Pale Blue Dot I Equity AB and Pale Blue Dot I AB are considered to be Article 9 fund type products under the Sustainable Finance Disclosures Regulation (SFDR). The financial products have sustainable investments as their objective.
The primary binding element of the Funds investment strategy is based on the portfolios potential to reverse, reduce, or prepare for the effects of climate change. During the initial research and due diligence phase, the companies are assessed on their impacts on the environment and society, considering the scale of both positive and adverse impacts. Therefore, that binding element already assures that the scale of the adverse impacts of each investment is insignificant compared to the scale of the positive impacts. Before committing to investing, each potential portfolio company is assessed according to rigorous selection criteria. During the research, the companies are judged based on their potential for climate impact (both positive and negative).
As for adverse impacts on sustainability factors, all indicators in Table 1 of the Annex are taken into account in order to avoid significant harm. Additionally, indicators from Table 2 and Table 3 are also taken into consideration. Furthermore, the Fund collects additional diversity and inclusion KPIs.
The sustainable objective of the Fund is to invest in companies with a positive climate impact that is closely tied to the economic success of the company. The Fund invests in companies that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so. Environmental objectives aligned with the objectives defined in Regulation (EU) 2020/852 include (i) climate change mitigation; (ii) climate change adaptation; (iii) the sustainable use and protection of water and marine resources; (iv) the transition to a circular economy; (v) pollution prevention and control; and (vi) the protection and restoration of biodiversity and ecosystems.
The Funds strategy is to invest in companies with a positive climate impact that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so. The Funds investment strategy is aligned with the following SDGs: (i) 7: Affordable and Clean Energy; (ii) 11: Sustainable Cities and Communities; (iii) 13: Climate Action; (iv) 14: Life Below Water; and (v) 15: Life on Land.
Good governance of the investee companies is first assessed during the due diligence process. Thereafter, it is through traditional governance structures such as board and/or shareholder meetings, as well as more informal update meetings with the portfolio companies. Certain aspects of good governance practices (such as management team diversity) are reported to the fund quarterly. The Fund measures the unadjusted gender pay gap at portfolio level.
The Fund will allocate 99% of its capital in companies that meet the environmentally sustainable investment objective in accordance with the binding elements of the investment strategy and 1% to non-sustainable investments. The Fund will make environmentally sustainable investments but does not commit to make any socially sustainable investments. The Fund also does not commit to make any investments that qualify as environmentally sustainable (i. e. , taxonomy-aligned) under Regulation (EU) 2020/852.
All portfolio companies are required to set up quantitative climate KPIs that directly relate to the core problem that they are solving, and these are reported to the Fund and further to the LPs on a quarterly basis. All portfolio companies also complete PAI questionnaires at the end of each year. Additionally, six months after the initial investment, and annually thereafter, ESG scorecards are completed for all companies in the portfolio, which are used to keep track of the initial understanding of the portfolio company.
Each potential portfolio company is assessed for its climate impact potential before receiving an investment from the Fund. This is done internally by the Fund. A climate thesis is developed for each investment which is then mapped to the Funds impact categories (i. e. , reduce, reverse and prepare).
A main source of data is information provided by portfolio companies through pitch decks, DD questionnaires and reporting templates. All data is processed internally by the Fund and might be reviewed by external parties, if needed. The Fund works on improving data quality through ongoing process reviews and by ensuring validity, reliability and readability of the data collection instruments in use. If needed, the data may be supplemented by estimates based on plausible fact-based assumptions.
Limitations to methodologies and data sources are expected to mainly be due to a lack of precise data from portfolio companies/incomplete data. Incomplete data refers to missing data, which can occur due to non-response, incomplete surveys or questionnaires, or other reasons. The Fund will continuously work with investee companies to enhance and improve data sources and will seek to implement monitoring systems where this is possible.
All investment decisions are based on commercial, financial, legal, and ESG due diligence, as well as estimated return and key risk components. During the due diligence process, all potential portfolio companies are asked to complete a detailed ESG questionnaire to give insights into the materiality of ESG risks. Potential portfolio companies are also asked to complete a separate ESG scorecard. The scorecard is used in deciding whether there is enough alignment for the company to join the portfolio. The scorecard includes a self-assessment part that is sent to the company as part of the due diligence pack as well as an internal assessment that is filled in by the investment committee during the decision stage. The founders and the investment lead will thereafter review the scorecard six months after the investment and then annually.
