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Wilshire SFDR Disclosures

Website Policy Statements

EU Sustainable Finance Disclosure Regulation

The Sustainable Finance Disclosure Regulation (”SFDR” or “the Regulation”) applied from 10 March 2021. The Regulation requires financial market participants and/or financial advisers such as Wilshire (the “firm”) to provide information to investors with regards to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics, and sustainable investment. Set out below are the following website disclosure requirements contained in the Regulation:

  • Sustainability Risk Policy (Article 3 of SFDR) – please see here.
  • Principal Adverse Sustainability Impacts Statement (Article 4 of SFDR) – please see here.
  • Remuneration Policy – Sustainability Risks (Article 5 of SFDR) – please see here.

Sustainability Risk Policy

The Sustainable Finance Disclosure Regulation (”SFDR” or “the Regulation”) applied from 10 March 2021. This Sustainability Risk Policy specifically addresses the obligation in Article 3 of the Regulation which requires either financial market participants and/or financial advisers (as applicable) to:

“…publish on their websites information about their policies on the integration of sustainability risks in their [in the case of financial market participants] investment decision‐making process or [in the case of financial advisers] investment advice or insurance advice [(as applicable)].”

Sustainability Risks

“Sustainability Risks” as defined in Article 2(22) of the Regulation: “an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of an investment”.

Sustainability Risks include (but are not limited to) the following:

  • environmental risks such as the impact of environmental events such as increased flooding risks on operations of portfolio companies;
  • social risks such as impact of non-compliance with anti-slavery or working conditions laws and regulations by portfolio companies; and
  • governance risks such as inadequate management oversight of portfolio companies.

Integration of sustainability risks in investment processes

Wilshire is a signatory to the Principles for Responsible Investing (PRI) and includes environmental, social and governance issues (ESG) in decision-making, investing, and monitoring processes where appropriate. ESG related factors are one of many factors that Wilshire may consider when evaluating an investment decision. In addition, Wilshire incorporates ESG-related questions in its due diligence on managers. Specifically, Wilshire includes in its private markets funds operational due diligence questionnaire inquiries regarding: (i) the manager’s ESG-related policies and investment beliefs; (ii) how the manager identifies and manages material ESG-related risks and opportunities; and (iii) how the manager contributes to the portfolio companies’ ESG-related risks and opportunities.

Wilshire continues to invest in its ESG resources and capabilities. Led by our Senior Vice President for Responsible Investment, a firm-wide ESG and Diversity Committee, designed to provide coordination of ESG initiatives, monitor emerging trends and share best practices across the firm, meets regularly.

This Sustainability Risk Policy will be reviewed regularly and amended as appropriate by the ESG and Diversity Committee.

Principal Adverse Sustainability Impacts Statement

The Sustainable Finance Disclosure Regulation (”SFDR” or “the Regulation”) applied from 10 March 2021. This Principal Adverse Sustainability Impacts Statement specifically addresses the obligation in Articles 4(1)(b) and 4(5)(b) of the Regulation which requires financial market participants and financial advisers respectively to publish and maintain on their websites:

“[in the case of financial market participants] where they do not consider adverse impacts of investment decisions on sustainability factors, clear reasons for why they do not, including, where relevant, information as to whether and when they intend to consider such adverse impacts…[and, in the case of financial advisers]…information as to why they do not to consider adverse impacts of investment decisions on sustainability factors in their investment advice or insurance advice, and, where relevant, including information as to whether and when they intend to consider such adverse impacts”

Sustainability Factors

“Sustainability Factors” are defined in Article 2(24) of the Regulation as: “environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters”.

No Consideration of Sustainability Adverse Impacts

Wilshire does not currently consider the adverse impacts of its investment decisions on sustainability factors.

Given the nature of Wilshire’s business generally, Wilshire does not currently consider adverse impacts on Sustainability Factors with respect to any of its products that fall within the Regulation. Given the obligations contained in the Regulations (including the technical methodologies and data capture requirements this would reasonably entail) compliance with the Regulations is not assured among the different portfolio managers that many of the Wilshire products will invest with. As such, there is no assurance that Wilshire will have access to clear, comparable and consistent data with which to report on principal adverse impacts of investment decisions on Sustainability Factors. This decision will, however, be kept under regular review.

Remuneration Policy – Sustainability Risks

The Sustainable Finance Disclosure Regulation (”SFDR” or “the Regulation”) applied from 10 March 2021. This Remuneration Policy (Sustainability Risks) specifically addresses the obligation in Article 5 of the Regulation:

“Financial market participants and financial advisers shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks, and shall publish that information on their websites.”

Sustainability Risks

“Sustainability Risks” as defined in Article 2(22) of the Regulation: “an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of an investment”.

Sustainability Risks include (but are not limited to) the following:

  • environmental risks such as the impact of environmental events such as increased flooding risks on operations of portfolio companies;
  • social risks such as impact of non-compliance with anti-slavery or working conditions laws and regulations by portfolio companies; and
  • governance risks such as inadequate management oversight of portfolio companies.

Remuneration and sustainability risks

Wilshire does not currently have a remuneration policy that is relevant to SFDR, including with respect to the integration of sustainability risks under SFDR, except to the extent described below.

Among other forms of remuneration that are provided on a fixed basis, the firm may award employees variable discretionary bonuses on an annual basis. Remuneration levels are attributable to, among other factors, performance of the relevant individual and of Wilshire and the total amount of variable remuneration may reflect a combination of the assessment of the performance of the employee and the overall results of Wilshire, as well as the conduct of the employee under any relevant internal procedures, policies and compliance requirements (which may, to the extent applicable to the employee’s role, include factors relating to sustainability risks).

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