Environmental, Social and Corporate Governance (ESG)
Mandatory disclosures under Regulation of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (EU) 2019/2088 (“SFDR”):
A. Capnamic Ventures Management GmbH
I. Transparency of sustainability risk policies (Article 3 SFDR)
Capnamic Ventures Management GmbH (“Capnamic”) considers sustainability risks as part of its investment decision-making process in so far as deemed relevant. ‘Sustainability risk’ means 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 the investment. The results of this assessment are considered when making investment decisions. However, Capnamic has the freedom to choose not to invest or to proceed with an investment despite identified sustainability risks. In such cases, Capnamic may also implement measures to reduce or mitigate any sustainability risks.
II. No consideration of adverse impacts of investment decisions on sustainability factors (Article 4 SFDR)
Currently, Capnamic Ventures Management GmbH does not take into account any principle adverse impacts (PAIs) of investment decisions on sustainability factors as described in Art. 4 SFDR and the Regulatory Technical Standards (Delegated Regulation (EU) 2022/1288, “RTS”). Capnamic believes that the information provided to it by the portfolio companies in relation to the investments is not sufficient to allow it to do so. Capnamic will monitor developments with regard to available information and consider whether it is reasonably possible in the future to disclose the information required by the Art. 4 SFDR-framework (including the future RTS).
III. Transparency of remuneration policies in relation to the integration of sustainability risks (Article 5 SFDR)
As a registered AIFM within the meaning of section 2(4) of the German Capital Investment Code (Kapitalanlagegesetzbuch), Capnamic Ventures Management GmbH does not have a remuneration policy in accordance with the requirements of the KAGB. The integration of sustainability risks is not considered with respect to the determination of the remuneration, as described in Art. 5 of the SFDR.
B. Capnamic Ventures Fund III GmbH & Co. KG
Financial product: Capnamic Ventures Fund III GmbH & Co. KG (“Fund”)
The Fund considers certain environmental and social characteristics as part of its investment decisions but does not seek to make sustainable investments as defined in the SFDR. For this purpose, the Fund incorporates exclusion (negative screening) aspects during the investment decision-making process and considers environmental, social and governance (ESG) factors through requesting potential portfolio companies to complete an ESG questionnaire. The actions and decisions described in the following sections are each made by Capnamic Ventures Management GmbH for and on behalf of the Fund.
Der Fonds berücksichtigt bestimmte Umwelt- und soziale Merkmale im Rahmen seiner Anlageentscheidungen, strebt jedoch nicht an, nachhaltige Investitionen im Sinne der SFDR zu tätigen. Zu diesem Zweck integriert der Fonds Ausschlusskriterien (Negativselektion) in den Prozess der Anlageentscheidung und berücksichtigt Umwelt-, Sozial- und Governance-Faktoren (ESG), indem er potenzielle Portfolio-Unternehmen auffordert, einen ESG-Fragebogen auszufüllen. Die in den folgenden Abschnitten beschriebenen Maßnahmen und Entscheidungen werden jeweils von der Capnamic Ventures Management GmbH im Namen des Fonds getroffen.
II. No sustainable investment objective
This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.
III. Environmental or social characteristics of the financial product
The Fund promotes environmental and/or social characteristics by implementing certain investment exclusions described under “Investment Strategy”. Moreover, environmental, social and governance(ESG) factors are considered through an ESG questionnaire, which includes, among others, the following points:
- Environmental: respecting and adhering to local environmental laws, focusing on efficiency of raw materials and limiting energy consumption;
- Social: considering employee working conditions(such as minimum wages), supporting the elimination of child labour, complying with international conventions on human rights;
- Governance: establishing and executing strategy and daily operations according to policies defined by the Advisory Board and/ or shareholders, ensuring adherence to the exclusion list specified under IV.
IV. Investment strategy
Capnamic intends to build, hold and manage– on behalf of the relevant funds – a portfolio of equity and equity-related minority investments in companies within Europe, with primary a focus on theDACH region. The Partnership will not invest, guarantee or otherwise provide financial or other support, directly or indirectly, to companies or other entities whose business activity consists of or which substantially focus on:
(i) an illegal economic activity (i.e., any production, trade or other activity, which is illegal . under the laws or regulations applicable to the Partnership or the relevant company or entity, including without limitation, human cloning for reproduction purposes);
(ii) the production of and trade in tobacco and distilled alcoholic beverages and related products;
(iii) the production of and trade in weapons and ammunition of any kind, it being understood that this restriction does not apply to the extent such activities are part of or accessory to explicitEuropean Union policies;
(iv) casinos and equivalent enterprises;
(v) the research, development or technical applications relating to electronic data programs or solutions, which
a. aim specifically at supportingany activity referred to above; internet gambling and online casinos; orpornography; or which
b. are intended to enable toillegally enter into electronic data networks; or download electronic data;
(vi) fossil fuel-based energy production and related activities, as follows:
a. Coal mining, processing, transport and storage;
b. Oil exploration &production, refining, transport, distribution and storage;
c. Natural gas exploration &production, liquefaction, regasification, transport, distribution and storage;
d. Electric power generation exceeding the Emissions Performance Standard (i.e. 250 grams of CO2e per kWh of electricity), applicable to fossil fuel-fired power and cogeneration plants, geothermal and hydro-power plants with large reservoirs;
(vii) energy-intensive and/ or high CO2-emitting industries, as follows:
a. Manufacture of other in organic basic chemicals (NACE 20.13);
b. Manufacture of other organic basic chemicals (NACE 20.14);
c. Manufacture of fertilisers and nitrogen compounds (NACE 20.15);
d. Manufacture of plastics in primary forms (NACE 20.16);
e. Manufacture of cement (NACE 23.51);
f. Manufacture of basic iron and steel and of ferro-alloys (NACE24.10);
g. Manufacture of tubes, pipes, hollow profiles and related fittings, of steel (NACE 24.20);
h. Manufacture of other products of first processing of steel (NACE 24.30, incl. 24.31-24.34);
i. Aluminium production (NACE 24.42);
j. Manufacture of conventionally-fueled aircraft and related machinery (sub-activity of NACE 30.30);
k. Conventionally-fueled air transport and airports and service activities incidental to conventionally-fueled air transportation (sub-activities of NACE 51.10,51.21and 52.23).