Following an investment decision, the Fund will actively engage with portfolio companies to agree on impact KPIs to be reported quarterly, as well as work towards the predefined sustainability targets in the ESG scorecards. The Fund may engage in the processes and policy creations, but it is generally required of the portfolio companies to take active ownership of their ESG, and corporate responsibility matters and to implement them in a way that best serves value-creation in the company.
No reference benchmark has been designated to attain the sustainable investment objective.
The summary is available in more languages:
The primary binding element of the Funds investment strategy is based on the portfolios potential to reverse, reduce, or prepare for the effects of climate change. During the initial research and due diligence phase, the companies are assessed on their impacts on the environment and society, considering the scale of both positive and adverse impacts. Therefore, that binding element already assures that the scale of the adverse impacts of each investment is insignificant compared to the scale of the positive impacts. As a next step, Principal Adverse Impact indicators (part of Regulation (EU) 2019/2088) are considered as described below.
Before committing to investing, each potential portfolio company is assessed according to rigorous selection criteria (as further described in the investment strategy section). During the research, the companies are judged based on their potential for climate impact (both positive and negative). As for adverse impacts on sustainability factors, all indicators in Table 1 of the Annex are taken into account in order to avoid significant harm. Additionally, the below-listed indicators are also taken into consideration:
Investments in companies without carbon emission reduction initiatives.
Incidents of discrimination.
These indicators are considered by Investment Committee when committing to an investment. Only the companies whose contributions to environmental objectives clearly outweigh any (possible) environmental costs can receive an investment from the Fund.
Furthermore, the Fund collects additional diversity and inclusion KPIs. Reported annually in a separate sustainability report for the Fund, these are:
Underrepresented founders in the Funds deal flow annually:
Report on gender and self-assessed underrepresented in tech from a website form.
Report on gender from funnel data from decks and public information.
Portfolio:
Report on gender and underrepresented in tech in the quarterly report.
Report on gender and pay gap in portfolio employees.
Report the number of companies with at least one female founder on an annual basis.
Team:
Report on gender in the team
Report on the gender pay gap in the team on an annual basis.
The Fund employs a thorough due diligence process to identify any breaches of minimum norms detailed in the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. The due diligence process also includes an assessment of whether the target company has established human rights due diligence procedures proportionate to its size and leverage and human rights risks. If identified, an investment will be excluded from the Funds eligible investment universe.
Post-investment, any potential breaches are monitored on an ongoing basis (through quarterly reporting, monthly updates, and board memberships). Still, as the data might not be available for all companies, all investments cannot be guaranteed to be aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
The sustainable objective of the Fund is to invest in companies with a positive climate impact that is closely tied to the economic success of the company. The Fund invests in companies that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so.
Environmental objectives aligned with the objectives defined in Regulation (EU) 2020/852 include:
Climate change mitigation
Climate change adaptation
The sustainable use and protection of water and marine resources
The transition to a circular economy
Pollution prevention and control
The protection and restoration of biodiversity and ecosystems
The Funds strategy is to invest in companies with a positive climate impact that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so.
The Fund only invests in companies with a significant positive climate impact that can reduce, reverse, or prepare for the effects of climate change.
Each company is individually assessed and receives an individual score on their potential climate impact (both positive and negative). The scores are considered when making the final investment decision by the Investment Committee.
As a part of its strategy, the Fund aims to have at least 30% of the portfolio with at least one female founder.
The Funds investment strategy is aligned with the following SDGs:
13 - Climate Action
15 - Life on Land
14 - Life Below Water
11 - Sustainable Cities and Communities
7 - Affordable and Clean Energy
The Fund is following recommendations set out to mitigate the risks of the climate crisis including those by the Intergovernmental Panel on Climate Change (IPCC) and the 2015 Paris Agreement.
The Fund employs an extensive ESG due diligence process before the company is asked to join the portfolio. Investee companies are asked to complete ESG scorecards which are used to assess their value alignment before joining the portfolio.
At investment, six months after the first investment, and thereafter annually, the Fund completes internal ESG scorecards for each portfolio company. The scorecards are used to measure the attainment of the portfolio companies ESG objectives.
During the ownership phase, each company reports its individual climate KPIs and common social KPIs. All are collected quarterly.
