional clarity on how these factors are evaluated.

ESG Approach

Maven Funds Management does not apply any predetermined methodology to measure individual companies with respect to their labour, social, environmental, and ethical standing or apply any predetermined weighting system to the standards or considerations. Investment decisions are discretionary. Consideration of and subsequent monitoring of any labour, social, environmental, and ethical considerations require a qualitative judgement as to the effect of those considerations on a security’s risk and long-term financial performance.

Below are examples of labour, social, environmental and ethical factors that Maven Funds Management considers when selecting, retaining or realising investments of the Fund, subject to publicly available information:

1. Social and Labour Factors

Social and labour factors that examine how a company manages its relationships with employees, suppliers, customers and communities. This includes:

companies that derive any gross revenue from the direct manufacture of military-grade weapons for supply to countries or other entities which are currently under an Australian sanctions regime (under the Australian Department of Foreign Affairs and Trade's Consolidated List) as this may indicate a culture that is contrary to Australian community expectations.
evaluation of employee rights and fair wage practices within a company, to gauge the potential impact on operational stability, reputation, and employee engagement.

2. Environmental Factors

Environmental factors that assess how a company supports the environment. This includes:

degree of adherence to waste disposal methods and management of hazardous materials consistent with environmental regulations and relevant industry standards to avoid penalties and reputational damage.

3. Governance Factors

Governance factors that assess a company’s leadership, executive pay, audits, internal controls and shareholder rights. This includes:

evaluation of a company's treatment of minority shareholders, such as capital allocation decisions, executive remuneration, and the degree of alignment of management incentives with shareholder interests to gauge potential impact of corporate culture on ability to meet corporate strategies.

Dependencies for ESG Assessment

1. Availability of Public Information

Maven’s ability to evaluate ESG factors is contingent on the availability of accurate, reliable, and publicly accessible information. Some of the key sources of public information used in Maven’s ESG assessment include:

Company Disclosures: Annual reports, sustainability reports, and corporate governance documents provide direct insights into a company’s ESG practices.
Industry and Sector Data: Industry associations, regulators, and independent research reports may offer a broader perspective on the ESG practices of companies within particular sectors.

Where public information is unavailable or inconsistent, Maven applies qualitative judgments, making investment decisions based on the best available information.

2. Sector and Industry Variability

ESG factors can vary significantly by sector and industry. The relevance and weight of particular ESG considerations are determined by sector-specific risks and dynamics. For example:

Environmental Factors in Heavy Industries: In industries such as heavy manufacturing and chemicals distribution, adherence to environmental regulations regarding waste management practices are more heavily scrutinised due to the potential for environmental degradation and regulatory penalties.
Social Factors in Consumer-Facing Sectors: For companies in retail, hospitality, or healthcare, labour practices and customer relations are critical, and poor performance in these areas could lead to reputational damage and operational disruptions.

These sectoral distinctions allow Maven to tailor its ESG assessments and focus on the most material factors affecting a security’s risk and long-term financial performance for each industry.

3. Entity-Specific Considerations

The assessment of ESG factors is also influenced by the unique characteristics of each entity. Some of the entity-specific factors that may be considered include:

Corporate Culture: The quality of a company’s leadership and its commitment to ethical business practices can provide insights into its long-term viability.
Business Model and Market Position: The nature of a company’s business model and its positioning within its market can amplify or mitigate ESG risks. For example, a highly centralised, capital-intensive business may be more exposed to governance risks compared to a decentralised, technology-driven firm.

Sector and Industry Variability in ESG Considerations

Maven recognizes that ESG factors vary by industry, and the materiality of specific ESG issues is dependent on the company’s sector and industry. Examples of how ESG considerations differ by sector include:

Technology Sector: Governance factors, such as data privacy, cybersecurity, and intellectual property management, are critical in this industry, while labour practices may be less relevant than in other sectors.
Financial Services: Governance factors, such as executive compensation, risk management practices, and treatment of shareholders, tend to be more relevant than environmental issues in this sector.

Maven uses sector-specific knowledge to adjust its ESG evaluation process, ensuring that the most material factors are taken into account for each investment.

ESG Considerations in Investment Decisions

Maven Funds Management does not apply any predetermined methodology to measure individual companies with respect to their labour, social, environmental, and ethical standing or apply any predetermined weighting system to the standards or considerations. Instead, the consideration of labour, social, environmental, and governance factors is qualitative, and the extent of their influence on investment decisions may vary depending on:

Relevance of ESG Factors: The relevance of ESG factors is assessed in light of the company’s industry, market position, and strategic objectives.
Impact on Risk and Long-Term Performance: ESG factors are considered insofar as they affect the company’s risk profile and long-term financial performance.

Investment decisions are ultimately discretionary, and Maven retains flexibility in how ESG factors are considered for each investment.

Divestment and Monitoring

Investment decisions are discretionary. Consideration of and subsequent monitoring of any labour, social, environmental, and ethical considerations require a qualitative judgement as to the effect of those considerations on a security’s risk and long-term financial performance.

Where Maven Funds Management chooses to divest due to labour, social, environmental, and ethical considerations, it will do so within a timeframe it considers reasonable in all the circumstances.

Conclusion

The Fund is not designed for investors who wish to exclude particular types of companies or investments based on environment, social and governance (ESG) considerations or are looking for funds that meet specific ESG goals. The Fund does not have ESG targets and on that basis is not designed for investors who are looking for funds that meet particular ESG targets.