Greencode I Ky (the “Fund”) is managed by Greencode Ventures Oy (“GC”). The Fund pursues a venture capital strategy and has sustainable investments as its objective. Sustainable investment means an investment in an economic activity that contributes to environmental or social objectives as defined in Art. 2 no. 17 SFDR. Impact objectives are agreed for each portfolio company prior to the Fund's investment. GC takes into consideration negative adverse impacts of the Fund's investments. GC has set up a clear impact and ESG process as part of initial analysis, due diligence and post-investment engagement with a portfolio company defining and monitoring impact and ESG KPIs.
No significant harm to the sustainable investment objective
The Fund´s impact assessments have the objectives to assess and validate the net positive outcomes of a potential investment against our impact framework and ensure that there are no significant harms and that any potential negative outcomes or externalities are understood, managed and mitigated.
In order to analyze potential negative outcomes, the Fund takes a three step approach first conducting an investment theme screening, second an impact scan and third full impact due diligence. As part of the assessment, the Fund evaluates impact risks and corresponding mitigation strategies. These risks might result from the product, the business model, or the operations of the company, among others. Should a potential portfolio company fail to meet the “do no significant harm” safeguards, the Fund might decide to issue a negative investment or follow-on recommendation.
Sustainable investment objective of the financial product
The Fund has selected a multi-lens approach to reach GCs sustainable investment objective. In other words, instead of choosing one sustainable investment objective (e.g. climate change mitigation as per EU Taxonomy), the Partnership aims to contribute to any of them with a set of impact metrics.
The Partnership’s concept for measuring the sustainable investment objective is: the net impact ratio (considering both positive and negative impact) of its portfolio companies needs to be net positive (above zero).
Further, the business objective of an individual portfolio company needs to be focusing on the green transition (as defined in the investment strategy).
The Fund’s investment strategy is focused on companies whose products or services inherently contribute towards our sustainable investment objectives. GC focuses on early phase companies that utilize rapidly scaling, often digital, business models to address the challenges of green transition with a focus on making a positive impact.
The Fund invests from seed to series A stage, primarily in Europe and Israel.
The investment focus of the Fund is categorized in four main green transition themes: Green energy, Green mobility, Green buildings & living, and Green industries. These green transition themes can be supported by related themes such as broader climate tech themes, circular economy, resource scarcity, biodiversity.
Proportion of investments
At least 90% of the Fund's investments will qualify as sustainable investments. 60% are direct investments into climate start-ups (pursuing environmentally sustainable objectives), while 30% are direct investments in startups with societal impact (pursuing societal sustainable objectives). Out of the sustainable investments with an environmental objective at least 50% are aligned with the EU Taxonomy.
Monitoring of sustainable investment objective
GC continuously monitors the impact objectives of the Fund. Due to GC´s multi-lens approach relevant impact metrics as well as their calculations are decided at the time of investment in a portfolio company. Following the execution of an investment, the Fund's portfolio companies are required to set up quantitative impact KPIs, and these are reported to the Fund and further to the LPs at least on an annual basis. As a part of assessing the Do Not Significant Harm principles, all portfolio companies are asked to complete PAI questionnaires at the end of each year.
The Fund has developed a three step impact assessment approach which is conducted prior to any investment. As a first step of the Fund impact assessment the Fund screens how well an investment target fits with the defined investment themes as part of the investment strategy. With a positive outcome on the investment theme screening the Fund continues with an initial impact scan. This scan checks on the intentionality, additionality, measurability, system-level effect, etc. of the investment targets and helps understand the core of the companies´ business models and their wider effects. As a third step the impact DD further substantiates the findings of the impact scan and, in particular, focuses on the measurability of the investment target's impact. As a result of all steps the Fund derives an impact score which is key to our investment committee decision. The Fund conducts all analysis internally and is solely supported by particular external data impact data providers.
Data sources and processing
For the initial impact assessment, but also throughout the holding period of a portfolio company, Greencode Ventures uses different sources of data ranging from a dedicated impact data provider, market studies, as well as the portfolio company itself providing Greencode Ventures with current business data. Additionally, the market environment of a portfolio company is monitored. The data is stored in the Fund´s data warehouse.
The Fund aims for full data transparency, and circumvents any estimated data sources. Depending on the phase of the company, a proportion of the impact and ESG data might be estimated. Data requests are proportionate to the resources and capabilities of the potential portfolio company. Furthermore, data transparency can only be guaranteed when the Fund is leading/co-leading the round or has sufficient influence over the company's other investors and management.
Limitations to methodologies and data
Even though GC aims at using a sophisticated and rigorous impact assessment approach, there are limitations to the analysis and measurement for several reasons: First of all the Fund invests in early stage companies. At an early phase start-ups might have only limited or no data available. Second, all of the Fund's investments are minority investments with no significant shareholding. In some of these cases the Fund might receive limited or incomplete information, or might not be able to conduct a full analysis of the technology and business model.
GC will assess the actual impact of the portfolio companies on an annual basis.
The Fund’s due diligence (DD) process includes traditional DD components like financial, commercial or legal DD but also impact / ESG DD. As described in methodologies the Fund uses a three step impact assessment approach. Impact DD is the third and fundamental step.
During the due diligence process, all potential portfolio companies are asked to complete a detailed impact and ESG questionnaire or at minimum to provide certain data categories to give insights into the materiality of impact and ESG risks.
GC is driven by the mission to accelerate the green transition and create impact within a decade. GC engagement strategy is driven by our approach laid out in our impact framework. Post investment and setting impact and ESG KPIs, GC on behalf of the Fund engages with its portfolio companies at least on an annual basis to ensure they are on track to achieve their environmental and societal goals. The Fund may engage in the processes and policy creations, but it is generally required of the portfolio companies to take active ownership of their Impact and ESG matters. Should GC identify any potential issues relating the environmental or societal characteristics of a portfolio company, it will engage the portfolio company’s management in discussions with a view to resolving, reducing or mitigating such effects. Such engagement will always remain within a scope considered by GC in its absolute discretion to be proportionate to size and strategic importance of the respective investment in the portfolio companies and shall take into account the respective bargaining positions and transactional context.
Attainment of the sustainable investment objective
No reference benchmark has been designated to attain the sustainable investment objective.
This document was uploaded on 30.06.2023
Date of last update: 30.06.2023
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