From 10th March 2021, a new regulation on sustainability-related disclosures in the financial services sector applies to all EU market participants, including Planet A. Under the new Sustainable Finance Disclosure Regulation – SFDR funds are classified according to their ESG commitment and positive contribution to environmental and social objectives.
Article 9 funds have a sustainable investment objective with a strong ESG focus. Planet A meets this requirement by investing in start-ups which (1) contribute significantly to an environmental objective; (2) do not harm environmental or social objectives; and (3) follow good governance practices.
We support and welcome the move towards greater transparency in sustainability related disclosures for the industry.
Planet A GmbH („Planet A“) takes sustainability risks into account in its investment decision-making process. Sustainability risks are environmental, social or governance events or conditions that, if they occur, could cause an actual or a potential material negative effect on the value of the investments. As part of its standard procedure, Planet A conducts a Due Diligence prior to investing that includes an assessment of sustainability risks. The results of these assessments guide Plant A`s investment decisions. In its free discretion, Planet A may decide to make an investment even if sustainability risks have been determined. In such cases, Planet A may apply appropriate mitigation measures.
Principal adverse sustainability impacts statement
Planet A takes into account principal adverse effects of investment decisions on sustainability factors. Sustainability factors are environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters. Planet A invests in highly innovative portfolio companies with growth potential and a positive impact on planet earth, that contribute to significant reductions in at least one of the following four key areas: GHG emissions, waste generation, resource exploitation and/or biodiversity loss. Prior to each investment, Planet A conducts a life cycle assessment relating to the portfolio company`s innovative product or service to assess its environmental impacts. This allows for detecting and quantifying principal adverse environmental effects.
As part of its Due Diligence Planet A also conducts a risk assessment regarding environmental, social and governance issues via a checklist. The results of this assessment are taken into account when taking investment decisions. In its free discretion, Planet A may decide to make an investment even if adverse impacts have been determined or are expected. In such case, Planet A may apply appropriate mitigation measures including but not limited to offering training for portfolio companies to support their capacity to control, mitigate and/or reduce such adverse impacts. Planet A is not a member of international bodies or organizations or obliged under national or international conventions or standards to adhere to further specific requirements relating to ESG compliance.
Product Related Disclosure (EU SFDR Art. 9)
Below One Fund I GmbH & Co. KG (the „Fund“) is managed by Planet A. The Fund pursues a venture capital strategy and has sustainable investments as its objective. Sustainable investment means an investment in an economic activity that contributes to an environmental or social objective, provided that the investment does not significantly harm any environmental or social objective and that the investee companies follow good governance practices. Impact objectives are set forth for each portfolio company prior to the Fund’s investment. Planet A takes into consideration negative adverse impacts of the Fund’s investments.
No significant harm to the sustainable investment objective
The Fund’s investments not only avoid harm, but generate significant positive outcomes for the planet.
In order to exclude any possible adverse effects Planet A conducts a life cycle assessment relating to the portfolio company`s innovative product or service to assess the environmental impact. This allows for revealing and quantifying adverse environmental effects. Planet A also assesses potential adverse effects in regards to environmental, social and governance issues during its Due Diligence and takes the results into account in its investment decisions. The Fund`s risk management processes take into account such sustainability risks by way of identifying, mitigating or offsetting such risks early and effectively. For that purpose, a set of related questions has been integrated in the pre-investment Due Diligence questionnaire as well as in the post-investment monitoring and support processes.
Sustainable investment objective of the financial product
Planet A is an impact venture capital fund supporting start-ups that have a measurable positive impact on our planet while building scalable businesses. The Fund`s investments will lead to significant reductions in at least one of the following four key areas: GHG emissions, waste generation, resource exploitation and/or biodiversity loss. Planet A wants to contribute to an economy that operates within the planetary boundaries and make impact investment the new normal.
The Fund only invests in early stage start-ups that
- have the potential to create massive positive impact in at least one of these key areas: i.e. GHG emissions, waste generation, resource exploitation and/or biodiversity loss; this impact must be quantifiable and measurable;
- have a strong team/founder; and
- have highly scalable businesses.
Planet A partners with sustainability pioneers in the following sectors: AgTech_Food, Water&Waste, Manufacturing, Transport, Energy and Buildings as well as Enabling Technologies. A special focus will be on emerging green technology companies. The Fund intends to make its initial investments in early stage, i.e. seed and series A rounds.
The Fund`s focus on impact is anchored in every aspect of the investment process, from the screening to the setting of impact KPIs at the closing of the deal to impact monitoring during the holding period to an impact evaluation and carry clawback at the time of exit. Governance issues are being addressed as part of an ESG questionnaire during the Due Diligence.
Proportion of investments
The Fund will only invest in line with its investment strategy, which can be summarized as follows: investing in early stage (seed, series A) start-ups in Europe that have the potential to make a significant positive environmental impact globally.
