REGULATION (EU) 2019/2088 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November on sustainability-related disclosures in the financial sector (the "SFDR")
xista science ventures Management GmbH (“xsv”) considers sustainability risks as part of its investment decision-making process. Sustainability risks are environmental, social or governance events or conditions, the occurrence of which could have an actual or potential material adverse effect on the value of the investment. xsv considers sustainability risks as part of the due diligence process prior to any investment. This also includes an assessment of sustainability risks. Such assessment is being conducted using a questionnaire. The results of such assessment are taken into account when the investment decision is being taken. xsv remains free in its decision to refrain from investing or to invest despite sustainability risks in which case xsv can also apply measures to reduce or mitigate any sustainability risks. xsv will apply the principle of proportionality in dealing with sustainability risks taking due account of the strategic relevance of an investment as well as its transactional context.
xsv considers principal adverse impacts of its investment decisions on sustainability factors. Sustainability factors are environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. In the following section, the first consolidated statement, covering the reference period from September 25, 2023 to December 31, 2023, on principal adverse impacts on sustainability factors of xsv for the following financial products:
Zusammenfassung
xsv berücksichtigt die wichtigsten nachteiligen Auswirkungen der Investitionsentscheidungen auf Nachhaltigkeitsfaktoren. Zu den Nachhaltigkeitsfaktoren gehören Umwelt-, Sozial- und Arbeitnehmerbelange, Achtung der Menschenrechte und die Bekämpfung von Korruption und Bestechung.
Im folgenden Abschnitt wird die erste konsolidierte Erklärung, die den Bezugszeitraum von 25. September 2023 bis 31. Dezember 2023 abdeckt, zu den wichtigsten nachteiligen Auswirkungen auf die Nachhaltigkeitsfaktoren von xsv für die folgenden Finanzprodukte:
Description of the principal adverse impacts in sustainability factors
xsv considers principal adverse impacts of its investment decisions on sustainability factors before and after investments. Sustainability factors mean environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. xsv collects information regarding principal adverse impacts from portfolio companies using a questionnaire prior to the investment as well as on an ongoing basis.
Description of policies to identify and prioritise principal adverse sustainability impacts
Prior to any investment, xsv conducts due diligence. Part of this due diligence includes checking whether the investment could have a negative impact on sustainability factors. This check is performed using a checklist. The necessary information is obtained from the respective portfolio company. After an investment, i.e., during the holding period, a check is carried out at regular intervals to determine whether there have been or could be any adverse effects on sustainability factors. This review is carried out annually based on a checklist. In addition, the portfolio companies are expected to notify xsv in writing on an ad hoc basis if any adverse effects on sustainability factors become apparent. If adverse effects on sustainability factors are identified before or after an investment, they are taken into account in light of the circumstances of the individual case, in particular considering other impacts of the investment, its size, strategic importance and transactional context.
No sustainable investment objective
The Fund promotes environmental or social characteristics but does not have as its objective sustainable investment.
Environmental or Social Characteristics Promoted by the Fund
The Fund promotes environmental and/or social characteristics by implementing certain investment exclusions (see section ‘Investment strategy’) during the decision-making process and by considering principal adverse impacts of its investment decisions on sustainability factors.
Investment Strategy
The purpose of the Fund is to build, hold and manage (including to divest) a portfolio of equity and equity-related investments in portfolio companies. Thereby, the Fund invests in early-stage portfolio companies from all sectors with innovation capacity and growth potential.
The Fund is bound by the investment restrictions and limitations set out in the Fund’s limited partnership agreement and shall procure that such requirements, restrictions and limitations are always complied with. In particular, the Fund will screen each investment opportunity against its investment exclusions and no investments will be made in such exclusions.
The Fund does not invest, guarantee or otherwise provide financial or other support, directly or indirectly, to companies, including portfolio companies, or other entities whose business activity consists of:
Illegal research and innovation activity;
Illegal economic activity,
Tobacco;
Alcohol;
Weapons and ammunition;
Gaming;
Pornography.
Good governance practices are assessed through a 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 regular monitoring of the good governance 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., will only make investments which are aligned with its environmental or social characteristics (i.e., its investment exclusions). The Fund does not make and does not intend to make sustainable investments within the meaning of Art. 2 no. 17 SFDR or environmentally sustainable investments within the meaning of Art. 3 of Regulation (EU) 2020/852 (the "EU Taxonomy"; hence, no portion of its investments will be aligned with the EU Taxonomy.
