Sustainability - related disclosures

1. Integration of Sustainability Risks into Investment Decision-making Process

 

Sustainable Finance Disclosure Regulation (SFDR), Integration of Sustainability Risks into Investment Decision-making Process, Article 3 Disclosure

In accordance with Article 3 of the Sustainable Finance Disclosure Regulation (2019/2088) (“SFDRˮ)[1], Vesna Venture Capital (“Vesna VCˮ) is required to provide an information on its policies regarding the integration of sustainability risks into its investment decision-making process.

Sustainability risk is defined by the SFDR as “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“.

Vesna VC has integrated sustainability risks into its investment decision-making process.

While Vesna VC does not (i) promote environmental or social characteristics under Article 8 of the SFDR nor (ii) pursue sustainable investment objectives under Article 9 of the SFDR, sustainability risks are evaluated as part of the firm’s general investment aproach. These risks, if deemed significant and relevant to a specific investment opportunity, are carefully assessed to ensure they are appropriately addressed during the investment decision-making process. This approach reflects Vesna VC’s commitment to responsible investment practices, ensuring that sustainability risks are not overlooked when they could materially influence the value or performance of investments.

For more information on how Vesna VC incorporates sustainability risk considerations into its overall risk management and investment practices, please refer to Vesna VC’s Responsible Investment Policy.

 

[1] Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”)

 

2. No Consideration of Adverse Impacts of Investment Decisions on Sustainability Factors

 

Sustainable Finance Disclosure Regulation (SFDR),  No consideration of adverse impacts of investment decisions on sustainability factors , Article 4 Disclosure

In accordance with Article 4 of the Sustainable Finance Disclosure Regulation (“SFDRˮ)[1] (2019/2088), Vesna Venture Capital (“Vesna VCˮ) has assessed its current operations, size, and the nature of its financial products, including the  Vesna Deep Tech Venture Fund SCSp ( “Fund”), in determining its approach to the consideration of Principal Adverse Impacts (the “PAIsˮ) of investment decisions on sustainability factors.

Principal adverse impacts (the “PAIsˮ) are understood as those impacts of investment decision that result in negative effects on sustainability factors. PAIs represent a key concept of the SFDR and are imposed on the financial market participants using the comply-or-explain principle. SFDR defines sustainability factors as “environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.  

Vesna VC has decided to opt-out of the PAIs, both at the firm level and product level.

This decision reflects a thoughtful evaluation of the firm’s size, investment approach, and operational focus. Given Vesna VC’s position as a focused venture capital manager, implementing additional layers of PAI evaluation is not currently justified in terms of proportionality or relevance to its activities. Instead, the firm prioritises the efficient deployment of its resources to support its innovative portfolio and investment strategy.

The Vesna Deep Tech Venture Fund invests in deep-tech projects and startups, sectors defined by cutting-edge innovation and nascent technologies. These investment areas generally have limited exposure to systemic sustainability risks compared to sectors with higher adverse environmental or social impacts. However, Vesna VC remains vigilant in assessing potential risks and ensuring that its investments align with its strategic priorities and ethical standards.

Sustainability risks are already integrated into Vesna VC’s decision-making processes through its Responsible Investment Policy. This policy outlines a robust framework for identifying and managing relevant risks, ensuring an appropriate balance between financial and sustainability considerations. At this stage, Vesna VC believes this approach is sufficient and proportionate to the nature of its operations, negating the need for further formalisation of PAI-specific tools or metrics.

While PAIs are not presently considered, Vesna VC acknowledges that the regulatory and market landscape evolves, as do stakeholder expectations. Should circumstances change—such as significant growth in the firm’s size, changes in investment focus, or the emergence of material PAI-related risks relevant to its portfolio—Vesna VC is committed to reassessing its approach to PAI consideration.  Any decision to adopt PAI evaluation will be grounded in a practical and informed assessment of its relevance and potential to enhance the firm’s investment process and outcomes.

Vesna VC continues to prioritise responsible investment practices, ensuring that sustainability risks, where relevant, are integrated into decision-making to safeguard long-term value creation. For more information, please refer to Vesna VC’s Responsible Investment Policy.

This PAI statement is effective as of 12 July 2024 and will be reviewed annually by the Fund Management Company.

 

[1] Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”)

3. Integration of Sustainability Risks into the Remuneration Policy

 

Sustainable Finance Disclosure Regulation (SFDR), Integration of Sustainability Risks into the Remuneration Policy

In accordance with Article 5 of the Sustainable Finance Disclosure Regulation (“SFDRˮ)[1] (2019/2088), this statement outlines how Vesna Venture Capital (“Vesna VCˮ) remuneration policy aligns with the integration of sustainability risks.

