As 2xN Fund I GP S.à r.l. (the “AIFM”) manages certain alternative investment funds (the “Funds”) registered for marketing under the Alternative Investment Fund Managers Directive (2011/61/EU) (the “AIFMD”) in one or more member states of the European Economic Area (“EEA”), the AIFM is required by the Sustainable Finance Disclosure Regulation (Regulation 2019/2088) (the “SFDR”) to make certain disclosures on its website, including information about the AIFM’s policies on the integration of sustainability risks into its investment decision-making process; its approach to adverse sustainability impacts; and the consistency of its remuneration policies with the integration of sustainability risks. For these purposes, sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
No consideration of sustainability adverse impacts
The AIFM and Nielsen Ventures UK Limited (the “Investment Advisor”) acknowledge that the pursuit of the Funds’ objectives may, in some circumstances, have an impact on certain sustainability factors and, as part of the investment process described below, the AIFM and the Investment Adviser integrate a consideration of sustainability risks arising from ESG related criteria into its investment analysis. However, having considered the size, nature and scale of its activities, and as the primary objective of the Funds is to achieve attractive, sustainable, long-term, risk-adjusted returns by making venture capital investments, the AIFM considers that it would not currently be proportionate for it to comply with the detailed technical standards under the SFDR relating to the principal adverse impacts of its investment decisions on sustainability factors. Therefore, the AIFM does not currently consider the principal adverse impacts of investment decisions on sustainability factors, except to the extent that the AIFM has determined that sustainability factors also materially impact financial returns.
Policies on the integration of sustainability risks into the investment decision-making process
A sustainability risk means “an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment”. For the AIFM and the Investment Advisor, sustainability risks are risks which, if they were to crystallise, would cause a material negative impact on the value of the Fund.
Before any investment recommendations are made to the AIFM, the investment team at the Investment Advisor will complete a process that identifies the material risks associated with each proposed investment; these will include relevant and material sustainability risks. The investment team will consider these risks as part of its review of the relevant investment prior to submitting specific investment proposals to the Investment Advisor’s Investment Committee.
The Investment Advisor’s Investment Committee will assess all the identified risks, including sustainability risks alongside other relevant factors set out in the proposal. Following its assessment, the Investment Committee will decide whether to recommend the investment to the AIFM having regard to the relevant Funds’ investment policies and objectives. The AIFM will make the final investment decision, in light of the sustainability risks as identified in accordance with the foregoing process and other relevant factors. Throughout the entire process, relevant sustainability risks will be identified and assessed using the same process as is applied to other relevant risks affecting the Funds and investments made on their behalf.
Consistency of remuneration policies
The AIFM’s remuneration policies are consistent with its approach to the integration of sustainability risks into the investment decision making process. As sustainability risks are a type of financial risk, the AIFM acknowledges that failure to consider such risks could have an adverse impact on the performance of investments and the performance of funds managed by AIFM. To the extent that sustainability risks have an adverse impact on performance, this is likely to be reflected in the overall level of variable remuneration awarded to staff.