REGULATION (EU) 2019/2088 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 27 November on sustainability-related disclosures in the financial sector
In accordance with the Regulation (EU) 1019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR“), IST cube Management GmbH (“IST cube”) 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. IST cube 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. IST cube remains free in its decision to refrain from investing or to invest despite sustainability risks in which case IST cube can also apply measures to reduce or mitigate any sustainability risks. IST cube 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.
Principal adverse sustainability impacts statement
IST cube considers principal adverse impacts of its investment decisions on sustainability factors before and after investments in portfolio companies. Sustainability factors are environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. No sustainability indicators are currently used. IST cube gathers information regarding principal adverse impacts from portfolio companies using a questionnaire prior to the investment as well as on an ongoing basis. This statement dates as of March 10, 2022.
Description of principal adverse sustainability impacts
IST cube has not identified any adverse sustainability impacts related to its investments to date.
Description of policies to identify and prioritise principal adverse sustainability impacts
Prior to any investment, IST cube 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 IST cube 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.
IST cube decides at its sole discretion whether or not to make an investment in light of principal adverse impacts on sustainability factors, and IST cube may apply risk mitigation measures where appropriate. IST cube organizes an onboarding session for each portfolio company it invests in. During such onboarding sessions, IST cube discusses with and explains to the management of those portfolio companies how they can incorporate and implement consideration of adverse impacts into their daily operations.
References to international standards
IST cube is not a member of any international bodies, organizations or required by any national or international convention or standard to comply with any further requirements.
IST cube (EuVECA) GmbH & Co KG (the “Fund”) incorporates ESG principles within its investment processes and within its monitoring processes. Sustainable investment is not an objective of the Fund.
No sustainable investment objective
Sustainable investment is not an objective of the Fund.
Environmental or social characteristics of the financial product
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:
- Weapons and ammunition
The Fund invests in selected portfolio companies in accordance with its investment strategy.
Proportion of investments
The Fund does not invest a fixed percentage in portfolio companies aligned with environmental and/or social characteristics. The Fund will invest fully in line with its investment strategy. No portion of the Fund’s capital will be allocated to other asset classes.
Monitoring of environmental or social characteristics
IST cube monitors for the Fund ESG compliance on an ongoing basis. On an annual basis, IST cube provides its portfolio companies with a questionnaire to assess any potential or existing adverse sustainability impacts. IST cube carefully reviews such completed questionnaires upon receipt. Furthermore, IST cube will apply best efforts when negotiating an investment into a portfolio company, to reach a side letter agreement requiring the portfolio company to notify IST cube in writing on an ad hoc basis if any adverse effects on sustainability factors become apparent. In such cases, IST cube reviews all information provided ad hoc by the portfolio companies and determines in its sole discretion whether any actions need to be taken to address any potential or existing adverse impacts.
Currently, the methodologies applied comprise of collecting information via a questionnaire from the portfolio companies following the investment. Additionally, IST cube will apply best efforts when negotiating an investment into a portfolio company, to reach a side letter agreement requiring the portfolio company to notify IST cube in writing on an ad hoc basis if any adverse effects on sustainability factors become apparent. There is currently no quantitative measurement with regard to environmental or social characteristics and no sustainability indicators are currently used.
Data sources and processing
The questionnaire is completed by the portfolio company. Further research and investigation by IST cube is not being conducted regularly.
Limitations to methodologies and data
The information collected via the questionnaire as part of IST cube’s due diligence on behalf of the Fund is 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, IST cube 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.
Should IST cube on behalf of the Fund determine any potential issues relating the environmental or social characteristics, it will engage the portfolio company’s manager in discussions (e.g. in board meetings) with a view to resolving, reducing or mitigating such effects, provided that such efforts will always remain within a scope considered by IST cube in its absolute discretion to be proportionate in light of the size and strategic importance of the respective investment in the portfolio companies and shall take into account the respective bargaining positions and transactional context.