Since 2021, a new regulation on sustainability-related disclosures in the financial services sector applies to all EU market participants, including Planet A. Under the 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.
I. Sustainability risks
Planet A GmbH (“Planet A”, LEI: 391200YUE7N8O4IU6R41) 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.
II. Statement on principal adverse impacts of investment decisions on sustainability factors
Summary
Planet A considers principal adverse impacts of its investment decisions on sustainability factors. The present statement is the first consolidated statement on principal adverse impacts on sustainability factors of Planet A.
This statement on principal adverse impacts on sustainability factors covers the reference period from 31 March 2022 to 31 December 2022.
Sustainability factors include environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. Planet A applied a pre-defined set of sustainability indicators at portfolio company level. This contains the mandatory indicators as set forth in no. 1 to 14 of Table 1 of Annex I of the Delegated Regulation (EU) 2022/1288 (“RTS”) as well as the indicators no. 5 of table 2 and no. 12 of table 3 of Annex I. At all times, Planet A applied the principle of proportionality taking due account of the strategic relevance of an investment as well as its transactional context.
In general, the startups in the Fund’s portfolio did not have a significant negative impact. The 14 portfolio companies held in 2022 are all early-stage startups that only have a minor operative footprint. There are numerous software companies among them that have very low emissions per se. In case of hardware companies, they were in lab or demo stages in 2022. At the same time, the products and services of these startups all have a significant positive impact on environmental and climate protection that far exceeds the operational emissions. We demonstrate this in publicly available life cycle assessments on our website.
This was the first survey of its kind and provided clarity on the availability of these data in the portfolio companies and the internal data collection processes. In some categories, like GHG emissions, not all companies were able to contribute data; we are thus not yet able to provide total numbers across our fund in all categories. In the future, we expect to work with an external ESG/SFDR platform and provide more targeted support in generating the data needed to portfolio companies.
Zusammenfassung
Planet A berücksichtigt die wichtigsten nachteiligen Auswirkungen der Investitionsentscheidungen auf Nachhaltigkeitsfaktoren. Bei der vorliegenden Erklärung handelt es sich um die erste konsolidierte Erklärung zu den wichtigsten nachteiligen Auswirkungen auf die Nachhaltigkeitsfaktoren von Planet A.
Diese Erklärung zu den wichtigsten nachteiligen Auswirkungen auf die Nachhaltigkeitsfaktoren bezieht sich auf den Bezugszeitraum vom 31. März 2022 bis zum 31. Dezember 2022.
Nachhaltigkeitsfaktoren sind Umwelt-, Sozial- und Arbeitnehmerbelange, Achtung der Menschenrechte und die Bekämpfung von Korruption und Bestechung. Planet A wendet dabei eine Reihe vorgegebener Nachhaltigkeitsindikatoren auf Ebene der Portfoliounternehmen an. Diese enthält die verpflichtenden Indikatoren gemäß Nr. 1 bis 14 der Tabelle 1 des Anhangs I der Delegierten Verordnung (EU) 2022/1288 (“RTS”) sowie die Indikatoren Nr. [5] der Tabelle 2 und Nr. [12] der Tabelle 3 des Anhangs I. Planet A wird stets den Grundsatz der Verhältnismäßigkeit anwenden und sowohl die strategische Bedeutung einer Investition als auch ihren Transaktionskontext berücksichtigen.
Im Allgemeinen hatten die Startups im Fondsportfolio keine nennenswerten negativen Auswirkungen auf Umwelt- und Klimaschutz. Bei den 14 Portfoliounternehmen, die wir 2022 im Bestand hatten, handelt es sich durchweg um Startups im Frühstadium, die nur einen geringen operativen Fußabdruck haben. Darunter befinden sich zahlreiche Softwareunternehmen, die per se sehr geringere Emissionen aufweisen. Wenn es sich um Hardware-Unternehmen handelt, befanden sich diese 2022 im Labor- oder Demostadium. Gleichzeitig haben die Produkte und Dienstleistungen dieser Startups alle einen signifikanten positiven Einfluss auf den Umwelt- und Klimaschutz, der die operativen Emissionen weit übersteigt. Dies zeigen wir in öffentlich zugänglichen Ökobilanzen auf unserer Website.
