No significant harm to the sustainable investment objective

MoZaiC Sustainable Healthcare Fund (MSHF) has developed an internal data-driven framework to baseline the sustainability performance of its infrastructure investments across healthcare sector and different geographies.
The Management Company ensures that all of the Company's investments contribute to the above objectives without significantly undermining any of the other sustainable, environmental and social objectives defined by Article 2 (17) of the SFDR Regulation by conducting an overall sustainability assessment of each asset.

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How do the sustainable investments not cause significant harm to any environmental or social sustainable investment objective?
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‍The Management Company conducts a sustainability assessment of each asset to ensure investments align with the GP's objectives.
MSHF aims to reduce environmental impact and improve the societal impact of the assets and governance factors. Identifying the main negative impacts adapted to the real estate sector is based, firstly, on a sector and regulatory watch that makes it possible to identify the major issues in the market.
The fund prioritises adverse impacts based on probability and magnitude.
Five main adverse impacts have been identified:
1 - The share of investments in real estate assets in investments in fossil fuel-related activities (extraction, storage, transport or manufacture),
2 - The share of investments in energy-intensive properties (EPC C+ or share of non-ts underlying its investments. W, the management team has implemented a process to identify and principal adverse by its underlying assets on environmental, and social, compliance with RT 2012-2020
3 - The Energy intensity in KWh/m²,
4 - The share of non-vegetated surface area compared to the total surface area of the plots of all assets,
5 - The ratio of assets certified BREEAM "Very Good" in the portfolio.
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Adverse impacts are prioritised according to the specificities of the Real Estate sector and business models of tenants considered for investment based on the following:

- analysis of the asset’s exposure to environmental impacts based on science-based data from independent organisations (e.g. energy intensity, impacts on biodiversity, etc), - analysis of the company’s footprint,
- screening of ongoing or potential controversies.

Where MSHF deems the tenant’s processes and practices are insufficient to mitigate environmental, social and governance risks, notably with regard to the relevant PAIs, the company’s impact is deemed as negative which makes it ineligible for investment.

How the indicators for adverse impacts in Table 1 of Annex I, and any relevant indicators in Tables 2 and 3 of Annex I, are taken into account?

The quantification of these adverse impacts will be done annually and will be disclosed in the fund's periodic report and on its website.
As the fund's investment strategy does not involve the acquisition of equity stakes in companies, this section is not applicable.
However, the management company endeavours to define a policy of engagement with key stakeholders in the operation of the assets to ensure contribution to the achievement of the sustainable investment objectives.
As part of the analysis of residual ESG risks conducted on each asset, MSHF systematically assesses and monitors indicators that are deemed to indicate the presence of principal adverse impact (including consideration of data relating to the mandatory PAI indicators referred to in the consolidated Regulatory Technical Standards for assessment of sustainable investment in accordance with art. 2 (17)SFDR).
When the data necessary for the calculation of certain PAI indicators are not available, MSHF may use qualitative or quantitative proxies that cover themes similar to the PAI indicators in question.The achievement of the sustainable investment objective is measured annually through sustainability indicators accompanied by a methodology that guarantees the quality of the data and results.

For each key stakeholder, engagement actions have been defined and are being implemented.

Are the sustainable investments aligned with the OECD Guidelines for Multinational Enterprises and theUN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation onFundamental Principles and Rights at Work and the International Bill of Human Rights?

MSHF screens tenant against adherence with OECD Guidelines for Multinational Enterprises and UN Guiding Principles on Business and Human Rights. MSHF continuously reviews tenants’ track records and news flows to identify significant controversies. Tenants’ involvement and resolving measures are taken into account. Risks of potential breach may be monitored through engagement to obtain additional assurance.

Our stakeholders as part
of the decision process

As the fund's investment strategy does not involve the acquisition of equity stakes in companies, there is no policy to assess good governance practices.
However, the company have a credible mechanism in place for stakeholder consultation.
The management company endeavours to define a policy of engagement with key stakeholders in the operation of the assets to ensure contribution to the achievement of the sustainable investment objectives.
This: 
- Includes a complaints mechanism that is accessible to host country workers and community members
- Invits the stakeholder input in its decision-making: the management company has defined a stakeholder engagement policy and engagement actions have been defined and implemented for each key stakeholder.
The management company has identified its "key" stakeholders, i.e. those that are both directly concerned and have an impact on achieving the fund's sustainable investment objective.