Good governance of the investee companies is first assessed during the due diligence process. Thereafter, it is through traditional governance structures such as board and/or shareholder meetings, as well as more informal update meetings with the portfolio companies. Certain aspects of good governance practices (such as management team diversity) are reported to the fund quarterly. The Fund measures the unadjusted gender pay gap at portfolio level.
The Fund will allocate 99% of its capital in companies that meet the environmentally sustainable investment objective in accordance with the binding elements of the investment strategy and 1% to non-sustainable investments. The Fund will make environmentally sustainable investments but does not commit to make any socially sustainable investments.
The Fund may only use derivative instruments and other hedging techniques to protect against adverse movements in currency and/or interest rates. In that case, those derivatives will be included in the Not Sustainable category and will not comply with any minimum safeguards; however, the investments kept for liquidity arrangements and hedging techniques (e. g. , cash, cash equivalents and derivatives) are not expected to cause any significant harm.
All portfolio companies are expected to be sustainable investments, but the Fund does not commit to any minimum level of alignment with the EU Taxonomy. Since the Fund will invest in start-up and pre-seed companies (including companies that are not EU Taxonomy eligible), it will not, beforehand, be possible to assess what share, if any, of the investment that will be aligned with the EU Taxonomy. The minimum extent of Taxonomy alignment is thus 0%.
The minimum share of investments in transitional and enabling activities is 0%. However, transitional and enabling technologies are within the investment scope of the Fund. The Fund may therefore make investments in such technologies.
The Fund will not make any indirect investments in portfolio companies through other funds or derivatives, hence the direct exposure in portfolio companies is 100%.
All portfolio companies are required to set up quantitative climate KPIs that directly relate to the core problem that they are solving, and these are reported to the Fund and further to the LPs on a quarterly basis. As a part of assessing the Do Not Significant Harm criteria, all portfolio companies are asked to complete PAI questionnaires at the end of each year. Additionally, six months after the initial investment, and annually thereafter, ESG scorecards are completed for all companies in the portfolio. The ESG scorecards are used to keep track of the initial understanding of the portfolios alignment with the Funds values and its development as the portfolio matures. It is also used to help identify areas where the portfolio might need help.
Each potential portfolio company is assessed for its climate impact potential before receiving an investment from the Fund. This is done internally by the Fund. A climate thesis is developed for each investment which is then mapped to the Funds impact categories as defined below:
Reduce: These companies are creating new business models that reduce emissions and technologies that do better with fewer materials, waste, animal products, or energy. For example, green transport, energy efficiency software, and transitioning the food system to a more sustainable future.
Reverse: These are technologies and approaches that remove greenhouse gases from the atmosphere and reverse our warming trajectory. Examples include nature-based solutions like seaweed and reforestation and novel industrial technologies that will transform CO2 into materials we already use.
Prepare: Because of the damage that has already been done to our planet, the world is set to face enormous challenges. The reality is that we all need to prepare for a new future with technologies that will help us deal with mass climate migration and natural weather disasters, as well as ensure food and water security. Examples include climate risk data and forest fire prevention.
The data sources used to attain the sustainable investment objectives of this product are:
Pitch decks and interviews with portfolio companies,
Databases and articles used during the Funds research phase into the potential climate impact of each investment,
Due diligence questionnaires including ESG assessment scorecards,
Indicators listed in Table 1 (and any relevant indicators in Tables 2 and 3) of Annex I of the Regulatory Technical Standards (Delegated Regulation (EU) 2022/1288)] to identify and assess potential adverse impacts,
Financial and impact KPIs reported by portfolio each quarter.
A main source of data is information provided by the companies assessed for investment. During the due diligence phase, the Funds access to the data is limited to what the portfolio company reports. Certain measures are taken to ensure data quality including (but not limited to):
ensuring validity by the use of well-designed data collection surveys that are tested and validated,
ensuring reliability by using standardized data collection instruments and by following data collection procedures consistently,
enhancing the readability of questionnaires including the definition of technical terms;
ensuring that questionnaires are completed, or the interviews are given by qualified respondents of the Investee Company; and including the option to provide documentary evidence to support responses where appropriate,
ensuring that data security measures are in place to protect against unauthorized access, tampering, or loss of data. This can include using secure data storage and backup systems, restricting access to sensitive data, and ensuring that data is encrypted during transmission.