Dies war die erste Erhebung dieser Art und brachte Klarheit über die Verfügbarkeit dieser Daten in den Portfoliounternehmen und die internen Datenerhebungsprozesse. In einigen Kategorien, wie z. B. Treibhausgasemissionen, konnten nicht alle Unternehmen Daten beisteuern; wir sind daher noch nicht in der Lage, in allen Kategorien Gesamtzahlen für unseren Fonds zu liefern. Wir setzen derzeit die Zusammenarbeit mit einer externen ESG/SFDR-Plattform auf und werden den Portfoliounternehmen gezieltere Unterstützung bei der Generierung der benötigten Daten bieten, um im kommenden Jahr ein vollständigeres Bild abgeben zu können.
Description of the principal adverse impacts on sustainability factors
Planet A considers the adverse sustainability indicators as set forth in the table below.
Description of policies to identify and prioritise principal adverse impacts on sustainability factors
Planet A has established and implemented an ESG policy as well as sustainability clauses as part of the shareholder agreements to identify and prioritise principal adverse impacts on sustainability factors. These policies have been approved by the governing body of Planet A on 01.10.2021. The responsibility for their implementation and application has been allocated to Christian Schad.
The indicators as set forth in no. 1 to 14 in the table above are mandatory according to the RTS. All other indicators were chosen by Planet A by taking into account their relevance with respect to Planet A’s business strategy.
Prior to any investment, Planet A conducts a due diligence. Part of this due diligence includes checking whether the investment could have an adverse impact on sustainability factors. This check is performed by using an ESG questionnaire which, inter alia, includes the adverse sustainability indicators considered by Planet A at portfolio level (see above).
After an investment, i.e., during the holding period, Planet A checks for adverse impacts on sustainability factors in regular intervals. The relevant data is collected annually by using the table above. At the end of each reference period, Planet A aggregates the relevant data. When assessing principal adverse impacts, Planet A prioritises the adverse impacts by taking into account the probability of occurrence and the severity of those impacts.
To the extent possible, Planet A uses publicly available information relating to any of the adverse sustainability indicators. Where information is not publicly available, Planet A primarily obtains it by making reasonable assumptions or directly from the portfolio companies. Thus, errors cannot be excluded completely. Yet, Planet A will always endeavour to identify such errors or inaccuracies and to intervene as appropriate.
The so described policies will be re-evaluated on a regular basis, i.e., annually, in particular to reflect any legal or regulatory changes as well as data availability and further developments in the market. Hence, in the future, Planet A may also use other indicators to identify and assess additional principal adverse impacts.
Engagement policies
Planet A established an ESG policy and aims to insert sustainability clauses into the termsheets and shareholder agreements to reduce the principal adverse impacts assessed through the indicators set forth in the table above in accordance with its set targets: Planet A will engage with its portfolio companies to discuss any (potential) principal adverse impacts. Where there is no reduction of principal adverse impacts over more than one period, Planet A will consult with the Company’s management and identify the causes. In addition, in such a case, together with the management of the Company, a set of measures will be developed in order to reduce PAIs in the future. In the unlikely event that no positive development can be reported and the negative impacts are substantial, Planet A might consider the sale of its stake in the company.
References to international standards
Planet A is a signatory of the United Nations Principles for Responsible Investments (UNPRI), the Finance for Biodiversity Pledge as well as the Leaders for Climate Action`s (LfCA) pledge. Planet A is committed to the objectives of the UNFCCC Paris Agreement.
III. Remuneration disclosure
As a registered alternative investment fund manager within the meaning of section 2 (4) of the German Investment Code (Kapitalanlagegesetzbuch, “KAGB”) and a manager of a qualifying venture capital fund as defined in article 3 (b) of Regulation (EU) No. 345/2013 (“EuVECA-Regulation”), Planet A does not have and does not need to have a remuneration guideline or policy in accordance with the requirements of the KAGB or the EuVECA Regulation.
IV. Sustainability-related disclosures
Below One Fund I GmbH & Co. KG
Financial product: Below One Fund I GmbH & Co. KG GmbH & Co. KG (the “Fund” / der “Fonds”)
LEI: 391200R47ECQMGPUOH32
Summary
The Fund pursues a venture capital strategy and has sustainable investments as its objective. Sustainable investment pursuant to Art. 2(17) SFDR 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.