Monitoring of environmental or social characteristics
The Fund has an increased awareness on the impact of environmental or social characteristics on risk management and thus on the value potential of investments. Prior to making an investment, the Fund provides its portfolio companies with a questionnaire to assess the attainment of its investment exclusions. During the holding period, the Fund uses the sustainability indicator ‘no investments in areas of investment exclusions’ to measure their attainment on a continuous basis. For this purpose, The Fund annually provides its portfolio companies with a questionnaire and will carry out further checks in order to identify potential issues with such characteristics. Further, the Fund uses the adverse sustainability indicators for the consideration of principal adverse impacts listed in the table below and collects the relevant data from its portfolio companies before an investment and on a regular basis.
Download: Principle adverse impacts indicators 2023 (PDF)
Moreover, the Fund will apply best efforts when negotiating an investment into a portfolio company, to reach a side letter agreement requiring the portfolio company to notify the Fund in writing on an ad hoc basis if any ESG-related controversies become apparent and will immediately review all information so provided. Therefore, the Fund monitors compliance with its environmental and/or social characteristics
on an ongoing basis. External monitoring mechanisms are not in place.
Methodologies for environmental or social characteristics
The Fund applies qualitative assessments with regard to its environmental and/or social characteristics. The Fund conducts an initial assessment of the promoted environmental or social characteristics through a questionnaire in the course of its due diligence process, prior to any investment. Based on the results of such assessment, the Fund identifies whether the environmental and/or social characteristics promoted by the Fund are met. During the holding period, the Fund monitors and consults with its portfolio companies on a regular basis to assess whether said characteristics are continuously met. Further, the Fund applies best efforts when negotiating an investment into a portfolio company to reach a side letter agreement requiring the portfolio company to notify the Fund in writing on an ad hoc basis if any ESG-related controversies become apparent. In such case, the Fund immediately reviews all information provided by the portfolio companies and determines at its sole discretion whether any actions need to be taken to address potential or existing adverse effects.
Data sources and processing
In order to attain each of the environmental and/or social characteristics promoted by the Fund, a questionnaire is completed by the (potential) portfolio companies in the course of the due diligence process prior to any investment as well as on an annual basis during the holding period. In addition, the portfolio companies shall notify the Fund in writing on an ad hoc basis if any ESG-related controversies become apparent. Hence, data is obtained only from the (potential) portfolio companies and no (proportion of) data is estimated or supplemented by information publicly available. An internal or external review or verification of the information obtained will be carried out if misrepresentations are suspected.
Limitations to methodologies and data
The information collected via the questionnaire as part of xsv’s due diligence and monitoring processes on behalf of the Fund 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 investment is made for several years, the Fund considers it a priority to establish and maintain a trust within a good working relationship with the portfolio company as a safeguard in light of the limitations described in this section. 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 environmental and/or social characteristics promoted by the Fund is carried out as part of the due diligence process using a questionnaire and, where required based on the inherent ESG risk of the portfolio company, through an enhanced analysis. As a rule, purely qualitative statements of an environmental or social nature or relating to corporate governance are requested from the portfolio companies and then taken into account in the investment decision-making process. 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 environmental or social investment strategy of the Fund. The Fund will engage with its portfolio companies should principal adverse impacts become apparent. Further, should the Fund determine any potential issues relating to its environmental and/or social characteristics or other ESG-related controversies in its portfolio companies, the Fund will engage the portfolio companies’ management in discussions (e.g., in board meetings) in order to resolve, reduce or mitigate any adverse effects. Yet, it remains at the absolute discretion of the Fund to determine which efforts are proportionate in light of the size and strategic importance of the respective investment in the portfolio companies as well as the bargaining positions and transactional context.
Engagement policies
Engagement forms part of the environmental or social investment strategy of the Fund. The Fund will engage with its portfolio companies should principal adverse impacts become apparent. Further, should the Fund determine any potential issues relating to its environmental and/or social characteristics or other ESG-related controversies in its portfolio companies, the Fund will engage the portfolio companies’ management in discussions (e.g., in board meetings) in order to resolve, reduce or mitigate any adverse effects. Yet, it remains at the absolute discretion of the Fund to determine which efforts are proportionate in light of the size and strategic importance of the respective investment in the portfolio companies as well as the bargaining positions and transactional context.
Historical comparison
This section is not yet applicable in the first principal adverse sustainability impacts statement.
As a registered alternative investment fund manager within the meaning of section 1 para (5) of the Austrian Alternative Investment Fund Manager Act (Alternative Investmentfonds Manager-Gesetz, “AIFMG”) and a manager of a qualifying venture capital fund as defined in Art. 3 (b) of Regulation (EU) No. 345/2013 (“EuVECA-Regulation”), xsv does not have and does not need to have a remuneration guideline or policy in accordance with the requirements of the AIFMG or the EuVECA Regulation. Sustainability risks are not considered with respect to the determination of the remuneration.