Annex I: Public Disclosure Template

Introduction

The Investment Firm Prudential Regime (“IFPR”) is the FCA’s prudential regime for MiFID investment firms which aims to streamline and simplify the prudential requirements for UK investment firms. The IFPR came into effect on 1 January 2022 and its provisions apply to Climate Asset Management Limited  as an FCA authorised and regulated firm.

Under the IFPR, Climate Asset Management is categorised as a small and non-interconnected (“SNI”) MIFIDPRU investment firm.

Climate Asset Management carries on the business of providing portfolio management services in the natural capital solutions space and has been authorised by the FCA since 8 December 2021 (FRN: 944222).

Climate Asset Management is required to publish disclosures in accordance with the provisions outlined in MIFIDPRU 8 of the FCA Handbook. This disclosure document covers all aspects of the disclosure requirements within the scope of the MIFIDPRU rules applicable to SNIs that have not issued additional tier 1 instruments. Specifically, disclosure relating to Climate Asset Management’s remuneration policy and practices.

Climate Asset Management is not a member of a UK Consolidation Group. The disclosure is prepared annually on an individual basis. Climate Asset Management will consider making more frequent public disclosure where particular circumstances demand it, for example, in the event of a major change to its business model or where a merger has taken place.

The disclosure is published on the company website.

Climate Asset Management believes that its qualitative disclosures are appropriate to its size and internal organisation, and to the nature, scope and complexity of its activities.

This disclosure has been ratified and approved by the Board of Climate Asset Management.

The annual audited accounts of Climate Asset Management set out further information which complements the information in this disclosure. The audited accounts are freely available from UK Companies House.

This document does not constitute any form of financial statement on behalf of Climate Asset Management. The information contained herein has been subject to internal review but has not been audited by Climate Asset Management’s external auditors.

Objectives

This document sets out the public disclosure under MIFIDPRU 8 for Climate Asset Management as of 31 December 2022, which is Climate Asset Management’s accounting reference date.

As a MIFIDPRU investment firm, we must establish and implement disclosure requirements to provide investors, stakeholders and wider market participants an insight into how Climate Asset Management is run. This disclosure sets out the overarching requirements that apply to Climate Asset Management.

Policy and disclosure validation

Climate Asset Management is committed to having robust internal controls to ensure the completeness, accuracy, and compliance with the relevant public disclosure regulatory requirements.

This document has been subject to internal governance and verification process, and approval by the Board in line with the Public Disclosure Policy that Climate Asset Management has adopted to ensure compliance with the regulatory requirements contained in MIFIDPRU 8.

The Policy requires internal challenge and oversight prior to approval and publication.

Remuneration Policies and Practices

Introduction

Under MIFIDPRU 8.6.2R, Climate Asset Management is required to disclose a summary of:

a)       its approach to remuneration for all of its employees;

b)       the objectives of its financial incentives;

c)       the decision-making procedures and governance surrounding the development of the remuneration policies and practices Climate Asset Management is required to adopt in accordance with the MIFIDPRU Remuneration Code, to include, where applicable:

d)       the composition of and mandate given to the remuneration committee; and

e)       details of any external consultants used in the development of the remuneration policies and practices.

Under MIFIDPRU 8.6.5R, Climate Asset Management must also disclose the key characteristics of its remuneration policies and practices in sufficient detail to provide the reader with:

a)       an understanding of the risk profile of Climate Asset Management and/or the assets it manages; and

b)       an overview of the incentives created by the remuneration policies and practices.

For purposes of MIFIDPRU 8.6.5R, Climate Asset Management must disclose at least the following information:

a)       the different components of remuneration, together with the categorisation of those remuneration components as fixed or variable; and

b)       a summary of the financial and non-financial performance criteria used across Climate Asset Management, broken down into the criteria for the assessment of the performance of:

i.         Climate Asset Management;

ii.        business units; and

iii.      individuals.

Under MIFIDPRU 8.6.8R(2), Climate Asset Management must disclose the total amount of remuneration awarded to all staff, split into:

a)       fixed remuneration; and

b)       variable remuneration.

As a MIFIDPRU investment firm, we must establish, implement, and maintain gender neutral remuneration policy and practices that are appropriate and proportionate to the nature, scale, and complexity of the risks inherent in the business model and the activities of Climate Asset Management. Our remuneration policy and practices are gender neutral and do not discriminate employees on the basis of gender or other characteristics.

Governance

The Remuneration Committee is responsible for Climate Asset Management’s remuneration policy.

Performance period

Climate Asset Management’s performance period is from 1 January 2022 to 31 December 2022.

Climate Asset Management has adopted a Remuneration Policy that complies with the requirements of Chapter 19G of the FCA’s Senior Management Arrangements, Systems and Controls Sourcebook.

Approach to remuneration for employees

Climate Asset Management’s remuneration approach is designed to support individual and corporate performance, encourage the sustainable long-term financial health of the business, and promote sound risk management for the success of Climate Asset Management and to the benefit of its customers, counterparties, and the wider market. Our remuneration approach promotes long-term value creation of our human resources through transparent alignment with the agreed corporate strategy.

The Board believes Climate Asset Management’s remuneration structure is appropriate for the business and the industry it operates in and is efficient and cost-effective in delivering its long-term strategy.

Undeserved and excessive remuneration sends a negative message to all stakeholders, including Climate Asset Management’s workforce, and causes long term damage to Climate Asset Management and its reputation.

