- Information pursuant to Art. 10 of the Disclosure Regulation can be viewed here (including the exclusion criteria and PAI indicators used by HTGF).
- SFDR ANNEX I Principal adverse sustainability impacts (PAI) statement will be provided upon request to firstname.lastname@example.org.
- SFDR ANNEX II (on pre-contractual information) is available on request at email@example.com.
- SFDR ANNEX IV (on regular information) is available on request at firstname.lastname@example.org.
Statutory information under Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector (Sustainability Finance Disclosure Regulation – “SFDR”).
Policies on the integration of sustainability risks in the investment decisions regarding High-Tech Gründerfonds GmbH & Co. KG, High-Tech Gründerfonds II GmbH & Co. KG and for High-Tech Gründerfonds III GmbH & Co. KG (Information in accordance with Art. 3 SFDR)
This statement is the consolidated explanation of sustainability risk policies for High-Tech Gründerfonds GmbH & Co. KG, High-Tech Gründerfonds II GmbH & Co. KG and for High-Tech Gründerfonds III GmbH & Co. KG (together the “High-Tech Gründerfonds I – III”) in accordance with Art. 3 of the Disclosure Regulation.
High-Tech Gründerfonds I – III partially consider sustainability risks as part of the risk analysis in the investment decision-making process. High-Tech Gründerfonds I – III have decided to improve, to develop a systematic ESG policy and to introduce an ESG management system. Such work is currently in progress.
Policies on the integration of sustainability risks in the investment decisions regarding High-Tech Gründerfonds IV GmbH & Co. KG (Information in accordance with Art. 3 SFDR)
Sustainability risks as defined in the SFDR are considered in investment decisions concerning High-Tech Gründerfonds IV GmbH & Co. KG.
A sustainability risk is an environmental, social or governance event or condition that, if it occurs, could at entity level cause a negative material impact on the net assets, financial position and results of operations as well as the reputation of High-Tech Gründerfonds IV GmbH & Co. KG; and thus, on the value of the investment. Sustainability risks can affect all known risk types, i.e. market risks, liquidity risks, counterparty risks and operational risks and contribute as a factor to the materiality of these risk types. The review of sustainability risks is part of the due diligence process and risk management by the HTGF team.
Sustainability risks in the areas of climate and environment are divided into physical risks and transitory risks:
Physical risks include, for example, extreme weather events and their consequences (periods of heat and drought, rising temperatures, increased risk of forest fires, flooding, storms, hail, etc.) as well as long-term changes in climatic conditions (e.g. frequency of precipitation, weather instability, sea-level rise). The consideration of such physical sustainability risks is of relevance, for example, for investments in real estate. In the case of investments in portfolio companies, such as those made by High-Tech Gründerfonds IV GmbH & Co. KG, physical sustainability risks do not represent a relevant risk position and are therefore not explicitly examined as part of the ESG due diligence.
Transitory risks include, for example, the risks that can arise from the changeover to a low-carbon economy (and any associated increase in the price and/or shortage of fossil fuels or emission certificates). For example, political measures can lead to an increase in energy prices. In addition, changing preferences of contractual partners and social developments represent a corresponding risk for non-adapted companies. New technologies can also displace known technologies. Transitory risks can also be realised in a decline in demand for emission-intensive technologies. There is also a dependency between physical risks and transitory risks. Insofar as physical risks increase sharply, this may require an abrupt change in the economy, which in turn leads to higher transitory risks.
Furthermore, events, developments, or behaviour that are classified in the areas social and corporate governance can represent a significant sustainability risk, as far as the probability of occurrence has not been sufficiently considered in the valuation of an asset. An example is the payment of fines for tax evasion or unjustly received refunds.
Sustainability risks can also have a significant impact on the reputation of High-Tech Gründerfonds IV GmbH & Co. KG. On the one hand, this results from the potential for damage that sustainability risks basically implicate. On the other hand, there is potential for moral prejudice, which can result, for example, from an existing business relationship with a company which is exposed to sustainability risks on its part and does not alleviate them appropriately.
Generally, sustainability risks can have a significant impact on the economic result of an investment in High-Tech Gründerfonds IV GmbH & Co. KG. Sustainability risks can result in a reduction or even devaluation of assets. They have not yet been sufficiently investigated science-based, particularly in the area of environmental risks, or there has been a lack of the necessary data basis. As far as a sustainability risk materialises, planned payments to the investor may therefore be delayed or be lower than expected or, in the worst case, be defaulted.
Regarding the consideration of sustainability risks in investment decisions, the HTGF team ensures that the respective risks for each portfolio company are identified and assessed separately and prior to investment. This is done using a standardised assessment form as part of the due diligence process. If a particularly high risk is identified or other warning signs (“red flags”) are discovered, the founding team is informed. If the risk cannot be eliminated or adequately alleviated, the investment opportunity in question is not pursued any longer. The investment strategy of High-Tech Gründerfonds IV GmbH & Co. KG includes criterions for exclusion with regard to the portfolio companies to be acquired. For example, the HTGF team already excludes portfolio companies that are associated with potential sustainability risks due to their business model. High-Tech Gründerfonds IV GmbH & Co. KG refers to the exclusion lists published by the European Investment Fund (EIF), KfW-Capital and KfW Bankengruppe. The assessment is carried out in the above-mentioned standardised assessment form as part of the due diligence process.
