Sustainable Finance Disclosure Regulation
Earlybird DWES Management GmbH & Co. KG, Earlybird Growth Management GmbH & Co. KG, Earlybird VC Management GmbH & Co. KG, Earlybird Venture Capital GmbH & Co. KG, Earlybird Health Management GmbH & Co.KG and Earlybird Venture Capital B.V. (together “Earlybird”) are alternative investment fund managers within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and/or the EuVECA-Regulation and as such publish the following information on their website 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 27th of November 2019 on sustainability disclosure requirements in the financial services sector (the “SFDR”). Unless the information is explicitly provided in relation to a specific fund managed by Earlybird the following statements refer to the management and investment decision-making processes of Earlybird in general
I. Sustainability risk policies statement
Earlybird addresses sustainability risks in its investment decision-making process. ‘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. In particular, Earlybird pays attention to the sustainability risks that are specified as adverse sustainable impact factors in the draft Regulatory Technical Standards issued as Final Report by the ESAs Joint Committee on 2 February 2021. A standardized sustainability risk questionnaire that is mandatory to be completed as part of the Due Diligence process prior to an investment decision ensures the adequate and systematic assessment of the main sustainability risk factors associated with a proposed investment. Identified “red flags” need to be brought to the investment committee’s (ICs) attention and without cure or adequate mitigation an investment will not be pursued.
Earlybird regularly reviews its sustainable risk policies to ensure that those are being kept in line with the ESAs recommendations as they may evolve over time.
II. Principal adverse sustainability impacts statement
Earlybird considers the principal adverse impacts of its investment decisions on sustainability factors. The present statement is the consolidated principal adverse sustainability impacts statement of Earlybird.
2. Description of principal adverse sustainability impacts
‘Sustainability factors’ mean environmental, social and employee matters, respect for human rights, anti-corruption and anti-bribery matters. The indicators related to principal adverse impacts on sustainability factors can be divided into three categories: (i) climate and other environment-related indicators; (ii) social and employee, respect for human rights, anti-corruption and anti-bribery matters; (iii) indicators applicable to investments in sovereigns and supranationals. (iii) is not relevant, as an investment into sovereigns and supranationals is not part of Earlybird’s investment strategy.
Earlybird considers the following climate and other environment-related indicators (i) linked to its investee companies as applicable in each case and/or at a portfolio level:
• Greenhouse gas emissions
• Carbon footprint
• Greenhouse gas intensity
• Fossil fuels sector exposure
• Share of energy consumption and production from non-renewable sources compared to renewable sources
• Energy consumption intensity per high impact climate sector
• Sites/operations located in or near to biodiversity sensitive areas where activities of those investee companies negatively affect those areas
• Emissions to water
• Hazardous waste production
• Emissions of ozone-depleting substances
• Earlybird considers the following principal adverse impacts other than climate/environment-related (ii) linked to its investee companies as follows
• Violations of UN Global Compact principles and OECD Guidelines for Multinational Enterprises
• Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact principles and OECD Guidelines for Multinational Enterprises
• Unadjusted gender pay gap
• Board gender diversity or the lack thereof
• Exposure to controversial weapons
• Whistleblower protection policy
3. Description of policies to identify and prioritize principal adverse sustainability impacts
Earlybird has developed policies on the identification and prioritization of principal adverse sustainability impacts and indicators.
The methodologies put in place by Earlybird reflect the inherent characteristics of investing in startups and innovative technology companies that are expected to grow and scale their operations. Such desired growth in economic activity will lead to an increase in some of the adverse sustainability indicators as specified above, implying that in those cases only a relative adverse impact mitigation strategy can be pursued.
Each principal adverse sustainability impact is considered individually, with a specifically required mitigation strategy defined in each case. For principal adverse sustainability impacts that are likely to be severe and of a potentially irremediable character or are not linked to the companies’ operations and are avoidable by implementing good business practices, a “prevent/do not tolerate” strategy will be put in place. For principal adverse sustainability impacts that are intrinsically linked to investee companies’ economic activities, a minimization/mitigation or relative minimization/mitigation strategy will be pursued.
Each principal adverse sustainability impact will be assessed during the due diligence phase and investee companies will be obliged to monitor/measure and report on each adverse sustainability impact on a regular basis, allowing Earlybird to aggregate and track such adverse sustainability impacts individually per investee company and on a portfolio level and initiate actions for mitigation as appropriate.
Please find the German version of the SFDR policy here for your download.
Please find the Dutch version of the SFDR policy here for your download.