NextEnergy Solar Fund : NESF - EU SFDR PAI Annex Table | FY2023/2024

Statement on principal adverse impacts of investment decisions on sustainability factors

Financial market participant: NextEnergy Solar Fund Limited, 213800ZPHCBDDSQH5447 on behalf of NextEnergy Capital Limited

Summary

NextEnergy Solar Fund Limited (the "Company"), 213800ZPHCBDDSQH5447, considers principal adverse impacts (PAIs) of its investment decisions on sustainability factors. The present statement is the consolidated statement on principal adverse impacts on sustainability factors of NextEnergy Solar Fund Limited.

This statement on PAIs on sustainability factors covers the reference period from 1st April 2023 to 31 March 2024, in line with the financial reporting year.

The tables below contain the PAIs required by regulation and considered material to the Company. The results show limited adverse impacts in line with the sustainable investment objective. The most significant adverse impact is scope 3 greenhouse gas emissions. This reflects embodied carbon is assets constructed that reached first generation during the year. The Investment Adviser, NextEnergy Capital, is working to accelerate the decarbonisation of the supply chain which would reduce these emissions for future assets constructed.

The nature of the portfolio means the majority of activity is outsourced to third-party providers, mainly operations and maintenance contractors. This creates a particular problem for collecting data to process into the principal adverse impacts. The Company is reliant on the provision of data from these third parties. In the current year, estimations across most metrics were carried out because most O&Ms could not provide actual consumtption data, rather they provided relevant information to help estimate actual consumption. The data quality of the responses has been assessed, and improvements made where possible. However, the nature of data provided in the current year means there is a lack of transparency to establish the overall accuracy. This is offset to a degree through statistical analysis of responses to detect anomalies and resolve them. The Investment Adviser and the Asset Manager are actively engaged in improving the completeness and accuracy of data going forward.

Overall the principal adverse indicators reflect the positive nature of the sustainable investment objective and provide targeted areas for improvement in the future which the Company is actively engaged in addressing. The nature of the PAI are designed to be negative in isolation. However, to review the Company's positive attributions please refer to the

ESG reports https://www.nextenergysolarfund.com/esg/esg-reports-and-publications/

Description of the principal adverse impacts on sustainability factors

See descriptions below table:

	Adverse sustainability indicator	Metric
Greenhouse gas emissions	1. GHG emissions	Scope 1 GHG emissions

	Table 1
Indicators applicable to investments in investee companies
Impact 2024	Impact 2023	Unit	Explanation	Actions taken and actions planned and targets set for the
next reference period

CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS

Scope 2 GHG emissions

Scope 3 GHG emissions

		Total GHG emissions
2.	Carbon footprint	Carbon Footprint
3.	GHG intensity of investee companies	GHG intensity of investee companies
4.	Exposure to companies active in the fossil fuel	Share of investments in companies active in the
sector	fossil fuel sector

5. Share of non-renewable energy consumption and Share of non-renewable energy consumption and

productionnon-renewable energy production of investee companies from non-renewable energy sources compared to renewable energy sources, expressed as a percentage of total energy sources

6. Energy consumption intensity per high impact	Energy consumption in GWh per million EUR of
climate sector	revenue of investee companies, per high impact
	climate sector

0	0	tCO2e
1,395	1,169	tCO2e

31.440

150

tCO2e

32,835

1,319

tCO2e

37.011.02 tCO2e per €M

13,943.02	6.68	tCO2e per €M
0	0
0.40%	0.30%	%

• 0 GWh per €M

The investee companies are SPVs that hold solar PV projects. The construction and operation of these are outsourced to third parties so no scope 1 emissions are incurred.

Scope 2 emissions related to purchased import electricity. These emissions reflect non-renewable electricity imported, a significant portion of the portfolio imports renewable energy and does not incur emissions.

Scope 3 emissions for this reporting cycle include supply chain emissions, which were estimated by calculating an emission factor that includes the cradle-to-gate plus transport and installation processes of solar panels. This applies to sites under construction that reached first generation during the period. Data was not available in the prior period but a detailed supply chain study enabled these emissions to be calculated in the current year.