The data is processed by the Funds investment team and other members of the team supporting the investment decision and portfolio management. In certain cases, the Fund may ask external parties/consultants for additional review of the data.
If needed, the data may be supplemented by estimates based on plausible fact-based assumptions. The need for estimates highly depends on the quality and availability of data provided by the individual portfolio company. Therefore, the proportion of estimated data cannot be provided in advance. Nonetheless, the aim is to reduce the use of estimates to a minimum.
Limitations to methodologies and data sources are expected to mainly be due to a lack of precise data from portfolio companies/ incomplete data. Incomplete data refers to missing data, which can occur due to non-response, incomplete surveys or questionnaires, or other reasons. This can limit the validity of the data. The Fund does not expect such limitations to impact the attainment of its sustainable investment objective as the sustainable investment objective is not dependent on the methodologies and data sources. The Fund also expects such errors and misrepresentation to be limited in quantity. The Fund will continuously work with investee companies to enhance and improve data sources and will seek to implement monitoring systems where this is possible.
All investment decisions are based on commercial, financial, legal, and ESG due diligence, as well as estimated return and key risk components. During the due diligence process, all potential portfolio companies are asked to complete a detailed ESG questionnaire to give insights into the materiality of ESG risks. Potential portfolio companies are also asked to complete a separate ESG scorecard. The scorecard is used in deciding whether there is enough alignment for the company to join the portfolio. The scorecard includes a self-assessment part that is sent to the company as part of the due diligence pack as well as an internal assessment that is filled in by the investment committee during the decision stage. The founders and the investment lead will thereafter review the scorecard six months after the investment and then annually.
Following an investment decision, the Fund will actively engage with portfolio companies to agree on impact KPIs to be reported quarterly, as well as work towards the predefined sustainability targets as specified in the ESG scorecards mentioned above. The Fund may engage in the processes and policy creations, but it is generally required of the portfolio companies to take active ownership of their ESG, and corporate responsibility matters and to implement them in a way that best serves value-creation in the company.
No reference benchmark has been designated to attain the sustainable investment objective.
Pale blue dot II (D) AB and Pale blue dot II (E) AB are considered to be Article 9 fund type products under the Sustainable Finance Disclosures Regulation (SFDR). The financial products have sustainable investments as their objective.
The primary binding element of the Funds investment strategy is based on the portfolios potential to reverse, reduce, or prepare for the effects of climate change. During the initial research and due diligence phase, the companies are assessed on their impacts on the environment and society, considering the scale of both positive and adverse impacts. Therefore, that binding element already assures that the scale of the adverse impacts of each investment is insignificant compared to the scale of the positive impacts. Before committing to investing, each potential portfolio company is assessed according to rigorous selection criteria. During the research, the companies are judged based on their potential for climate impact (both positive and negative).
As for adverse impacts on sustainability factors, all indicators in Table 1 of the Annex are taken into account in order to avoid significant harm. Additionally, indicators from Table 2 and Table 3 are also taken into consideration. Furthermore, the Fund collects additional diversity and inclusion KPIs.
The sustainable objective of the Fund is to invest in companies with a positive climate impact that is closely tied to the economic success of the company. The Fund invests in companies that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so. Environmental objectives aligned with the objectives defined in Regulation (EU) 2020/852 include (i) climate change mitigation; (ii) climate change adaptation; (iii) the sustainable use and protection of water and marine resources; (iv) the transition to a circular economy; (v) pollution prevention and control; and (vi) the protection and restoration of biodiversity and ecosystems.
The Funds strategy is to invest in companies with a positive climate impact that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so. The Funds investment strategy is aligned with the following SDGs: (i) 7: Affordable and Clean Energy; (ii) 11: Sustainable Cities and Communities; (iii) 13: Climate Action; (iv) 14: Life Below Water; and (v) 15: Life on Land.
Good governance of the investee companies is first assessed during the due diligence process. Thereafter, it is through traditional governance structures such as board and/or shareholder meetings, as well as more informal update meetings with the portfolio companies. Certain aspects of good governance practices (such as management team diversity) are reported to the fund quarterly. The Fund measures the unadjusted gender pay gap at portfolio level.