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For each key stakeholder, engagement actions have been defined and are being implemented.The management company has established a specific engagement strategy for each type of stakeholder, including associated issues and specific means of engagement.
MSHF has committed to its investors to adhere to an additional set of Environmental, Social and Governance KPI’s complementary to the article 9 criterion to report on the Fund’s both financial and extra financial performance on the GRESB to be externally audited by the independent French ISR Label for the Fund’s management fees to be linked to the successful execution of our ESG objectives.

MSHF maintains an overarching commitment to have a positive environmental and social impact though our investment activity. This website is available to be utilised by key stakeholders of the fund including investors, the fund management team, the asset and property management teams.

Our commitments
and investment strategy

The Fund’s mission is centred around the creation, renewal and acquisition of sustainable healthcare and senior living real estate across Europe that caters to all levels of dependency and provides an impact in its community.
MoZaiC Asset Management works as Investment Advisor for the Fund with the supervision of Lemanik Asset Management.

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These facilities will offer medicalised nursing home rooms for the highly dependent with life threatening pathologies, assisted living units for the independent living with assistance and specialized care/medical offices for the long term and temporality dependant that will allow their users to live longer, healthier, and more self-determined life’s.

The Advisor is committed to supporting best in class facilities that provide future oriented care and have a tangible difference achieved though renewal of antiquated stock, construction of modern stock and purchase of leading stock with high quality operational partners and best practices agreed on a contractual basis.

The achievement of the sustainable investment objective is measured annually through sustainability indicators accompanied by a methodology that guarantees the quality of the data and results.

The Management Company ensures that all of the Company's investments contribute to the above objectives without significantly undermining any of the other sustainable, environmental and social objectives defined by Article 2 (17) of the SFDR Regulation by conducting an overall sustainability assessment of each asset.

In the event that the asset has a rating below a defined minimum rating for the fund, an ESG improvement plan is defined (to reach the minimum rating or a 20-point improvement in the ESG rating). This must be implemented within three years and the budget associated with this improvement plan must be included in the business plan.
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In the event that (i) the financially acceptable action plan is not sufficient (to achieve the threshold score or 20-point improvement) or (ii) the action plan required to achieve the threshold score or 20- point improvement is not financially acceptable, the Investment Committee will not be able to accept the acquisition for the fund.The ESG assessment of assets below the minimum rating and those above the minimum rating will be monitored annually and the associated improvement plans implemented.The MOZAIC Sustainable Healthcare fund is also committed to excluding 100% of its realisation value from assets involved in the extraction, storage, manufacture or transportation of fossil fuels, as defined in the European Taxonomy Regulation 2020/852.

As the fund's investment strategy does not involve the acquisition of equity stakes in companies, there is no policy to assess good governance practices. However, the management company endeavour to define a policy of engagement with key stakeholders in the operation of the assets to ensure contribution to the achievement of the sustainable investment objectives.
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Monitoring of sustainable
investment objective

The monitoring systematically includes review of the relevant residual environmental and social risks originating from companies’ activities and practices and asset's quality and allows to measure the efficiency to mitigate these risks.This measurement will be carried out and updated annually with reference to the framework for defining sustainable economic activities and the "do no significant harm"(DNSH) principle.

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How are the environmental or social characteristics and the sustainability indicators monitored throughout the lifecycle of the financial product and the related internal/external control mechanism?

The analysis considers notably the degree of exposure of the assets activities that may be considered to be damaging for the environment and/or the society and exposure to relevant environmental or social controversies. The sustainable investment objective of the product is continuously monitored by MSHF’s Sustainability ESG team to ensure that the company meets the sustainable investment criteria, and by MSHF’s Risk Management team to monitor compliance with the minimum commitment and binding elements of the asset.
Based on the estimated data currently available, which is not currently aligned with the regulatory requirements for equivalent data, the fund could achieve an alignment with the Taxonomy Regulation of 5%. This percentage does not represent a commitment and its achievement is not guaranteed. With the exception of newly acquired properties, properties in use at the time of acquisition will only be able to achieve compliance with the Taxonomy Regulations once they have been renovated and such compliance will not be guaranteed.