Other scope 3 is subject to a large degree of estimation uncertainty. Data provided from suppliers was incomplete (did not cover the full portfolio). Estimations were formed using the data that was provided as a proxy. Although transparency regarding the data used to form estimates improved compared to the previous cycle this year, the level of transparency remained limited. As a result the level of accuracy cannot be established. Procedures were undertaken to analyse the data, this took correlation of responses from different proivders into account. Where possible annomolaies were queried and improvements to quality made with additional information.

GHG emissions are calculated in accordance with the GHG Protocol using DEFRA emission factors. As noted above, coverage of scope 3 emissions was limited in the current year and included supply chain emissions.

The movement in carbon footprint is due to the increased data coverage in scope 3 emissions, mainly from the coverage of supply chain emissions.

The movement in carbon footprint is due to the increased data coverage in scope 3 emissions, mainly from the coverage of supply chain emissions.

The investment strategy is focused on assets that produce renewable energy.

The portfolio produces renewable energy, electricity generation is exponentially larger than electricity consumed.

Renewable energy is not considered a high impact climate sector.

NA

Import data will continue to be collected, options for sourcing more renewable energy are being explored.

The Investment Adviser and the Asset Manager are actively engaged in improving data quality from suppliers.

NA

NA

NA

NA

The strategy will continue, options for sourcing renewable import electricity are being explored.

NA

Biodiversity	7.	Activities negatively affecting biodiversity-	Share of investments in investee companies with
	sensitive areas	sites/operations located in or near to biodiversity-
			sensitive areas where activities of those investee
			companies negatively affect those areas
Water	8.	Emissions to water	Tonnes of emissions to water generated by investee
			companies per million EUR invested, expressed as
			a weighted average
Waste	9.	Hazardous waste and radioactive waste ratio	Tonnes of hazardous waste and radioactive waste
			generated by investee companies per million EUR
			invested, expressed as a weighted average

0

0

%

• 0 tonne per €M
• 0 tonne per €M

The Company undertakes environmental assessments before sites are constructed. There is an active biodiversity program in place to improve the performance of sites.

Direct emissions to water are zero. However, 2,194 litres of pesticides were used on sites during the reporting period.

No hazardous wastes were produced during the reporting period.

Biodiveristy improvements will continue as part of the overall ESG strategy.

NA

NA

INDICATORS FOR SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTI-BRIBERY MATTERS

Social and employee matters	10.	Violations of UN Global Compact principles
	and Organisation for Economic Cooperation and
	Development (OECD) Guidelines for
	Multinational Enterprises
	11.	Lack of processes and compliance mechanisms
	to monitor compliance with UN Global Compact
	principles and OECD Guidelines for Multinational
	Enterprises
	12.	Unadjusted gender pay gap
	13.	Board gender diversity

Share of investments in investee companies that have been involved in violations of the UNGC principles or OECD Guidelines for Multinational Enterprises

Share of investments in investee companies without policies to monitor compliance with the UNGC principles or OECD Guidelines for Multinational Enterprises or grievance/ complaints handling mechanisms to address violations of the UNGC principles or OECD Guidelines for Multinational Enterprises

Average unadjusted gender pay gap of investee companies

Average ratio of female to male board members in investee companies, expressed as a percentage of all board members

0	0	%	The Company applies these policies, with a particular focus on supply chain. The
investee companies themselves are SPVs holding assets and have no employees.
0	0	%	The Company applies these policies, with a particular focus on supply chain. The
investee companies themselves are SPVs holding assets and have no employees.
0	0		The Company has no employees. It invests in SPVs which hold solar assets. The
	operations are outsourced to third-party contractors.
45%	46%	%	Investee companies are SPVs holding assets, these are not operational trading
companies.

NA

NA

NA

NA

14. Exposure to controversial weapons (anti-	Share of investments in investee companies
personnel mines, cluster munitions, chemical	involved in the manufacture or selling of
weapons and biological weapons)	controversial weapons

0

0

%

Investments are all in solar PV projects.

