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Green River Fund

EU SFDR Disclosure
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Pursuant to Article 9 of Regulation (EU) 2019/2088

Presentation of financial products that have sustainable investments as their objective, financial market participants shall publish the information referred to in Article 10(1) of Regulation (EU) 2019/2088

Product name: ClimatePoint Green River (referred to as “the Fund”).

An “Investment” is a company (public or private) that the Fund owns equity in.

The methodology used for quantifying and forecasting potential impact of technology solutions is herein defined as “Impact Methodology”.

1. Summary

The Fund directly and indirectly invests in early-stage companies offering products or services that have the potential to 1) significantly reduce global greenhouse gas emissions, and 2) operate in accordance with the requirements outlined by Article 9 by the Sustainable Finance Disclosure Regulation (SFDR). The SFDR requires investments to have sustainable objectives in line with the EU Taxonomy that avoid specified harms to other environmental objectives. The UN Sustainable Development Goals (SDGs) are also considered during the investment process to show alignment or potential alignment with specified targets and indicators, the fund has a particular focus on SDG #13 – Climate Action.

The Fund utilizes the Impact Methodology to 1) quantitatively assess scope 1,2,3 and 4 avoided emissions and project these according to forecast presented by the Investment. Additional requirements of the SFDR, inclusive of the EU Taxonomy are assessed by the Investment Manager and integrated into the due diligence process as well as ongoing portfolio monitoring.

2. Climate change mitigation as our investment objective

a. Consideration of principal adverse impacts indicators

The funds consideres the Princniple Adverse Impacts of the investment decisions. The assessment of an investment’s performance on the “Do No Significant Harm (DNSH)” principle will occur in relation to the investment’s performance on Principle Adverse Impacts (PAIs).

The fund will monitor investments on the mandatory Principal Adverse Impacts (PAIs) and track the evolution. If performance of these indicators significantly worsen, the Fund will take adequate actions and consider divesting.

For full overview of the Funds Principle Adverse Impact data, see Annex II of the peridic reports.

The Fund also commits to monitor the investments for social and environmental controversies. If a controversy is found, the Fund will take adequate actions to retain its ethical guidelines, potentially leading to divestment.

a. Alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights

The Fund make use of an Investment Exclusion List, aligned with OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights to comply with minimum safeguards. Alignment is ensured through engagement with investments, addressing the topics of:

Norm-based exclusion:

  • Systematic violations of international law, norms, and human rights
  • Systematic violations of international law, norms, and human rights
  • Severe environmental degradation

Product/industry-based exclusion

  • Activities that contribute to significant increases in CO2 emissions
  • Production, trade and/or distribution of controversial weapons
  • Production, trade and/or distribution of tobacco
  • Activity of prostitution or procuring of prostitutes
  • Production, distribution, or sale of pornography
  • Manufacture or marketing of casinos or other gambling activities

The Fund will engage with investments and ensure that there is adequate implementation of due diligence procedures, internal controls, assigned personnel, and relevant policies & procedures in place. The Fund also assess the Investment in light of the UN Principles for Responsible Investments (PRI).

3.   Sustainable Investment Objective of the Financial Product

The Sustainable Objective of the Fund is Climate Change Mitigation and a reduction of adverse resource requirements currently existing within various industries. The Fund will achieve this objective with the following strategic focus: 

  • By investing indirectly through leading climate investment structures for the acceleration of the green economy.
  • By investing in companies that develops technology that will provide substantial global emission reductions by replacing emission intensive technology
  • By investing in companies that develops technology that reduces and mitigates global water consumption, land use and adverse resource requirements
  • By investing in companies that develops enabling technology for circular consumption and production patterns, driving the shift from a linear to a circular economy
  • By investing in companies that develops carbon capture and sequestration technologies for carbon removal.

The fund will Invest in secotrs considered to attain a significant potential for climate change mitigation and GHG emission reductions, identified as:

o   Food & Agrotech

o   Travel & Mobility

o   Building & Construction

o   Circular Economy

4.   Investment Strategy

a. The investment strategy used to attain the sustainable investment objective.

To ensure that the investment objectives are being obtained, the Fund follows strict investment criteria. The Fund’s investment opportunities are filtered by an internal scorecard. Maximum score is 50. Only companies with a ‘ClimatePoint score’ greater than 45 is accepted.