Each year from 31 December 2022, the Management Company under the control of LEMANIK AM will issue a report setting out the Company's objectives and achievements in relation to the environmental issues mentioned above.

An annual meeting is organized to evaluate the results, measure the gaps and define the way to achieve the commitments. The ESG assessment of assets below the minimum rating and those above the minimum rating will be monitored annually and the associated improvement plans implemented.
An annual meeting is also provided to review the risks and rate those risks permitting to adapt the action plan to our strategy.
Each asset is evaluated according to the benchmark defined by the Management Company for the investment. This assessment results in an action plan, the budget of which is taken into account for the investment decision.
100% of investments are evaluated according to this benchmark during due diligence.

Data Sources, Processing and Limitations

Assessments are mainly based on internal review of documents published by tenants and on direct exchanges with them.
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MSHF also relies on various sources of information (Rating agencies e.g GRESB, Experts, OID, sell-side analysts, news databases, etc.).
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In-house (primarily qualitative) analysis is conducted by members of the Sustainability  team.
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What are the data sources used to attain the sustainable investment objective including the measures taken to ensure data quality, how data is processed and what is the proportion of estimated data?

Environmental
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For carbon impact and Energy assessments, MSHF has partnered with Technical providers in the countries applying methodologies capable of providing  measurements in line with the challenges of a low -carbon economy.
The databases and models developed through partnerships are the main solutions used for climate integration within the asset.
To ensure data robustness, MSHF teams work closely together to assess the data quality and consistency before its implementation into MSHF’s systems.

Social
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MSHF will support the most vulnerable members of our society though inclusion in creating places for them to live better and positively interact within their communities, make them feel less lonely.

‍Governance

MSHF will adhere to overarching governance policy which holds to the highest standards of business ethics along with our anti-corruption and ESG policy. We will quantify and verify the environmental and social impacts of our assets, review progress against our objectives and targets, and report our ESG performance.

Systematic controls and specific analysis are performed on external ESG data, and an annual quality review is performed with the tenant.
To that extent, MSHF is in ongoing contact with data providers to challenge their views.
At the moment, the combination of multiple external data providers, the numerous quantitative and qualitative metrics does not allow to calculate and provide the proportion of estimated data.

A methodological note has been written and deployed to define the process of data collection and analysis as well as the process of calculating the indicators.
This notice is intended to guarantee the quality of the data. The implementation of the methodology is described in the methodological note.

What are the limitations to the methodologies and data sources? (Including how such limitations do not affect the attainment of the sustainable investment objective and the actions taken to address such limitations)

MSHF’s sustainability analysis approach is based on a qualitative analysis of the environmental, social and governance practices of each asset and seeks to capture their overall level of compatibility with the achievement of the UN SDGs. Several limitations related to the methodology used, as well as more broadly to the quality of the information available on these subjects, can be identified.
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The analysis is largely based on qualitative and quantitative data provided by the tenants themselves and is therefore dependent on the quality of this information. Although constantly improving, ESG reporting by tenants is still very heterogeneous.
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To make the analysis as relevant as possible, MSHF concentrates on those sustainability issues most likely to have a concrete impact on the reviewed assets and on the tenants. These key issues are regularly reviewed within a collaborative approach. They are, however, not exhaustive. The necessary participation of the tenants in order to have access to the consumption data is a prerequisite for the collection of consumption data. An explanatory note for the calculation of each indicator has been produced in order to make the data more reliable. These instructions make it possible to manage the risk.
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In addition, the fund strongly involves its stakeholders, including its tenants, by making them aware of environmental and social issues and by involving them in the process in order to limit the risk of non-representativeness of the consumption data.
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Lastly, although the analysis methodology aims to incorporate forward-looking elements to ascertain the environmental and social quality of the selected assets and its tenants, anticipating the occurrence of controversies remains a difficult exercise and may result in a retroactive revision of MSHF’s opinion of the ESG quality of an asset.‍

Due Diligence

To begin this process, the Sustainability team gathers information on the company’s business model, processes and CSR practices and may engage in direct discussion with the company representatives in order to identify the most significant sustainability issues a company is facing, both from a positive angle (potential to generate positive impact) and a negative angle (risk of obstructing the achievement of the ISRs involvements). During the investment stage, each asset is evaluated according to the benchmark defined by the Management Company for the investment.