Sustainability risk is defined by the SFDR as “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 investmentˮ.

Vesna VC has integrated sustainability risks into its investment decision-making process. If these risks are identified as significant and relevant to a particular investment opportunity, they are thoroughly evaluated to ensure they are effectively addressed as part of the investment decision-making process.

Vesna VC’s team members are required to adhere diligently to the firm’s approach to integrating sustainability risks into investment decisions, as outlined in the Responsible Investment Policy. This ensures a consistent and principled application of sustainability considerations across all investment activities.

Vesna VC is committed to fostering responsible and investor interest aligned remuneration practices. The firm aims to reward team members fairly and competitively, reflecting their performance while upholding ethical and principled behaviour. The remuneration policy is structured to support Vesna VC’s long-term business strategy, aligning the interests of team members with those of the firm and its limited partners. This approach establishes a clear link between performance and compensation over short, medium, and long-term horizons, discouraging excessive risk-taking for short-term gains and ensuring compliance with applicable regulatory requirements. Compensation structures are designed to prioritise risk management, compliance, and investor outcomes, ensuring alignment with Vesna VC’s core values of responsibility and integrity.

Risk and control considerations are integral to Vesna VC’s remuneration framework, forming a key part of performance evaluations and compensation decisions. This framework adopts a balanced approach between fixed and variable remuneration components, where fixed pay reflects organizational responsibility and individual capability, and variable pay incorporates both short-term incentives (STI) and long-term incentives (LTI). The LTI components emphasize sustainable performance by incorporating risk-adjusted mechanisms and deferred elements aligned with long-term value creation. This structure actively discourages excessive risk-taking, including risks related to sustainability, while avoiding incentives that could jeopardize investor interests. By embedding sound risk management practices, Vesna VC ensures that its compensation policies align with its broader commitment to long-term, sustainable success. Furthermore, sustainability risks and corporate responsibility considerations are integrated into both STI and LTI performance conditions, with measurable targets such as reducing carbon emissions and aligning investments with Environmental, Social, and Governance (ESG) principles.

This policy is consistent with the integration of sustainability risks as required by Regulation (EU) 2019/2088 of November 27, 2019, as amended. It ensures that the structure of remuneration does not encourage excessive risk-taking with respect to sustainability risks and promotes sound and effective risk management. The policy does not encourage risk-taking that is inconsistent with the risk profile and the rules instruments of the underlying funds managed.

This Remuneration Policy is effective as of 12 July 2024 and will be reviewed annually by the Fund Management Company.

 

[1] Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”)

4. Responsible Investment Policy

 

Vesna Venture Capital Responsible Investment Policy

 Vesna Venture Capital (“Vesna VCˮ) classifies its product Vesna Deep Tech Venture Fund SCSp ( “Fund”) as an Article 6 fund under the Sustainable Finance Disclosure Regulation (2019/2088) (“SFDRˮ)[1] —indicating that it does not promote ESG characteristics or have a sustainable investment objective. However, this classification does not preclude the integration of sustainability risks into its investment decision-making processes. Recognising the potential financial materiality of ESG factors, Vesna VC employs tools such as ESG questionnaires to systematically identify and manage sustainability risks that could impact the long-term performance of investments.

This approach reflects a pragmatic commitment to responsible investment practices. The ESG questionnaire and related assessments are not intended to categorise the fund as Article 8 or 9 but rather to ensure that Vesna VC’s investment processes are thorough, risk-aware, and aligned with evolving market expectations and investor interests. By proactively incorporating ESG-related evaluations, Vesna VC aims to safeguard against material risks and identify potential opportunities, all while adhering to its Article 6 designation.

At Vesna VC we are steadfast in our commitment to generating value for our investors and portfolio companies while factoring environmental, social, and governance (ESG) considerations. Our approach to responsible investing is embedded in our operations, ensuring sustainable growth, ethical governance, and a positive societal impact.

This policy outlines Vesna VC’s framework for integrating ESG factors into our investment processes and aligns with our broader commitment to sustainability. It also reflects Vesna VC’s compliance with the SFDR and other relevant regulatory frameworks, ensuring transparency in ESG practices and alignment with disclosure obligations.

This Responsible Investment Policy applies to Vesna VC’s operations, funds under management, and interactions with portfolio companies and stakeholders. We actively advocate for the adoption of these principles by our portfolio companies and collaborate with partners who share similar ESG values to promote collective progress towards sustainability.