The HTGF team is convinced that the sustainability risks will not have a material adverse impact on the portfolio due to the investment process as well as due to the risk diversification. However, despite the inclusion and consideration of sustainability risks in the investment processes, it can explicitly not be excluded that sustainability risks which materialise nevertheless, will affect the value of the portfolio and thus the return of High-Tech Gründerfonds IV GmbH & Co. KG may be impacted.
Statement on the principal adverse impacts of investment decisions on sustainability factors concerning High-Tech Gründerfonds GmbH & Co. KG, High-Tech Gründerfonds II GmbH & Co. KG, High-Tech Gründerfonds III GmbH & Co. KG and for High-Tech Gründerfonds IV GmbH & Co. KG (Information in accordance with Art. 4 SFDR)
This statement is the consolidated explanation on principal adverse impacts of investment decisions on sustainability factors for High-Tech Gründerfonds GmbH & Co. KG, High-Tech Gründerfonds II GmbH & Co. KG, High-Tech Gründerfonds III GmbH & Co. KG and for High-Tech Gründerfonds IV GmbH & Co. KG (together the “High-Tech Gründerfonds”) in accordance with Art. 4 SFDR.
In accordance with Art. 4 SFDR, High-Tech Gründerfonds, in their capacity as fund managers, are obliged to provide information on the consideration of principal adverse impacts of investment decisions on sustainability factors, i.e., adverse impacts on environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters (so-called “Principal Adverse Impacts” / “PAI”).
For this purpose, a standardized evaluation form has been developed as part of the private placement memorandum. If a particularly high risk is discovered (a “red flag”), the HTGF informs the founding team. If the risk cannot be eliminated or adequately mitigated, the investment opportunity is not pursued further. For the HTGF IV, the due diligence checklist was therefore extended by a section in which the ESG risks are checked.
Whether PAI indicators can be considered is significantly dependent on the availability of relevant information; in the early seed phase, the data required for this task is often available only to an insufficient extent and in inferior quality. Nevertheless, the HTGF will assess the impact of investments on some sustainability factors and exclude investments that would compromise environmental, social, ethical or governance factors.
Due to the early stage of the start-ups and the corresponding unavailability of quantitative data, some of the mandatory PAIs in the SFDR as dismissed:
- With the measurement of the carbon footprint, all PAIs on greenhouse gas emissions and on energy consumption are essentially already considered: the emissions are measured and set in relation to the investment. The PAIs on the detailed greenhouse gas emissions, on greenhouse gas emissions in relation to sales and on energy consumption can be dispensed since this data has to be included in the calculation of the carbon footprint anyway. Most start-ups do not carry out any energy-intensive activities in the early phase. Two of the PAIs, engagement in fossil fuels and in weapons, are already omitted due to the exclusion list mentioned above.
- It is of great importance to emphasize that the considered companies are in a very young stage of development and thus the PAIs looking at social indicators might not be relevant. In this context, processes, or compliance mechanisms to monitor compliance with the principles of the UN Global Compact and the OECD Guidelines (incl. ILO core labour standards) may not yet have been established. The likelihood of early-stage violations of these principles is also very low. A gender pay gap is also unlikely and not relevant at this early stage of development.
Part of the due diligence is a comprehensive review of the portfolio company and its beneficial owners as a Know Your Customer (“KYC“) check to prevent money laundering and terrorist financing.
In the context of the PAI assessment, which happens as a part of the due diligence process, the following selections can be made for each PAI factor:
- “No relevance”: The PAI factor is not relevant for the portfolio company due to its business model.
- “Relevance / implementation realized”: The PAI factor is relevant and is already considered by the portfolio company.
- “Relevance / no implementation / action required”: The factor is relevant, but the issue is not currently being considered and does not disqualify the investment. In these cases, a roadmap with concrete measures and recommendations is developed by the HTGF together with the portfolio company to cure this PAI factor in the near future.
If the HTGF determines during a new financing round of an existing portfolio company that the environmental and social requirements are not being met, the HTGF has the option to refuse providing further funding in the context of a follow-up financing round. As a shareholder, it can point out this problem and its associated risks.
Information on the inclusion of sustainability risks in the remuneration policy concerning High-Tech Gründerfonds GmbH & Co. KG, High-Tech Gründerfonds II GmbH & Co. KG and for High-Tech Gründerfonds III GmbH & Co. KG (together the “High-Tech Gründerfonds I – III”) in accordance with Art. 5 SFDR
The remuneration policy of High-Tech Gründerfonds I – III is consistent with the inclusion of sustainability risks from the environmental, social and corporate governance areas. This is due to the fact that High-Tech Gründerfonds only cooperates with public and private investors that meet high standards in terms of social criteria and good corporate governance, moreover, it only invests in such start-ups. In addition, High-Tech Gründerfonds also invest specifically in start-ups that pursue an environmentally friendly business model or even directly combat environmental pollution (for example, traceless materials GmbH). The sales of High-Tech Gründerfonds, from which in turn the remuneration is paid, are generated in compliance with this sustainability-related investment strategy, which is why the remuneration policy is already consistent with the inclusion of sustainability risks from the areas of environment, social affairs and corporate governance.
Information on the inclusion of sustainability risks in the remuneration policy concerning High-Tech Gründerfonds IV GmbH & Co. KG in accordance with Art. 5 of the Disclosure Regulation
The requirements of Section 37 of the German Capital Investment Code (KAGB) for the maintenance of a specific remuneration policy do not apply to High-Tech Gründerfonds IV GmbH & Co. KG. Accordingly, no sustainability risks pursuant to the legal requirements of Section 37 KAGB are taken into account in connection with remuneration.