The score is determined by: (Weighted percentage)

  • ESG due diligence (40%)
  • Overall assessment of investment opportunity (20%)
  • Management (15%)
  • Financial Due Diligence (10%)
  • Risk & Considerations (5%)
  • Business Due Diligence (5%)
  • Board members (2.5%)
  • Additionality (2.5%)

In addition, the Fund follows other strict investments criteria, placing investments in companies that comply with (A), (B), (C) and, (D).

(A) A Life Cycle Assessment (LCA) is performed to the extent of which is capable to the technology of the time of investment. The outcomes are designed to convey:

  • Scope 4 avoided impact is significant and valid with respect to market and scalability ambitions.
  • Highlighting key assumptions and risks related to climate impact.
  • Determining the key drivers of impact and potential indicators for areas of improvement.

(B) The Investment is Taxonomy aligned or has potential for alignment. This implies that the Investment must contribute substantially to minimum one of the six objectives, while not causing significant harm to any of the other objectives. The Fund utilizes the Technical Screening Criteria of the Taxonomy Regulation (TSC) to determine the specific requirements and thresholds for an activity to be considered Taxonomy Aligned. The EU commission is still publishing substantial contribution criteria for a variety of industries and sectors, therefore exceptions will be made for technologies that do not fall into the category of published materials.

(C) The Investment targets SDG #13 Climate Action. Other Sustainable Development Goals contributes positively to the overall assessment of the investment opportunity. However, an investment will not be executed unless SDG #13 is aligned or demonstrates potential for alignment.

(D) The Investment complies with SFDR Article 9. This implies that the Investment must be an economic activity that contributes to an environmental or social objective, provided such activity does not significantly harm any other environmental/social objective and that the Investment follows good governance practices, with respect to sound management structures, employee relations, remuneration of staff, and tax compliance.

If the Investment is in material breach of the above the Fund is entitled to divest its Securities in the Investment.

b. The policy to assess good governance practices of the investee companies, including with respect to sound management structures, employee relations, remuneration of staff and tax compliance.

The Fund has committed to ensuring good governance practices among its investees and this engagement has been solidified through a formalized policy. There is a systematic process to engage with Investments on good governance practices. Good governance related to topics from prevention of corruption & bribery to board member independence. These are important topics which relate to the Investment’s integrity and resiliency. It protects investments from exposure to legal and reputational risks. Further information and details on this policy are available on request from internal personnel.

5. Proportion of investments

The Fund will only invest in accordance with its investment strategy as outlined above. In addition, the Fund has a following distribution of investments:

  • 100% must be between the stages of Angel and Series A.
  • Minimum 70% of investments must be within Scandinavia.
  • 70% of investments should be co-investments, the remaining 30 can be single investments, taking the lead.
  • Minimum 70% of investments should be EuVECA aligned:

- <250 employees - Revenue < €50millions - Annual Balance < €43 millions

6.   Monitoring of Sustainable Investment Objective

The Investment manager evaluates if the sustainable investment objective has been attained. This is achieved through quarterly reports from the Investment reporting on their climate impact, applying the Impact Methodology. In addition, a yearly climate due diligence is conducted to ensure that the Investment is aligned with the Fund’s objectives. Furthermore, by obtaining a detailed emission profile on each portfolio company, the fund is in a unique position to assist the investee companies in their GHG emission reduction efforts.

Workflow for portfolio GHG emission reductions:

  • During the due diligence process, a climate LCA on prospective companies are performed. From this data, the fund identifies and provides the portfolio companies valuable insights as to which processes that will be the most effective for the companies to focus on with respect to optimising their sustainabilty and GHG emission reductions.
  • The Investment manager also practice an ergodic investment strategy where the fund's network of sustainable solutions is levraged to direct the portfolio companies towards synergetic collaboration opportunities for sustainability optimisation and GHG emission reductions.

7.   Methodologies

As of September 2022, ClimatePoint is a member of, Project Frame, a working group established by Prime Coalition and World Fund, that aims to solve how investors can effectively track and project their investment’s contribution towards real world outcomes. Project Frame has published a methodology on how to account for scope 4 avoided emissions. ClimatePoint implements this strategy with its own internal assessments of projected GHG emissions and climate impact.

