Sustainability Related Disclosures

Mandatory disclosures under Regulation of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (EU) 2019/2088 (“SFDR”):

A. Grazia Capital Management GmbH

Date of Publication: 24.02.2022
Updated on 19.01.2023

I. Transparency of sustainability risk policies (Article 3 SFDR)

Grazia Capital Management GmbH (the “AIFM”) is a long-term investor that embraces its responsibility towards investors, portfolio companies and stakeholders in the wider ecosystem in which the firm and its portfolio companies operate. The AIFM considers sustainability related risks in its investment decision as well as in the management of its investment portfolio. Furthermore, sustainability risks may be considered as part of the due diligence and risk assessment processes in advance of each investment.

II. No consideration of adverse impacts of investment decisions on sustainability factors (Article 4 SFDR)

Article 4 SFDR provides for a framework aimed at achieving transparency with regard to any principle adverse impacts of investment decisions on sustainability factors. For this purpose, financial market participants such as the AIFM must disclose certain information (taking into account the Commission Delegated Regulation (EU) 2022/1288 (“RTS”) with regard to regulatory technical standards). Currently, the AIFM does not take into account any principle adverse impact of investment decisions on sustainability factors as provide for by the RTS, as it believes that the information provided to it by the portfolio companies in relation to the investments is not sufficient to allow it to do so. The AIFM will monitor developments with regard to available information and consider whether it is reasonably possible in the future to disclose the information required by the Article 4 SFDR-framework (including the RTS).

III. Transparency of remuneration policies in relation to the integration of sustainability risks (Article 5 SFDR)

As a registered AIFM within the meaning of section 2(4) of the German Capital Investment Code (Kapitalanlagesetzbuch), the AIFM does not have a remuneration guideline (remuneration policy) in accordance with the requirements of the German Capital Investment Code (Kapitalanlagesetzbuch). Accordingly, the integration of sustainability risks is not considered with respect to the determination of the remuneration.

B. Financial Product: Grazia Impact III GmbH & Co. KG (the “Financial Product”)

Sustainability-related disclosures

I. Summary

The Financial Product, managed by the Grazia Capital Management GmbH (“AIFM”), intends to promote environmental and social characteristics and hence envisages to invest only in ethically and socially sound portfolio companies. The Financial Product focuses on equity and equity-related investments in the area of digital transformation and/or IT services mainly in the DACH region in companies, especially young, innovative and technology-oriented companies (start-ups) (“Investee Companies”).
The Financial Product supports environmental and social measures within its portfolio companies and looks for investments which align with the UN Sustainable Development Goals.
Thus, the AIFM intends to invest in portfolio companies that could have a positive impact on one of the UN Sustainable Development Goals.

II. No sustainable investment objective

The Financial Product promotes environmental or social characteristics (Article 8 SFDR) but does not have sustainable investments (Article 9 SFDR) as its objective.

III. Environmental or social characteristics of the financial product

The Financial Product supports environmental and social measures within its portfolio companies and looks for investments which align with the UN Sustainable Development Goals.

Thus, the AIFM intends to invest in portfolio companies that could have a positive impact on one of the UN Sustainable Development Goals.
Specifically, the Financial Product promotes the following environmental and social characteristics:

Environmental characteristics

  • Affordable and Clean Energy (UN SDG No. 7)
  • Sustainable Cities and Communities (UN SDG No. 11)
  • Responsible Consumption and Production (UN SDG No. 12)
  • Climate Action (UN SDG No. 13)
  • Life Below Water (UN SDG No. 14)
  • Life On Land (UN SDG No. 15)

Social characteristics

  • Zero Hunger (UN SDG No. 2)
  • Good Health and Well-Being (UN SDG No. 3)
  • Quality Education (UN SDG No. 4)
  • Clean Water and Sanitation (UN SDG No. 6)
  • Decent Work and Economic Growth (UN SDG No. 8)
  • Industry, Innovation and Infrastructure (UN SDG No. 9)
  • Reduce Inequalities (UN SDG No. 10)

IV. Investment strategy

The investment strategy guides investment decisions based on factors such as investment objectives and risk tolerance. The Financial Product intends to promote ecological and social characteristics and has adjusted its investment strategy accordingly. During the entire investment process consisting of

  • the pre-investment phase (sourcing and screening),
  • the investment phase (due diligence),
  • the holding phase (portfolio management, monitoring, reporting) and
  • the exit phase (performance evaluation, disclosure)

the Financial Product may apply one or a combination of the following methods to collect information and to assess its alignment with the promotion of the E/S characteristics listed above:

The AIFM will use a questionnaire to assess whether the potential portfolio company contributes to a UN Sustainable Development Goal.
In order to attain each of the E/S characteristics set out above the Financial Product carefully selects its investments opportunities during the pre-investment and investment phase.