NA

Adverse sustainability impact

Adverse impact on sustainability factors

(qualitative or quantitative)

	Other indicators for principal adverse impacts on sustainability factors
		Table 2
	Additional climate and other environment-related indicators
Metric	Impact 2024	Impact 2023	Unit	Explanation	Actions taken and actions planned and targets set for the
next reference period

Indicators applicable to investments in investee companies

CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS

Water, waste and material emissions

1. Water usage and recycling
2. Investments in companies without water management policies
3. Exposure to areas of high water stress

1. Average amount of water consumed by the
investee companies (in cubic meters) per million	284.6	84.5	m3 per €M
EUR of revenue of investee companies
2. Weighted average percentage of water recycled	0	0	%
and reused by investee companies
Share of investments in investee companies
without water management policies	0	0	%
Share of investments in investee companies with
sites located in areas of high water stress without a	0	0	%
water management policy

Best efforts were made to obtain this data; however, in the prior year, suppliers provided incomplete information. In the current year, an estimation methodology has been developed with significant inputs from the portfolio to address this issue.

NA

Coverage for this indicator is limited for the current year.

Coverage for this indicator is limited for sites located in high water stress areas in the current year.

Opportunities for recycling water are being explored, as are alteratives to using water.

				Table 3
			Additional indicators for social and employee, respect for human rights, anti-corruption and anti-bribery matters
		INDICATORS FOR SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTI-BRIBERY MATTERS
Adverse sustainability impact	Adverse impact on sustainability factors	Metric	Impact 2024	Impact 2023	Unit	Explanation
(qualitative or quantitative)

Indicators applicable to investments in investee companies

Actions taken and actions planned and targets set for the

next reference period

Social and employee matters	1.	Investments in companies without workplace	Share of investments in investee companies
	accident prevention policies	without a workplace accident prevention policy
	2.	Rate of accidents	Rate of accidents in investee companies expressed
			as a weighted average
	3.	Number of days lost to injuries, accidents,	Number of workdays lost to injuries, accidents,
	fatalities or illness	fatalities or illness of investee companies expressed
			as a weighted average
	4.	Lack of a supplier code of conduct	Share of investments in investee companies
			without any supplier code of conduct (against
			unsafe working conditions, precarious work, child
			labour and forced labour)

0	0	%	The investee companies are SPVs with no employees.
0	0		No accidents reported in the year.
0.035	0		NA
0	0	%	The investee companies are SPVs to hold assets but suppliers are subject to
procurement policies from the ultimate parent.

NA

NA

NA

NA

Description of policies to identify and prioritise principal adverse impacts on sustainability factors

The Board has established an ESG Committee, which is Chaired by Josephine Bush who has an extensive experience in sustainable finance.

1. The Board approved the Sustainable Investing Policy in 2019
2. Since it was established the ESG Committee has oversight of this policy with operational implementation delegated to NextEnergy Capital
3. The indicators in Table 2 and 3 have been assessed based on their materiality. That is the likelihood and severity of occurrence. This process included an assessment of the asset lifecycle, from supply chain through operational life and end of life.
4. The assessment is inherently judgmental in nature which incorporates a margin of error. Feedback from stakeholders will be taken into account when reviewing this selection and amendments made in future reporting cycles if required.
5. Data is challenging on a number of metrics because it is primarily provided by third party operations and maintenance contractors. Additional data was available from the asset manager.

Data received from third-party contractors was assessed for quality. Annomolies were queried with providers. Estimates were used on data gaps using the data that was available as a proxy (converting this into an intensity metric and applying to relevant activity).

Engagement Policies

The investments are infrastructure assets. Engagement is primarily focused on operations and maintenance contractors to adopt more efficient and sustainable operations (using less fuel and less water are focus areas). Supply chain is the other major area of focus for new sites under construction or parts for repairs. The engagement focus is on human rights and climate risk.

Reference to international standards

As an Article 9 fund with a sustainable investment objective the UN Guiding Principles on Business and Human Rights and OECD Guidelines for Multinational Enterprises are adhered to.

1. Indicators 10 and 11 in Table 1 are key to ensuring compliance with these frameworks
2. As there is direct control over the infrastructure assets full coverage can be obtained. Extensive work is undertaken to collect data from contractors and suppliers but this has inherent limitations in completeness and accuracy.
3. Climate scenarios are not used in the indicators but they are considered as part of the TCFD/ISSB reporting, publicly available

Historical comparison

The higher scope 3 emissions are due to data improvement, with more comprehensive data being received from suppliers.