The Fund will allocate 99% of its capital in companies that meet the environmentally sustainable investment objective in accordance with the binding elements of the investment strategy and 1% to non-sustainable investments. The Fund will make environmentally sustainable investments but does not commit to make any socially sustainable investments. The Fund also does not commit to make any investments that qualify as environmentally sustainable (i. e. , taxonomy-aligned) under Regulation (EU) 2020/852.
All portfolio companies are required to set up quantitative climate KPIs that directly relate to the core problem that they are solving, and these are reported to the Fund and further to the LPs on a quarterly basis. All portfolio companies also complete PAI questionnaires at the end of each year. Additionally, six months after the initial investment, and annually thereafter, ESG scorecards are completed for all companies in the portfolio, which are used to keep track of the initial understanding of the portfolio company.
Each potential portfolio company is assessed for its climate impact potential before receiving an investment from the Fund. This is done internally by the Fund. A climate thesis is developed for each investment which is then mapped to the Funds impact categories (i. e. , reduce, reverse and prepare).
A main source of data is information provided by portfolio companies through pitch decks, DD questionnaires and reporting templates. All data is processed internally by the Fund and might be reviewed by external parties, if needed. The Fund works on improving data quality through ongoing process reviews and by ensuring validity, reliability and readability of the data collection instruments in use. If needed, the data may be supplemented by estimates based on plausible fact-based assumptions.
Limitations to methodologies and data sources are expected to mainly be due to a lack of precise data from portfolio companies/incomplete data. Incomplete data refers to missing data, which can occur due to non-response, incomplete surveys or questionnaires, or other reasons. The Fund will continuously work with investee companies to enhance and improve data sources and will seek to implement monitoring systems where this is possible.
All investment decisions are based on commercial, financial, legal, and ESG due diligence, as well as estimated return and key risk components. During the due diligence process, all potential portfolio companies are asked to complete a detailed ESG questionnaire to give insights into the materiality of ESG risks. Potential portfolio companies are also asked to complete a separate ESG scorecard. The scorecard is used in deciding whether there is enough alignment for the company to join the portfolio. The scorecard includes a self-assessment part that is sent to the company as part of the due diligence pack as well as an internal assessment that is filled in by the investment committee during the decision stage. The founders and the investment lead will thereafter review the scorecard six months after the investment and then annually.
Following an investment decision, the Fund will actively engage with portfolio companies to agree on impact KPIs to be reported quarterly, as well as work towards the predefined sustainability targets in the ESG scorecards. The Fund may engage in the processes and policy creations, but it is generally required of the portfolio companies to take active ownership of their ESG, and corporate responsibility matters and to implement them in a way that best serves value-creation in the company.
No reference benchmark has been designated to attain the sustainable investment objective.
The summary is available in more languages:
The primary binding element of the Funds investment strategy is based on the portfolios potential to reverse, reduce, or prepare for the effects of climate change. During the initial research and due diligence phase, the companies are assessed on their impacts on the environment and society, considering the scale of both positive and adverse impacts. Therefore, that binding element already assures that the scale of the adverse impacts of each investment is insignificant compared to the scale of the positive impacts. As a next step, Principal Adverse Impact indicators (part of Regulation (EU) 2019/2088) are considered as described below.
Before committing to investing, each potential portfolio company is assessed according to rigorous selection criteria (as further described in the investment strategy section). During the research, the companies are judged based on their potential for climate impact (both positive and negative). As for adverse impacts on sustainability factors, all indicators in Table 1 of the Annex are taken into account in order to avoid significant harm. Additionally, the below-listed indicators are also taken into consideration:
Investments in companies without carbon emission reduction initiatives.
Incidents of discrimination.
These indicators are considered by Investment Committee when committing to an investment. Only the companies whose contributions to environmental objectives clearly outweigh any (possible) environmental costs can receive an investment from the Fund.
Furthermore, the Fund collects additional diversity and inclusion KPIs. Reported annually in a separate sustainability report for the Fund, these are:
Underrepresented founders in the Funds deal flow annually:
Report on gender and self-assessed underrepresented in tech from a website form.
Report on gender from funnel data from decks and public information.
Portfolio:
Report on gender and underrepresented in tech in the quarterly report.
Report on gender and pay gap in portfolio employees.
Report the number of companies with at least one female founder on an annual basis.
Team:
Report on gender in the team
Report on the gender pay gap in the team on an annual basis.