The assessment of good governance practices of Investee Companies is incorporated in the Financial Product’s legal due diligence as far as good governance practices have been adopted by law.

V. Proportion of investments

The Financial Product does not commit to make sustainable investments within the meaning of the SFDR and the TAXR. However, the Financial Product targets that at least 50% of its investments will be aligned with E/S characteristics, i.e. contribute to at least one of the UN SDG. Since the Financial Product’s asset portfolio consists a blind pool, it reserves the discretion to make sustainable investments and investments in “Other” assets in accordance with its investment strategy as provided in the additional information and accompanying marketing documents.

The Financial Product does not commit to a minimum extent to make sustainable investments with an environmental objective aligned with the EU Taxonomy. In most of the Investee Companies the Financial Product will participate as a minority shareholder. The legal limitations of this position do not allow the Financial Product to ensure full compliance with all requirements set out by the SFDR and the TAXR for sustainable investments with an environmental objective aligned with the EU Taxonomy. In particular, the Financial Product cannot monitor the compliance of the "do not cause significant harm" principle in all its Investee Companies by economically reasonable means. It also assumes that monitoring and reporting on the compliance of this principle would place an economically disproportionate burden on the usually small management teams of its Investee Companies.
The Financial Product does not commit to make sustainable investments with an environmental objective aligned with the EU Taxonomy and will therefore not have a minimum share of investments in transitional and enabling activities.

VI. Monitoring of environmental or social characteristics

In order to attain each of the E/S characteristics set out above the Financial Product carefully selects its investments opportunities during the pre-investment and investment phase.

During the entire investment process consisting of

  • the pre-investment phase (sourcing and screening),
  • the investment phase (due diligence),
  • the holding phase (portfolio management, monitoring, reporting) and
  • the exit phase (performance evaluation, disclosure)

the Financial Product will apply the method described under VII. and X. to collect information and to assess its alignment with the promotion of the environmental and social characteristics.

VII. Methodologies for environmental or social characteristics

The AIFM will use a questionnaire to assess whether the potential Investee Company contributes to a UN Sustainable Development Goal.
As sustainability indicator the AIFM will report on the ratio between all investments and investments aligned with at least one UN Sustainable Development Goal.

VIII. Data sources and processing

Apart from its due diligence (as described below under X. in further detail), monitoring and regular communication between the AIFM and the Financial Product’s Investee Companies, the AIFM does not conduct further research or investigations on a regular basis, at least as long as the data reported by the Investee Companies does not give rise to any reasonable doubts.

IX. Limitations to methodologies and data

In most Investee Companies the Financial Product will participate as a minority shareholder. The legal limitations of this position do not allow the Financial Product to ensure full compliance with all requirements set out by the SFDR and the EU Taxonomy for sustainable investments with an environmental objective aligned with the EU Taxonomy. In particular, the Financial Product cannot monitor the compliance of the “do not cause significant harm” principle in all its Investee Companies by economically reasonable means. It also assumes that monitoring and reporting on the compliance of this principle would place an economically disproportionate burden on the usually small management teams of its Investee Companies.

X. Due diligence

The assessment of how the Financial Product’s potential investment in the potential Investee Company relates to the promoted environmental and social characteristics is carried out as part of the due diligence process prior to the investment. Further reviews may be conducted beyond such due diligence process and regular monitoring if, and to the extent, the AIFM deems it appropriate to conduct an ad hoc review in a specific case. The AIFM does not foresee to engage external service providers to assess the environmental and social characteristics of a potential investment.

XI. Engagement policies

The assessment of good governance practices of portfolio companies is incorporated in the Financial Product’s legal due diligence as far as good governance practices have been adopted by law.