All of the Fund’s sustainable investments are – at the same time – investments in an environmentally sustainable economic activity within the meaning of the Regulation (EU) 2020/852 (“Taxonomy”).
No index as reference benchmark has been designated (Art. 9(1) SFDR).
In order to determine the sustainability of a potential investment, life cycle assessments (“LCA”), among other things, are conducted as part of the due diligence process during the investment decision process. Furthermore, (potential) portfolio companies are required to complete an ESG questionnaire, which, inter alia, requests information on (adverse) sustainability indicators. The LCAs are amended as soon as new products or processes need to be taken into account. The portfolio companies are requested to report on ESG on an annual basis and ad-hoc in case of severe breaches.
In the absence of publicly available data, the Fund either collects data for the LCAs and the (adverse) sustainability indicators directly from its (potential) portfolio companies, bases them on scientific studies or estimates them appropriately. In this respect, there is a risk of false information.
The actions and decisions described in the following sections are each made by Planet A for and on behalf of the Fund.
Zusammenfassung
Der Fonds verfolgt eine Wagniskapitalstrategie und strebt nachhaltige Investitionen an. Eine nachhaltige Investition ist nach Art. 2(17) SFDR eine Investition in eine wirtschaftliche Tätigkeit, die zu einem ökologischen oder sozialen Ziel beiträgt, vorausgesetzt, dass die Investition kein ökologisches oder soziales Ziel wesentlich beeinträchtigt und dass die Unternehmen, in die investiert wird, eine gute Unternehmensführung haben.
Bei den nachhaltigen Investitionen des Fonds handelt es sich zugleich um Investitionen in ökologisch nachhaltige Wirtschaftstätigkeiten im Sinne der Verordnung (EU) 2020/852 („Taxonomie“).
Ein Index als Referenzwert wurde nicht bestimmt.
Zur Ermittlung der Nachhaltigkeit eines potenziellen Investments werden im Rahmen des Due-Diligence Prozesses, welcher vor jeder Investitionsentscheidung erfolgt, u.a. Life Cycle Assessments (“LCA”) durchgeführt. Ferner ist von den (potenziellen) Portfoliounternehmen ein ESG-Fragebogen auszufüllen, in dem u.a. Informationen zu den Nachhaltigkeitsindikatoren sowie den Nachhaltigkeitsindikatoren für nachteilige Auswirkungen abfragt werden. Die LCAs werden ergänzt, sobald neue Prozesse und Produkte berücksichtigt werden müssen. Die Portfoliounternehmen sind angehalten, jährlich zu ESG zu berichten – im Fall von Vorfällen ad-hoc.
Bei Fehlen öffentlich verfügbarer Daten, erhebt der Fonds die Daten für die LCAs sowie die Nachhaltigkeitsindikatoren (für nachhaltige Auswirkungen) entweder direkt von den (potenziellen) Portfoliounternehmen, auf Grundlage wissenschaftlicher Literatur oder schätzt diese angemessen. Insoweit besteht ein Risiko von Falschinformationen.
Die in den folgenden Abschnitten beschriebenen Handlungen und Entscheidungen erfolgen jeweils durch Planet A für den Fonds.
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 assess whether an investment does not significantly harm any of the sustainable investment objectives, the Fund conducts a due diligence prior to each investment which includes an LCA to assess the environmental footprint of a potential portfolio company’s product or service as well as an ESG questionnaire to identify and assess any principal adverse impacts on sustainability factors. The ESG questionnaire contains the sustainability indicators 1 – 14 of Table 1 of Annex I of the RTS as well as indicator 5 of Table 2 and 12 of Table 3 of Annex I of the RTS. Conversely, as long as no principal adverse impacts are identified for a portfolio company of the Fund, it can be assumed that the Fund’s sustainable investments do not cause significant harm to any environmental or social investment objective.
Furthermore, the Fund strives to be fully aligned with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. For that purpose, the Fund has integrated a set of ESG related questions (including the alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights) in its pre-investment ESG questionnaire as well as in the post-investment monitoring and support processes.
Sustainable investment objective of the financial product
The Fund has sustainable investment as its objective (cf. Art. 9(2) SFDR). No index has been designated as a reference benchmark (Art. 9(1) SFDR).