Notwithstanding the above, investments in sectors mentioned in section (vii) items a) – k) included, shall be allowed if the Managing Limited Partner confirms that the specific final recipient transaction either (i) qualifies as environmentally sustainable investments as defined in the “EU taxonomy for sustainable activities” (Regulation (EU) 2020/852, as amended from time to time) as supplemented by the technical criteria established under the “EU Taxonomy Delegated Acts” (Commission delegated Regulations (EU) supplementing Regulation (EU) 2020/852 or upcoming Taxonomy Delegated Acts, as amended from time to time, respectively), or (ii) is eligible under EIF’s Climate Action & Environmental Sustainability (CA&ES) criteria for green financing.
In addition, when providing support to the financing of the research, development or technical applications relating to (A) human cloning for research or therapeutic purposes or (B) genetically modified organisms (“GMOs”), the Managing Limited Partner shall ensure the appropriate control of legal, regulatory and ethical issues linked to such human cloning for research or therapeutic purposes and/ or GMOs.
V. Proportion of investments
The investments will be in line with the Fund’s investment strategy and investment restrictions and does not intend to make any investments which are not aligned regarding its environmental or social characteristics. The Fund does not make or intend to make sustainable investments within the meaning of Art. 2 No. 17 SFDR or environmentally sustainable investments within the meaning of Art. 3 EU Taxonomy; hence, no portion of its investments will be aligned with the Taxonomy.
VI. Monitoring of environmental or social characteristics
The Fund conducts an initial assessment of the promoted environmental or social characteristics during its due diligence. Thereafter, the Fund consults with the companies on an ad-hoc basis and will carry out further checks if there are indications of potential issues with the Fund’s exclusion criteria. Therefore, the Fund monitors compliance with the ESG requirements on an ongoing basis.
The Fund currently conducts qualitative assessments regarding environmental and/ or social characteristics. The Fund conducts its initial assessment during its due diligence, which is conducted through an informal process as appropriate considering the circumstances of each individual case. There is currently no quantitative measurement with regards to environmental or social characteristics and no sustainability indicators are currently used.
Furthermore, the Fund will strictly adhere to the exclusion list specified under IV. The Fund will consider the exclusion list in every part of the investment process.
VIII. Data sources and processing
To obtain information on environmental and social characteristics for new portfolio companies, an ESG questionnaire is completed by each company prior to each investment. The collected information is then assessed and analyzed to be integrated into the investment decision-making process. An external review or verification of the information obtained will only be carried out if misrepresentations are suspected.
IX. Limitations to methodologies and data
The information collected from the portfolio companies as part of the due diligence on behalf of the Fund is externally verified only if and to the extent misrepresentations are suspected. Thus, it cannot be ruled out that false information may remain undetected in certain cases. As the investments are made for several years, the Fund considers it a priority to establish and maintain a trustful working relationship with the Fund’s portfolio companies in order to ensure compliance with the environmental or social characteristics promoted by the Fund.
X. Due diligence
An assessment regarding social and environmental characteristics of new portfolio companies is conducted as part of the due diligence process using an ESG questionnaire as deemed appropriate for each case. Qualitative statements regarding environmental and social characteristics are requested and risks are analyzed prior to any financial commitment and considered during the decision-making process.
XI. Engagement policies
The assessment of good governance practices of portfolio companies is partially incorporated in Capnamic’s legal due diligence as far as good governance practices have been adopted by law. The Fund decides at its own discretion whether an investment is conducted based on principal adverse impacts (PAIs) on sustainability factors and may include risk mitigation measures where appropriate.
XII. Designated reference benchmark
No index is designated as a reference benchmark for the Fund to attain the environmental or social characteristics promoted by the financial product.
C. Capnamic Ventures Bremen Fund I GmbH & Co. KG
The disclosures relating to Capnamic Ventures Bremen Fund I GmbH & Co. KG apply accordingly to Capnamic Ventures Fund III GmbH & Co. KG.
Date of Publication: 22.10.2021
This document was last updated on 05.02.2024