As our policy progresses, we are committed to adhering to the principle of proportionality. This entails considering the size, nature, and scope of our operations, as well as the types of funds we manage and the developmental stages of our portfolio companies. Additionally, we will approach engagement with our portfolio companies on a case-by-case basis, tailoring our actions to suit each company’s unique circumstances while also adhering to our legal, regulatory, and tax obligations.

Sustainability Integration in the Investment Process

ESG values are seamlessly woven into every stage of our investment and value creation process. They are not only integrated into our pre-investment assessments but also continue to guide our actions throughout the post-investment phases.

 Given our primary focus on pre-seed, seed, and post-seed investment stages, we possess the unique opportunity to nurture and mentor our portfolio companies right from inception. Our aim is to facilitate sustainable growth from the outset. We actively encourage alignment with our Responsible Investment 

Policy and values among our portfolio companies, fostering a shared commitment to responsible practices. To ensure this alignment, we’ve integrated various ESG evaluation mechanisms into our due diligence and ongoing portfolio monitoring processes. These initiatives include:

Pre-Investment

In the pre-investment phase, we consider our ESG values as we conduct our due diligence processes. We collect the relevant information from potential portfolio companies using a detailed questionnaire, which contains ESG-related questions as well as our exclusion criteria. For instance, we ask the potential portfolio companies whether they are highly dependent on fossil fuels or whether their production facilities have a negative impact on biodiversity sensitive areas. In doing so, we identify and evaluate potential ESG-related value creation opportunities and risks before making an investment decision. Furthermore, we screen the potential portfolio companies against our investment exclusions which are set forth in the limited partnership agreements and side letters of our fund. Thus, our fund mayot invest in restricted sectors, such as pornography and prostitution, gambling, casinos, racist and antidemocratic media, or weapons and ammunitions.

Part of the due diligence process also includes checking whether the potential investment could have a negative impact on sustainability factors. SFDR defines sustainability factors as “environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery mattersˮ.  This check is performed using a pre-defined set of indicators, which are assessed at the level of our portfolio companies.

We also apply our best efforts when negotiating an investment into a portfolio company, to reach an agreement requiring the portfolio company to notify us on an ad hoc basis if any ESG-related issues become apparent. Furthermore, we organize an onboarding session for each portfolio company during which we discuss with and explain to the management how they could incorporate ESG consideration into their operations.

Post-Investment

To assess progress and monitor alignment with our Responsible Investment Policy, Vesna VC conducts annual evaluations of ESG performance metrics post-investment. Each year, portfolio companies are asked to report on their ESG performance based on a consistent set of metrics initially introduced during the onboarding process. This enables us to get an understanding of where each portfolio company stands in terms of its ESG journey and to identify any ESG-related value creation opportunities and issues early. If issues become apparent, we encourage and support actions for improvement. We provide our portfolio companies with resources in order to tackle the areas they need to focus on and to help them to improve their ESG performance and to scale successfully to Series A and beyond.

Internal ESG Management

At Vesna VC we have already implemented concrete steps toward more sustainable business operations.  We remain committed to minimising Vesna VC’s environmental impact and expanding our sustainability initiatives in the future.

Environment

Vesna VC’s sustainability approach is reflected in two key dimensions: first, at the Fund level, through operational resource management and sustainable practices; and second, as detailed in this policy, through the integration of environmental considerations and ESG principles in our investment activities and engagement with portfolio companies.

Social

With regard to social sustainability, we are committed to promoting diversity and inclusion as part of our hiring processes as well as by providing for a healthy, safe, and inclusive work environment and culture, in which our employees are treated with dignity, decency, and respect.

Governance

We are committed to good governance practices and have implemented several compliance and control structures. For instance, we have established a Conflicts of Interest policy and have implemented internal governing boards: Advisory Board, Investment Committeee, and Advisory Panel. Our boards maintain independence in their decision-making. Yet, we aim to make all decision-making processes as transparent as possible. We ensure compliance with applicable laws and regulations throughout our businesses. Vesna VC reviews its regulatory status on a regular basis and adheres to applicable regulations. Moreover, we have implemented strict Know-Your-Customer processes and thus ensure compliance with the Financial Markets Anti-Money Laundering Act (AMLA; aligning with FATF standards.). We are committed to acting according to high ethical standards to which we hold all our employees accountable. Our internal principles, expectations, and values are laid down in a comprehensive Anti-Harassment & Discrimination policy.

Roles and Responsibilities

Our team consists of experienced professionals who are committed to and collectively responsible for our adherence to this ESG policy in all relevant investment decisions and monitoring procedures. Where additional expertise is needed, the team will employ external resources.

This Responsible Investment Policy is effective as of 12 July 2024 and will be reviewed annually by the Fund Management Company.

 

[1] Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”)