The Fund is an impact venture capital fund supporting green technology companies that have a quantifiable positive impact on the planet while building scalable businesses. The Fund wants to contribute to an economy that operates within the planetary boundaries and make impact investment the new ‘normal’.
Therefore, the Fund’s sustainable investment objective is to achieve significant reductions in at least one of the following four key areas: GHG emissions, waste generation, resource exploitation and/or biodiversity loss. As part of the LCAs, the Fund measures the attainment of its sustainable investment objective through sustainability indicators which are defined for each portfolio company individually after an investment of the Fund. Such sustainability indicator(s) is/are tracked and reported annually.
Pursuant to Art. 5 lit. (a) Taxonomy, the Fund’s investments in general will contribute to climate change mitigation.
Investment strategy
The purpose of the Fund is to build, hold and manage (including to divest) a portfolio of equity and equity-related and mezzanine investments (including convertible loans and subordinated revenue-based financing instruments (nachrangige partiarische Darlehen) in portfolio companies with a potential positive impact on planet earth.
The Fund shall, in principle, pursue a long term and sustainable investment strategy. Therefore, the Fund only invests in early-stage start-ups that have
The Fund’s targeted investment sectors are energy, mobility, agtech&food, buildings, manufacturing, water and waste and IT/enabling technologies. The Fund intends to invest in Europe (+Israel) and to make its initial investments in early stage, i.e., seed and series A rounds, of green technology companies. The Fund will not invest in companies that are not part of the solution to the climate and environmental crisis.
Good governance practices are assessed through an ESG checklist as part of every due diligence process prior to any investment made by the Fund. Such practices include, in particular, sound management structures, employee relations, remuneration of staff and tax compliance within the portfolio companies. Moreover, the Fund will conduct annular surveys of the ESG practices in its portfolio companies during the holding period. If the Fund becomes aware of severe governance issues, it will investigate them and work with all parties involved to find an appropriate solution.
Proportion of investments
The Fund will invest fully in line with its investment strategy and investment restrictions, i.e., it will only make sustainable investments (100 %). Currently, 100 % of the sustainable investments with an environmental objective are Taxonomy-aligned. The Fund intends to only invest in economic activities that qualify as environmentally sustainable under the Taxonomy. Therefore, the minimum share of sustainable investments with an environmental objective that are not aligned with the Taxonomy is 0 %.
The Fund does not invest in transitional economic activities. Therefore, the minimum share of investments in transitional economic activities is 0 %. As the fund intends to invest in enabling (software) technologies that help others to generate a significant positive impact the minimum share expressed as a percentage of all investments of the Fund, is at least 1 %.
The degree to which the Fund’s sustainable investments are investments in environmentally sustainable economic activities is measured (by default) by turnover. Where information about the degree to which an investment in a (potential) portfolio company is in an environmentally sustainable economic activity is not readily available from public disclosures, such information will be obtained directly from the (potential) portfolio company.
Furthermore, the Fund and its portfolio companies comply with the minimum safeguards of Art. 18 Taxonomy.
The compliance of the investments with the Taxonomy will not be subject to an assurance by auditors or a review by third parties but the results of the impact assessments are all shared publicly on the website of Planet A.
Monitoring of the sustainable investment objective
In order to monitor the sustainable investment objective and the sustainability indicators used to measure the attainment of the sustainable investment objective throughout the lifecycle of the Fund, impact performance data is being assessed on an annual basis. LCA data and models are updated on a regular basis in consultation with the Fund’s portfolio companies to reflect changes in their processes or products.
In addition, ESG-related information is collected and evaluated via an ESG questionnaire which is provided every year to the Fund’s portfolio companies. The (adverse) sustainability indicators for each portfolio company are also tracked on an annual basis using the ESG questionnaire.
Furthermore, the Fund requires its 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 Fund’s sustainable investment objective.
Methodologies
In order to measure the attainment of the sustainable investment objective, a full-fledged science team within Planet A, for and on behalf of the Fund, uses a rigid science-based impact methodology that assesses the climate and environmental impact of each of the Fund’s investments. In order to quantify the impact of a portfolio company’s innovative product or service the Fund conducts the LCAs, i.e., assesses 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. By comparing the results with reference products on the market, the Fund can assess how much better a (potential) portfolio company’s innovation is (= improvement rate). The impact is calculated by assessing the environmental improvement (impact perspective) and the growth of a company (business perspective).