The Fund employs a thorough due diligence process to identify any breaches of minimum norms detailed in the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. The due diligence process also includes an assessment of whether the target company has established human rights due diligence procedures proportionate to its size and leverage and human rights risks. If identified, an investment will be excluded from the Funds eligible investment universe.
Post-investment, any potential breaches are monitored on an ongoing basis (through quarterly reporting, monthly updates, and board memberships). Still, as the data might not be available for all companies, all investments cannot be guaranteed to be aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.
The sustainable objective of the Fund is to invest in companies with a positive climate impact that is closely tied to the economic success of the company. The Fund invests in companies that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so.
Environmental objectives aligned with the objectives defined in Regulation (EU) 2020/852 include:
Climate change mitigation
Climate change adaptation
The sustainable use and protection of water and marine resources
The transition to a circular economy
Pollution prevention and control
The protection and restoration of biodiversity and ecosystems
The Funds strategy is to invest in companies with a positive climate impact that directly or indirectly reduce, reverse, or prepare for the effects of climate change, or enable others to do so.
The Fund only invests in companies with a significant positive climate impact that can reduce, reverse, or prepare for the effects of climate change.
Each company is individually assessed and receives an individual score on their potential climate impact (both positive and negative). The scores are considered when making the final investment decision by the Investment Committee.
As a part of its strategy, the Fund aims to have at least 30% of the portfolio with at least one female founder.
The Funds investment strategy is aligned with the following SDGs:
13: Climate Action
15: Life on Land
14: Life Below Water
11: Sustainable Cities and Communities
7: Affordable and Clean Energy
The Fund is following recommendations set out to mitigate the risks of the climate crisis including those by the Intergovernmental Panel on Climate Change (IPCC) and the 2015 Paris Agreement.
The Fund employs an extensive ESG due diligence process before the company is asked to join the portfolio. Investee companies are asked to complete ESG scorecards which are used to assess their value alignment before joining the portfolio.
At investment, six months after the first investment, and thereafter annually, the Fund completes internal ESG scorecards for each portfolio company. The scorecards are used to measure the attainment of the portfolio companies ESG objectives.
During the ownership phase, each company reports its individual climate KPIs and common social KPIs. All are collected quarterly.
Good governance of the investee companies is first assessed during the due diligence process. Thereafter, it is through traditional governance structures such as board and/or shareholder meetings, as well as more informal update meetings with the portfolio companies. Certain aspects of good governance practices (such as management team diversity) are reported to the fund quarterly. The Fund measures the unadjusted gender pay gap at portfolio level.
The Fund will allocate 99% of its capital in companies that meet the environmentally sustainable investment objective in accordance with the binding elements of the investment strategy and 1% to non-sustainable investments. The Fund will make environmentally sustainable investments but does not commit to make any socially sustainable investments.
The Fund may only use derivative instruments and other hedging techniques to protect against adverse movements in currency and/or interest rates. In that case, those derivatives will be included in the Not Sustainable category and will not comply with any minimum safeguards; however, the investments kept for liquidity arrangements and hedging techniques (e. g. , cash, cash equivalents and derivatives) are not expected to cause any significant harm.
All portfolio companies are expected to be sustainable investments, but the Fund does not commit to any minimum level of alignment with the EU Taxonomy. Since the Fund will invest in start-up and pre-seed companies (including companies that are not EU Taxonomy eligible), it will not, beforehand, be possible to assess what share, if any, of the investment that will be aligned with the EU Taxonomy. The minimum extent of Taxonomy alignment is thus 0%.
The minimum share of investments in transitional and enabling activities is 0%. However, transitional and enabling technologies are within the investment scope of the Fund. The Fund may therefore make investments in such technologies.
The Fund will not make any indirect investments in portfolio companies through other funds or derivatives, hence the direct exposure in portfolio companies is 100%.
All portfolio companies are required to set up quantitative climate KPIs that directly relate to the core problem that they are solving, and these are reported to the Fund and further to the LPs on a quarterly basis. As a part of assessing the Do Not Significant Harm criteria, all portfolio companies are asked to complete PAI questionnaires at the end of each year. Additionally, six months after the initial investment, and annually thereafter, ESG scorecards are completed for all companies in the portfolio. The ESG scorecards are used to keep track of the initial understanding of the portfolios alignment with the Funds values and its development as the portfolio matures. It is also used to help identify areas where the portfolio might need help.