Monitoring of sustainable investment objective
Planet A constantly monitors impact objectives of the Fund. Wherever possible impact performance data is being gathered automatically and in real-time from the portfolio companies and displayed publicly. LCA data and models are updated on a regular basis in consultation with the portfolio companies to reflect changes in the start-up’s processes or products. The impact performance of the portfolio companies will be assessed by Planet A and information provided to the investors on a quarterly basis regarding the following three parameters: impact objectives, company`s impact multiple and overall portfolio impact multiple.
In order to quantify the impact of a start-up`s innovative product or service, Planet A assesses the environmental impacts associated with all stages of a product’s life – from raw material extraction through materials processing, manufacture, distribution, and use. A full-fledged science team at Planet A can develop these Life Cycle Assessments. The calculations not only include GHG emissions but a broader understanding of emissions, including plastic, water and land use footprints. Impact KPIs are defined by assessing the environmental improvement (impact perspective) and the growth of a company (business perspective).
Data sources and processing
To conduct the life cycle assessment data on the start-ups product or service is sourced from the company itself. Where there is no specific data available on production processes and resources used the data is modelled or sourced from peer reviewed scientific studies. LCAs at Planet A are conducted by LCA experts who are extensively trained in LCAs norms and standards. They have access to well documented process data from the globally most widely used LCA databases.
In order to report and forecast the impact the portfolio companies provide Planet A with current and projected business data (units sold, customers acquired etc.) in correspondence with the business plan. Planet A pulls this data automatically and in real-time from its portfolio companies wherever possible. LCA data and models are updated on a regular basis in consultation with the portfolio companies to reflect changes in the start-up’s processes or products. In addition, target markets of start-ups are being monitored to detect and include significant changes that might affect the environmental performance of a start-up. This data is stored in Planet A`s data warehouse. No customer data will be requested or stored.
Limitations to methodologies and data
Planet A is pioneering a science-based impact methodology for investments/ the VC world. The LCA approach allows for a measurable, comparable impact assessment of products and services. In cases where Planet A invests in nascent technologies that will achieve major environmental impact only in the long run Planet A will use proxies as impact KPIs.
- Impact: A full Life Cycle Assessment and forecasting of the startup’s product or service is being developed by the Impact Team.
- ESG: Take into account and check regarding our ESG Commitments
- Legal & commercial: Industry standard procedures with external validation by our legal advisors
- Intellectual Property: Industry standard procedures with external validation by our legal advisors
- Technical Assessment: Industry standard procedures with external validation by technical experts either within the Planet A network or professionally conducted assessments if applicable
Planet A is set up as a collaborative actor in the investment field. With the Fund, we want to generate positive impact beyond our portfolio companies by sharing learnings and scientific insights, cooperating with other VCs as well as public institutions and foundations in order to advance the whole ecosystem. Our objective is to make impact investment the new normal. We will actively communicate and publish our ambitions and findings. This will also include advocacy to strengthen social entrepreneurship, purpose companies, more stringent impact measurement standards as well as more ambitious environmental legislation.
We commit to adhere to ESG principles with regard to our own organization as well as the Fund. As venture capital investor, the influence we have on the Fund`s portfolio companies through shareholdings of our funds, including influence on sustainability matters, is typically limited. However, we shall apply our best efforts to encourage our portfolio companies to agree with our ESG Policy, and to commit to pursuing its ESG commitments. During the pre- as well as the post-investment phase, information on ESG related issues will be collected and evaluated via a questionnaire which we provide every year to our portfolio companies. This enables us to identify ESG related issues, early and encourage and support actions for improvement. To this end, we will conduct, where appropriate, training sessions for portfolio companies on how to resolve ESG related issues. In addition, we require our portfolio companies to provide an incident report in written form, if they become aware of any issue presenting a material risk for the realization of the ESG Commitments.
Attainment of the sustainable investment objective
At Planet A we strive to reduce GHG emissions and increase sinks in line with the objectives of the Paris Agreement. Our investments are supporting green or sustainable activities and the climate impact of those investments improve year after year. Following our mission to support the transition to a global economy that operates within the planetary boundaries we will not invest in companies that are not part of the solution to the climate crisis.
We back this mission with a rigid science-based impact methodology that assesses the climate and environmental impact of all our investments. In order to quantify the impact of a start-up`s innovative product or service we assess the climate and other environmental impacts associated with all stages of a product’s life – from raw material extraction through materials processing, manufacture, distribution, and use. This is called a “Life Cycle Assessment” (LCA). We pride ourselves in having a full-fledged science team on board who can calculate LCAs – a rare feature to the Venture Capital world.
We thus not only assess the GHG emissions involved but get a broader understanding of emissions, including plastic, water, land use footprints. By comparing the results with reference products on the market we can assess how much better a start-up`s innovation is (=improvement rate). We calculate impact by assessing the environmental improvement (impact perspective) and the growth of a company (business perspective).
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