Generation IM Long-term Equity Fund

Section

Summary

No sustainable investment objective

This Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment.

While the Fund makes no minimum % commitment to making sustainable investments as defined by SFDR, where the Fund does makes SFDR sustainable investments it will seek to ensure through pre-investment due diligence that such investments:

· do not significantly harm any of the other sustainable investment objectives set out under SFDR, including taking into account the Minimum PAI Indicators referred to in section (b) below,

· are appropriately aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, and

· where relevant (for potentially EU taxonomy-aligned investments), do not significantly harm any of the other sustainable investment objectives set out under the relevant EU Taxonomy category.

Environmental or social characteristics of the financial product

The Fund promotes the following environmental or social characteristics:

· Transformational change to drive to a net-zero, prosperous, equitable, healthy and safe society.

· To invest in high‐quality, sustainable businesses run by long‐term orientated management teams.

· To apply the investment process in a manner intended to move away from particular companies where sustainability risks are considered more prevalent.

· To engage with portfolio companies to provide guidance on issues of sustainability where it has insight and expertise and to nurture ambition with the intention of protecting and enhancing the value of portfolio investments.

· A positive environmental and/or social contribution towards a more sustainable future via system-level changes, through the products and services that portfolio companies of the Fund produce.

The definition of these characteristics is a dynamic matter, not binding and has the potential to evolve.

Investment strategy

The full investment strategy of the Fund is set out in the Program Overview for the Fund. The Fund targets mid-to-late-stage growth businesses that it considers aligned with Generation's System Positive Framework. Generation will ask five questions to assess whether target companies fit this framework:

· What are the systemic shifts required to make the sector truly sustainable?

· Does the company stand to benefit from a sustainable transition?

· Does the business and management team have a long-term orientation?

· Does the company have levers available to catalyse a system level change?

· Is the company mobilising effective coalitions for systems change?

The businesses that the Fund intends to pursue will typically possess characteristics that, in the opinion of Generation, make them suitable for long-term investment (for example, resilient business models involving recurring revenues and/or long-term contracts, and a management and/or ownership structure that Generation believes will facilitate strong long-term alignment).

Proportion of investments

In normal market conditions, when fully invested the Fund expects to have a minimum of 85% of its assets invested in investments aligned with environmental and social characteristics and a maximum of 15% of its assets invested in other assets.

Monitoring of environmental or social characteristics

Generation uses a suite of indicators to measure the attainment of the Fund’s promoted environmental and social characteristics, including investment-specific sustainability indicators, and a suite of cross-portfolio indicators designed to capture social and environmental outcomes which, from the coming into force of SFDR Level 2, have been supplemented by the relevant PAI indicators.

Methodologies for environmental or social characteristics

Investment-specific sustainability indicators used to measure contribution to the investment-specific social or environmental objective are designed in partnership with the portfolio company itself. These indicators are typically selected based on a combination of factors and strive to capture the ‘additional’ effect of the product or service on the specific social or environmental objective versus the status quo or business as usual.

The methodologies applied to measure the cross-portfolio measures vary according to the nature of the metric. Guidance is provided for portfolio companies in order to maximise consistency in calculation. This guidance is aligned to regulatory definitions, where relevant.

Data sources and processing

Generation aims to use primary data sources where possible by working closely with portfolio companies, supplemented with third party data providers, desktop research, as well as interviews and discussions with industry and subject matter experts. But in some cases data may be estimated.

Limitations to methodologies and data

The breadth of Generation’s overarching mission makes it hard to quantify the outcomes of all aspects associated with the actions underlying the attainment of the environmental and social characteristics promoted by the Fund. Generation has selected indicators that focus particularly on the contribution of the investee companies’ products and services to specific social or environmental objectives, as well as cross-portfolio sustainability performance indicators.

There remain significant gaps in corporate sustainability reporting, and a lack of relevant, comparable, reliable and publicly available sustainability data on companies.

Sustainability (including PAI indicator) data often relies on the data collection and assessment efforts of third parties and delays in accessing disclosures or inaccuracies in the data supplied will be beyond Generation’s control. Even where data is available, its impact and/or interpretation may be disputed. This is particularly the case for sustainability indicators that draw on third-party assessments.

Due diligence

Due diligence carried out on underlying assets of the Fund, and the associated internal and external controls on that due diligence, is set out in Generation’s approach to Sustainability in the Investment Process.

Engagement policies

The engagement policies implemented in support of the environmental and social investment strategy, including any management procedures applicable to sustainability-related controversies in investee companies, are set out in Generation’s Stewardship and Engagement Policy.

Designated reference benchmark

Generation has not designated an index as a reference benchmark for the purposes of measuring the attainment of the environmental or social characteristics promoted by the Fund.