This assessment results in an action plan, the budget of which is taken into account for the investment decision. 100% of investments are evaluated according to this benchmark during due diligence.

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What due diligence is carried out on the underlying assets of the financial product, including the internal and external controls on that due diligence ?
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MSHF carries out due diligence processes on each selected asset which aims at identifying and assessing that each tenant contributes to the achievement of one or more SDGs through their services and/or their processes while having no significant negative impact on other UN SDGs. To begin with, the Sustainability team gathers information on the company’s business model, processes and practices and engage a systemic visit with the company representatives in order to identify the most significant sustainability issues a company is facing, both from a positive angle (potential to generate positive impact) and a negative angle (risk of obstructing the achievement of the SDGs). 

This analysis encompasses review of necessary improvements. Positive impact assessment involves the analysis of a company’s exposure to sustainability solutions (capex, etc.) and the existence of advanced sustainability practices (ambitions tested against legal requirement and market practice), but also the analysis of the quality of care delivered. 

Sustainability risk involves assessment of company’s ability to address material risks with robust operational processes and transparency on the measures implemented to mitigate the sustainability risks. 

Based on this due diligence, MSHF  team submits a sustainability opinion into a proprietary memo centralizing the financial and non-financial analyses produced by MSHF Sustainability and Investment teams, as well as any analysis about the tenant.‍

Engagement policies

The management company has defined a stakeholder engagement policy and engagement actions have been defined and implemented for each key stakeholder.

The management company has identified its "key" stakeholders, i.e. those that are both directly concerned and have an impact on achieving the fund's sustainable investment objective.
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Is engagement part of the sustainable investment objective? Yes

If so, what are the engagement policies? (Including any management procedures applicable to sustainability-related controversies in invested companies)

The management company has established a specific engagement strategy for each typeof stakeholder, including associated issues and specific means of engagement. Engagement activity forms an integral part of MSHF’s responsible investment approach.

MSHF’s engagement strategy seeks to improve assets and tenant’s practices from an environmental, social, and governance point of view.
As a result, one of the core functions of the Sustainability team is engagement, both on individual and collaborative levels:

Individual engagement

In which MSHF’s ESG analysts interact one-on-one with the tenant to encourage improvement in their sustainability practices. This purpose of this type of engagement is not only to promote better ESG practices, but also to encourage the development of solutions for the major environmental and social challenges associated with Real Estate sector.

Collaborative engagement

MSHF joins with other investors and representatives of civil society to identify controversial practices, encourage greater transparency and demand, where necessary, that companies change their practices.MSHF also engage to share its vision of sustainable investment to improve standards and regulations across the financial sector and to foster sustainable investment. It is committed to promoting regulations, including legislative changes, standards (GRESB) or labels (ISR), and practices that support sustainable improvements and create long-term value.

The document has been prepared by Lemanik Asset Management S.A. and is not intended for distribution in any jurisdiction or country where distribution would be illegal. The information contained ion this website is intended for institutional investors. The value of an investment portfolio and the income from it may fall as well as rise and investors may not get back the amount originally invested. Past performance is not necessarily a guide to the future.
This document should be read in conjunction with its prospectus. Please refer to the prospectus of the fund available on June in 2023 before making any final investment decisions. A summary of investors rights is included in the prospectus and is available in English in this website in the private space.
The manager or management company may decide to terminate the arrangements made for the marketing of its collective investment undertakings in accordance with Article 93a of Directive 2009/65/EC and Article 32a of Directive 2011/61/EU.