The calculations in the Impact Methodology are grounded in Lifecycle Assessment methods used in academic research and the International Organization for Standardization (ISO) 14040. The calculations involve data related to (inter alia) emission projections, growth projections and performance metrics of incumbent technologies. The Impact Methodology integrates Project FRAME’s avoided impact philosophies with this ISO Standard to align international impact investing communities with regulatory impact expectations. More information is available at ClimatePoint

8. Data Sources and Processing

a. The Data Sources Used to Attain the Sustainable Investment Objective

To attain the Sustainable Investment Objective, the Fund and the Investment work together, using data from public databases and verifiable data from the Investment’s own operations. The Impact Methodology is then used to assess the Investment’s performance on scopes 1-3 Greenhouse Gas Emissions, as well as scope 4 GHG Emission Avoidance, the impact indicator used to measure achievement of the Fund’s objective, climate change mitigation.

b. Measures Taken to Ensure Data Quality

The Fund and the Investment:

  • Use validated data from the Investment.
  • Use high-quality LCA databases and scientific sources.
  • Follow relevant ISO and GHG Protocol standards for LCA development.
  • Get third party verification of LCAs when sufficiently mature.

c. How is Data Processed

The Fund collects data through a formalized engagement procedure. The Investments are engaged at quarterly intervals to secure up-to-date business data. This data affects climate impact calculations (present and projected), which are updated accordingly.

d. The Portion of Data Estimated

The Fund will estimate GHG emissions, including avoided emissions, of all investments on an ongoing basis, as part of the reporting. All the projected impact of the Investment is estimated and projected according to the business forecast of the solution technology. The Impact Methodology is correlated with this activity, to develop precise modelling of investment impact.

9. Limitations to Methodologies and Data

The methodologies outlined throughout this document allow for reasonably precise snapshot of impact calculations. However, projections into the future will always be fraught with uncertainty.

  • The Fund is aware of the limitations to the Impact Methodology and the data collected associated with the sustainability indicators. While Life Cycle Assessments is an established methodology with rapidly increasing and improving datasets for economic activities, there will always be a lag between the data in the databases and operations in the real world. Also, while 3rd party verification and standards (like GHG Protocol) go a long way to harmonize LCA outputs, there is still room for variability in the selection of system boundaries and reference technologies.

  • Why such limitations do not affect the attainment of the sustainable objective of the financial product: The limitations above are either unavoidable or too complex to properly account for, with the resources the Fund possesses. As such, the methodology presented is the best available. The Impact Methodology is deemed to adequately contribute to the defined sustainable objective targeted by the Fund.

  • Process items that cannot be confidently quantified, are identified as qualifiable variables. These are assessed and ranked with priority and importance, to designate ongoing points of interest and additional development of the analysis.

  • The actions taken to address such limitations: The Fund will regularly review the methodologies and data used to assess the attainment of the sustainable investment objective to ensure the most up-to-date approach possible. When severe limitations are identified, actions will be taken to overcome them.

10. Due Diligence

The Fund carries out ESG due diligence on all prospective investments to identify and analyze any risks of controversies or issues related to social, environmental, human rights, ethical or governance matters. The sustainability portion of the due diligence process covers climate change mitigation impact, ESG issues, and EU Taxonomy Alignment. The pre-investment sustainability assessment process is in accordance with the overall investment objectives. The ESG risk assessment includes a range of Principal Adverse Indicators as set out in the EU Commission’s delegated regulation supplementing Regulation (EU) 2019/2088 (the Sustainable Finance Disclosure Regulation). The Fund considers the 14 mandatory environmental, social and governance indicators of PAIs.

11. Engagement Policies

For engagement activities that are conducted in response to an incident or due to insufficient adaptive capacity, Investments will be given the opportunity to improve. The main objective of the Fund’s engagement activities is to reduce principal adverse impacts of investments and enhance the positive impacts of the Investments’ operations. However, the Fund does not hold voting rights nor board seats, hence the action made in case of violations to its objectives is divestment.

12.   Attainment of the Sustainable Investment Objective

The Fund is committed to having a positive impact in the fight against climate change, in alignment with the Paris Agreement. Given that there is no relevant benchmark index for early-stage businesses, an index has not been designated as a reference benchmark. The Fund ensures alignment with the Paris Agreement on climate change by focusing on deep decarbonization technologies. In addition, where Paris-aligned CO2e emission intensity levels for a given industry/vertical have been determined, the technologies invested in must, as a minimum, deliver on those levels.

Date of last update: 23 June 2023

Please do not hesitate to contact us for further queries at [email protected]

ClimatePoint
Funding the Future

ClimatePoint AS Universitetsgata 12, 0157 Oslo

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