Regulation (EU) 2019/2088 of 27 November 2019 on sustainability‐related disclosures in the financial services sector (“SFDR”)
SFDR imposes new transparency obligations and periodic reporting requirements on investment management firms (including managers of qualifying venture capital funds within the meaning of Regulation EU No 345/2013) at both a product and firm level. SFDR forms part of the European Commission’s action plan on sustainable finance.
3TS Capital Partners Oy as shareholder and investment advisor of TCEE Fund IV GP Sàrl a Luxembourg based European venture capital fund manager makes the following disclosure in accordance with SFDR.
Integration of Sustainability Risks
Sustainability risks, being environmental, social or governance events or conditions that, if they occur, could cause a negative material impact on the value of the investments, are considered by TCEE Fund IV Sàrl in its investment processes and due diligence procedures.
TCEE Fund IV Sàrl adopts and implements environmental and social due diligence and monitoring in respect of each of the target portfolio companies of a European venture capital fund managed by it. Certain sectors are completely excluded from investment on environmental, social or governance grounds. The risk management policy of TCEE Fund IV Sàrl identifies sustainability risks as one of those categories of risk to be monitored in the investment and due diligence process.
Principal Adverse Impacts
In relation to the consideration of principal adverse impacts, TCEE Fund IV Sàrl notes that there are still a number of uncertainties regarding this obligation, in particular because the relevant regulatory technical standards have not yet been finalised by the European authorities. While supportive of the policy aims of the principal adverse impact regime, TCEE Fund IV Sàrl is considering its approach in this area and does not currently consider principal adverse impacts. This decision will be kept under review pending the publication of the final regulatory technical standards and further details will be provided in due course.
TCEE Fund IV Sàrl is remunerated by means of a management fee calculated on either capital commitments to a European venture capital fund managed by it or acquisition costs of investments and is subject to a cap. Such mechanism does not encourage excessive risk taking and is thus consistent with the integration of sustainability risks into the investment decision making process. Affiliates of TCEE Fund IV Sàrl are entitled to receive a special return which is dependent of the financial returns of a European venture capital fund managed by it. The risk management process in place regarding the investment decision making process ensures that excessive risk is not encouraged (including as regards sustainability risks).