Financial incentives objectives

The objectives of Climate Asset Management’s remuneration practices are as follows:

a)       Climate Asset Management undertakes to reward all employees fairly, regardless of job function, race, religion, colour, national origin, sex, sexual orientation, marital status, pregnancy, disability or age;

b)       It is the policy of Climate Asset Management to operate competitive remuneration policies to attract, retain and motivate an appropriate workforce for Climate Asset Management;

c)       Climate Asset Management is also committed to ensuring that its remuneration practices encourage high standards of personal and professional conduct, support sound risk management and do not encourage risk taking that exceeds the level of tolerated risk of Climate Asset Management, and are aligned with Climate Asset Management’s regulatory requirements;

d)       Rewards for all staff will be aligned to financial and non-financial performance criteria and risk profile, and in all cases will be in line with the business strategy, objectives, values, culture and long-term interests of Climate Asset Management;

e)       Climate Asset Management will not allow any unfair or unjust practices that impact on pay; and

f)        Climate Asset Management undertakes that it will not award remuneration using vehicles or methods the aim of which is to attempt to avoid application of the relevant FCA’s Remuneration Code.

Climate Asset Management uses the following financial incentives:

a)       base salary

b)       bonuses;

c)       referral programmes;

d)       benefits;

e)       profit shares;

f)        salary raises; and

g)       professional development opportunities.

Our financial incentives are designed to:

a)       raise employee satisfaction;

b)       recognise individual and team performance;

c)       attract and retain talent;

d)       encourage collaborative teamwork; and

e)       motivate staff to achieve Firm-wide objectives.

Governance

The Remuneration Committee is responsible for Climate Asset Management’s remuneration policy.

The Remuneration Committee is responsible for reviewing and approving remuneration, and to ensure remuneration policies across Climate Asset Management are consistent with the promotion of effective risk management. The Remuneration Committee is responsible for reviewing and approving salary amendments and Climate Asset Management’s bonus pool arising from the annual compensation review, with reports made to the Board as required.

The Remuneration Committee meets regularly and is composed of:

1.        Chief Executive Officer, Climate Asset Management Limited;

2.       One Director, HSBC Global Asset Management Limited;

3.       One Director, Pollination;

4.       Head of Human Resources, Climate Asset Management Limited; and

5.       Chief Operating Officer, Climate Asset Management Limited.

External consultants Kroll have provided a third-party review for the purpose of assisting in the determination of the Remuneration Policy. The external consultant has also provided independent review of any changes to remuneration policies and procedures put in place to meet the requirements of IFPR relating to remuneration arrangements contained in the SYSC 19G Remuneration Code.

Components of remuneration

Climate Asset Management makes a clear distinction between the fixed and variable remuneration.

Fixed remuneration primarily reflects a staff member’s professional experience and organisational responsibility as set out in the staff member’s job description and terms of employment; and is permanent, pre-determined, nondiscretionary, non-revocable and not dependent on performance.

Variable remuneration is based on performance and reflects the long-term performance of the staff member as well as performance in excess of the staff member’s job description and terms of employment. In exceptional cases, variable remuneration is based on other conditions. Variable remuneration includes discretionary pension benefits.

Climate Asset Management will ensure that the fixed and variable components of an individual’s total remuneration are appropriately balanced. In determining this balance, Climate Asset Management considers the following factors:

a)       Climate Asset Management’s business activities and associated prudential and conduct risks;

b)       The role of the individual in Climate Asset Management;

c)       The impact that different categories of staff have on the risk profile of Climate Asset Management or of the assets it manages;

d)       No individual must be dependent on variable remuneration to an extent likely to encourage them to take risks outside the risk appetite of Climate Asset Management;

e)       It may be appropriate for an individual to receive only fixed remuneration, but not only variable remuneration; and

f)        Variable remuneration must not affect Climate Asset Management’s ability to ensure a sound capital base.

When assessing individual performance to determine the amount of variable remuneration to be paid to an individual, Climate Asset Management takes into account financial as well as non-financial criteria. Non-financial criteria should:

a)       form a significant part of the performance assessment process;

b)       override financial criteria, where appropriate;

c)       include metrics on conduct, which should make up a substantial portion of the non-financial criteria;

d)       include how far the individual adheres to effective risk management and complies with relevant regulatory requirements; and

e)       adherence to the Climate Asset Management values, which are:

i.         Passion

ii.        Integrity

iii.      Ambition

iv.      Inclusiveness

Financial and non-financial performance criteria

Climate Asset Management must take into account both financial and non-financial criteria when assessing the individual performance of its staff. This aims not only to discourage inappropriate behaviours but also to incentivise and reward behaviour that promotes positive non-financial outcomes for Climate Asset Management.

Climate Asset Management uses the following financial performance criteria:

a)       Capital Raised, revenues, profits.

Climate Asset Management uses the following non-financial performance criteria:

b)       measures relating to building and maintaining positive stakeholder relationships and outcomes, such as positive stakeholder feedback;

c)       performance in line with firm strategy or values, for example by displaying leadership, teamwork or creativity;

d)       adherence to Climate Asset Management’s risk management and compliance policies;

e)       achieving targets relating to environmental, social and governance factors; and

f)        diversity and inclusion.

Total amount of remuneration awarded

Under MIFIDPRU 8.6.8R(2), Climate Asset Management must disclose the total amount of remuneration awarded to all staff, split into:

a)       fixed remuneration; and

b)       variable remuneration.