Notice on Sustainable Finance Disclosure Regulations (SFDR)SFDR
eCAPITAL ENTREPRENEURIAL PARTNERS (“eCAPITAL”) is an alternative investment fund manager within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and as such publishes the following information in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosure requirements in the financial services sector (the “SFDR”).
We at eCAPITAL believe that technology is key for solving some of today’s largest problems and to improve the way people work and live. We want to make a difference with our investments and create positive outcomes for people, communities and society as a whole while providing financial returns for investors.
Accordingly, and in line with our overarching investment philosophy, we believe that considering Sustainability Risks within the investment decision has the ability to improve investment returns – both by downside operational risk reduction, and increased value potential. ‘Sustainability Risk’ means an environmental, social or governance (ESG) event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
To this end, eCAPITAL has committed itself to introduce a comprehensive ESG-Due Diligence in its investment operations and therefore developed criteria which define when an investment may present a Sustainability Risk.
At the beginning of our investment process, we screen our potential investment targets against a list of exclusion criteria, which, for example, excludes certain business activities. If a potential investment target meets a criterion from the exclusion list, eCAPITAL will not pursue any investment.
Within the Due Diligence process, we categorize the risk withing the three classes high risk, medium risk and low risk in the areas Environment, Social, and Governance. eCAPITAL currently includes the following factors within our definition of ESG:
- Environmental factors: the pollution and contamination of land, air and water, and related legal and regulatory compliance; waste management; management of scarce natural resources and climate change impacts
- Social factors: the treatment of employees including their pay; health and safety; labour conditions; human rights and any form of discrimination, harassment or victimization
- Governance factors: anti-bribery and corruption measures; business ethics; accountability; transparency; conflicts of interest; whistle-blowing; control mechanics; and the governance of environmental and social factors.
The ESG factors listed above are not exhaustive and eCAPITAL will continue to re-visit, refine and add to the list.
If the assessment by eCAPITAL results to a high-risk categorization in the areas Environment or Human and Labour, an external ESG-expert might be involved for an independent and in-depth ESG-Analysis.
In order to demand commitment from the founders, we include a sustainability clause in our term sheets and investment agreements that binds the founders to managing and mitigating ESG-risks.
Once defined, these risks are mitigated through an individual ESG Action Plan as part of our 100-days plan after an investment, monitored quarterly and reported upon using our ESG risk criteria over the whole lifecycle of our investments. This information can be found in quarterly reports to Limited Partners.
The eCAPITAL portfolio is unlikely to consist of companies that perform activities or own assets that are significantly exposed to such risks, given the investment scope of the funds. However, with this process we can ensure that Sustainability Risk, both internal and external, is integrated from the investment decision through to exit processes.
Principal Adverse Impact Statement
eCAPITAL does not currently consider the principal adverse impacts of its investment decisions on sustainability factors as set out under the European Union Sustainable Finance Disclosure Regulation 2019/2088 (“SFDR”) as the relevant supplemental framework and information requirements for the assessment of such impacts have not been finalized yet. When the finalised Regulatory Technical Standards, supplementing the SFDR, are published and the rules are made sufficiently clear, eCAPITAL intends to comply with the relevant requirements by developing processes to gather information on the sustainability impact of its portfolio companies and by undertaking a full principal adverse impact assessment.