After an investment decision, i.e., during the holding period, the Fund defines one to maximum four sustainability indicators for each portfolio company: tons of GHG emissions, energy demand, resource consumption and/or tons of waste. In cases where the Fund invests in enabling technology companies, i.e., companies that support third parties to decrease their ecological footprint, proxies are used as sustainability indicators.
Data sources and processing
The LCA data on a portfolio company’s 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. The LCAs 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. LCA data and models are updated on a regular basis in consultation with the portfolio companies to reflect changes in the company’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 portfolio company. This data is stored in Planet A`s data warehouse. No customer data will be requested or stored.
Limitations to methodologies and data
The information collected from the (potential) portfolio companies is internally or externally verified only if and to the extent misrepresentations are suspected. Thus, it cannot be ruled out completely that false information may remain undetected in certain cases. As the Fund’s investments are made for several years, the Fund considers it a priority to establish and maintain a trustful working relationship with its portfolio companies in order to ensure compliance with its sustainable investment objective. Further limitations, in particular with regard to the accuracy of the data and reliability of the data sources used, are not apparent at this time.
Due diligence
An initial assessment of how an investment relates to the sustainable investment objective of the Fund is carried out as part of the due diligence process. Therefore, the due diligence process includes inter alia a full LCA (if applicable) and forecasting of the (potential) portfolio company’s product or service by Planet A’s impact team, an ESG checklist and a technical assessment. The latter is validated by technical experts either within the Planet A network or through professionally conducted assessments, if applicable. For the other parts, an internal or external review or verification of the information obtained will only be carried out if misrepresentations are suspected.
Engagement policies
Engagement forms part of the sustainable investment objective of the Fund. With the Fund, Planet A aims to generate positive impact beyond the Fund’s portfolio companies by sharing learnings and scientific insights, cooperating with other Venture Capital funds as well as public institutions and foundations in order to advance the whole ecosystem. Planet A, for instance, provides impact trainings for generalist VCs and takes an active role in the advisory board of the EXIST program or the Sustainable Finance Advisory Committee of the German Government as well as the Clean Tech for Europe Initiative or the Finance@Biodiversity Initiative of the European Commission. 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.
Planet A commits to adhere to ESG principles with regard to its own organization as well as the Fund. As venture capital investor, the influence Planet A has on the Fund’s portfolio companies through shareholdings, including influence on sustainability matters, is typically limited. However, Planet A will apply its best efforts to encourage the Fund’s portfolio companies to agree with the Fund’s ESG policy, and to commit to pursuing its ESG commitments. When sustainability-related issues are detected, the Fund encourages and supports actions for improvement.
Attainment of the sustainable investment objective
The Fund’s sustainable investment objective is to achieve significant reductions in at least one of the following four key areas: GHG emissions, waste generation, resource exploitation and/or biodiversity loss. In order to measure the attainment of this sustainable investment objective, Planet A, for and on behalf of the Fund, applies the following sustainability indicators: tons of GHG emissions, energy demand, resource consumption and/or tons of waste. With regards to enabling technology companies, i.e., companies that support third parties to decrease their ecological footprint, proxies are used. The Fund uses a science-based methodology that assesses the climate and environmental impact of all its (potential) investments. In order to quantify the impact of a start-up’s innovative product or service, the Fund assesses by means of a LCA 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.
The Fund thus not only assesses the GHG emissions involved but gets a broader understanding of emissions, including plastic, water, land use footprints. By comparing the results with reference products on the market, the Fund can assess how much better a start-up’s innovation is (= improvement rate). Impact is calculated by assessing the environmental improvement (impact perspective) and the growth of a company (business perspective). After making an investment decision, the Fund will define one to maximum four impact KPIs to be tracked and reported on an annual basis. These KPIs are quantifiable and linked to the environmental outcome(s) the portfolio company aims to achieve. In cases where the Fund invests in nascent technologies that may achieve major environmental impact only in the long run the Fund will use proxies as impact KPIs.
This document has first been uploaded on 10 March 2021
Date of update: 7 May 2022 and 30 November 2022: implementation of recent legislative developments, and editorial amendments and clarifications; 30 June 2023: implementation of recent legislative developments and adding of consolidated first PAI statement.
Please do not hesitate to contact us for further queries at hello@planet-a.com
