Midlin has not set a minimum percentage for the alignment of its sustainable investments with the Taxonomy. Midlin intends to assess the sustainability of its investments in the future while taking into account the framework of the Taxonomy and the SFDR. However, it currently lacks sufficient data to do so. Midlin will report in its annual reports on the extent to which its sustainable investments are aligned with the Taxonomy, once it has sufficient information available.
Midlin has not set a minimum percentage for sustainable investments with an environmental objective that must not be aligned with the Taxonomy. Midlin intends to assess the sustainability of its investments in the future while considering the framework of the Taxonomy and the SFDR but currently lacks sufficient data to do so. Midlin will report in its annual reports on the extent to which its sustainable investments with an environmental objective are not aligned with the Taxonomy, once it has sufficient information available.
Midlin has not set a minimum percentage for its sustainable investments to qualify as socially sustainable.
Monitoring of Ecological or Social Characteristics
Midlin will report annually on its performance regarding ecological and social characteristics in its annual report, as provided for in the SFDR. It does not intend to have this reporting audited by an external assurance party.
Methodologies
Midlin uses quantifiable and qualifiable sustainability indicators in its ESG policy to measure the sustainability of an investment. Midlin currently employs the following quantifiable indicators: carbon footprint, employee absenteeism, and workplace accidents. Additionally, Midlin uses the following qualitative indicators: the presence of company policies on ESG or CSR, anti-corruption, business ethics, whistleblowing, codes of conduct, health and safety, data protection and privacy, procurement, ESG-dependent remuneration, diversity, and inclusion.
Midlin may use ad hoc sustainability indicators to measure the sustainability of its investments. Midlin reports annually (in an appendix to its annual report) on the sustainability indicators used and the performance of its investments against these indicators.
- Identifying sustainability themes: Before investing, Midlin identifies relevant sustainability themes based on industry data and company projects, using public sources and Regulation (EU) 2019/2088 (the "Taxonomy") and the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the "SFDR"). This includes analyzing sectoral trends and peer initiatives related to sustainability. Midlin seeks publicly available information about a company's performance on identified sustainability themes and engages with the company on these topics.
- Scoring sustainability categories: Midlin scores companies on nine sustainability categories: climate and energy, circularity, ecosystem impact, employee well-being, customer impact, corporate social responsibility, corporate governance, supply chain management, and resilience within the ESG framework. It identifies material themes within these categories. Midlin intends to use the following indicators to determine whether an industry scores ‘low,’ ‘medium,’ or ‘high’: regulatory pressure on the sector to become more sustainable, current sustainability measures within the sector, competitive advantages of a stronger sustainability position, the extent and scope of sustainability risks within the sector, and transition and physical risks.
- Selecting sustainability indicators: Based on the identified themes, Midlin selects relevant ad hoc quantitative and qualitative indicators and collects data accordingly.
- Proposing and evaluating sustainability goals: Midlin formulates sustainability improvement suggestions and discusses them with company management. These suggestions are linked to concrete objectives based on the selected indicators, after which Midlin engages in discussions with the company’s management.
Midlin intends to assess the sustainability of its investments in the future while considering the framework of the Taxonomy and the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the "SFDR"). However, it currently lacks sufficient data to do so. Midlin expects to obtain sufficient data in the short to medium term, particularly due to the sustainability reporting standards outlined in Directive (EU) 2022/2464 on corporate sustainability reporting (the "CSRD"), which will require companies in which it invests to report on sustainability in the short to medium term.
Data Sources and Processing
Midlin uses publicly available data from the companies in which it invests to achieve its ecological and social characteristics. Midlin may commission external parties to conduct sustainability analyses on a company in which it invests, a company it is considering investing in, or an entire market or sector. In such cases, the data used is determined through mutual agreement. An example of such an ESG analysis is the ESG report that Midlin prepared with Holtara for 2023.
Midlin has not implemented specific measures to ensure data quality and does not have a dedicated process for handling data related to sustainability factors.
Midlin generally cannot indicate what proportion of the sustainability data it processes or will process consists of estimates.
Methodological and Data Limitations
Midlin currently uses only a limited set of sustainability indicators to assess the performance of its investments in relation to sustainability factors, as described above under Methodologies. This may provide an incomplete picture of the sustainability of its investments.
At present, Midlin lacks sufficient information to report on the principal adverse impacts of its investment decisions on sustainability factors, as referred to in Commission Delegated Regulation (EU) 2022/1288.
Due Diligence
Before making an investment, Midlin conducts due diligence on the relevant company. It generally does not use external parties for this process, as its investments are primarily limited to European publicly traded companies.
Engagement Policy
Midlin positions itself as a constructive and engaged long-term shareholder. In this context, it conducts engagement in line with its stewardship policy. This includes engaging in discussions on sustainability with the companies in which it invests. Midlin does this as part of its ESG strategy, engaging directly with the management of the companies it invests in. More information can be found in the appendix ‘Pre-contractual disclosure under Article 8 SFDR Regulation (EU) 2019/2088’ of the Information Memorandum.
Engagement is a cornerstone of Midlin’s investment strategy and entrepreneurial shareholder approach. This means that it seeks to collaborate with the companies it invests in, encouraging them to focus on long-term, sustainable value creation.