Each potential portfolio company is assessed for its climate impact potential before receiving an investment from the Fund. This is done internally by the Fund. A climate thesis is developed for each investment which is then mapped to the Funds impact categories as defined below:
Reduce: These companies are creating new business models that reduce emissions and technologies that do better with fewer materials, waste, animal products, or energy. For example, green transport, energy efficiency software, and transitioning the food system to a more sustainable future.
Reverse: These are technologies and approaches that remove greenhouse gases from the atmosphere and reverse our warming trajectory. Examples include nature-based solutions like seaweed and reforestation and novel industrial technologies that will transform CO2 into materials we already use.
Prepare: Because of the damage that has already been done to our planet, the world is set to face enormous challenges. The reality is that we all need to prepare for a new future with technologies that will help us deal with mass climate migration and natural weather disasters, as well as ensure food and water security. Examples include climate risk data and forest fire prevention.
The data sources used to attain the sustainable investment objectives of this product are:
Pitch decks and interviews with portfolio companies,
Databases and articles used during the Funds research phase into the potential climate impact of each investment,
Due diligence questionnaires including ESG assessment scorecards,
Indicators listed in Table 1 (and any relevant indicators in Tables 2 and 3) of Annex I of the Regulatory Technical Standards (Delegated Regulation (EU) 2022/1288)] to identify and assess potential adverse impacts,
Financial and impact KPIs reported by portfolio each quarter.
A main source of data is information provided by the companies assessed for investment. During the due diligence phase, the Funds access to the data is limited to what the portfolio company reports. Certain measures are taken to ensure data quality including (but not limited to):
ensuring validity by the use of well-designed data collection surveys that are tested and validated,
ensuring reliability by using standardized data collection instruments and by following data collection procedures consistently,
enhancing the readability of questionnaires including the definition of technical terms;
ensuring that questionnaires are completed, or the interviews are given by qualified respondents of the Investee Company; and including the option to provide documentary evidence to support responses where appropriate,
ensuring that data security measures are in place to protect against unauthorized access, tampering, or loss of data. This can include using secure data storage and backup systems, restricting access to sensitive data, and ensuring that data is encrypted during transmission.
The data is processed by the Funds investment team and other members of the team supporting the investment decision and portfolio management. In certain cases, the Fund may ask external parties/consultants for additional review of the data.
If needed, the data may be supplemented by estimates based on plausible fact-based assumptions. The need for estimates highly depends on the quality and availability of data provided by the individual portfolio company. Therefore, the proportion of estimated data cannot be provided in advance. Nonetheless, the aim is to reduce the use of estimates to a minimum.
Limitations to methodologies and data sources are expected to mainly be due to a lack of precise data from portfolio companies/ incomplete data. Incomplete data refers to missing data, which can occur due to non-response, incomplete surveys or questionnaires, or other reasons. This can limit the validity of the data. The Fund does not expect such limitations to impact the attainment of its sustainable investment objective as the sustainable investment objective is not dependent on the methodologies and data sources. The Fund also expects such errors and misrepresentation to be limited in quantity. The Fund will continuously work with investee companies to enhance and improve data sources and will seek to implement monitoring systems where this is possible.
All investment decisions are based on commercial, financial, legal, and ESG due diligence, as well as estimated return and key risk components. During the due diligence process, all potential portfolio companies are asked to complete a detailed ESG questionnaire to give insights into the materiality of ESG risks. Potential portfolio companies are also asked to complete a separate ESG scorecard. The scorecard is used in deciding whether there is enough alignment for the company to join the portfolio. The scorecard includes a self-assessment part that is sent to the company as part of the due diligence pack as well as an internal assessment that is filled in by the investment committee during the decision stage. The founders and the investment lead will thereafter review the scorecard six months after the investment and then annually.
Following an investment decision, the Fund will actively engage with portfolio companies to agree on impact KPIs to be reported quarterly, as well as work towards the predefined sustainability targets as specified in the ESG scorecards mentioned above. The Fund may engage in the processes and policy creations, but it is generally required of the portfolio companies to take active ownership of their ESG, and corporate responsibility matters and to implement them in a way that best serves value-creation in the company.
No reference benchmark has been designated to attain the sustainable investment objective.