From 10th March 2021, a new regulation on sustainability-related disclosures in the financial services sector applies to all EU market participants, including venture capital funds. MVP Management GmbH (“MVP”) is a Capital Management Company within the meaning of the German Capital Investment Code. It publishes the following information on its website in accordance with Regulation (EU) 2019/2088 on sustainability-related disclosure requirements in the financial services sector. Unless information is explicitly provided in relation to a specific fund managed by MVP, the following statements refer to MVP’s management and investment decision-making processes in general.

MVP focuses on investments in Transformative Technologies which have the potential to fundamentally change value chains in today’s major industry verticals. Following the concept of the Triple Top Line, MVP supports startups to create solutions for holistic value creation for economic wealth, environmental prosperity, and social equity. MVP’s investment decisions reflect environmental, social, and governance (ESG) considerations, and the evaluation of ESG related risks and opportunities is an integral part of the investment strategy. As signatory of the UN Principles for Responsible Investment (PRI), MVP supports and welcomes the move towards greater transparency in sustainability related disclosures for the industry.

This publication dates as of March 10th, 2021.

Summary

MVP considers principal adverse impacts of investment decisions on sustainability factors. Sustainability factors are environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

To identify, evaluate, and prevent principal adverse impacts on ESG criteria, the assessment of ESG related risks and opportunities is an integral part of MVP’s investment strategy. Prior to an investment, ESG matters are evaluated as part of the due diligence process. Furthermore, all investees are required to report on ESG criteria at least once per year. In case risks or adverse sustainability impacts are identified, a mitigation strategy is being developed.

The present statement is the consolidated principal adverse sustainability impacts statement of MVP. The statement dates as of March 10th, 2021 and is valid until to date.

Zusammenfassung

MVP berücksichtigt die wichtigsten negativen Auswirkungen von Investitionsentscheidungen auf Nachhaltigkeitsfaktoren. Bei den Nachhaltigkeitsfaktoren handelt es sich um Umwelt-, Sozial- und Arbeitnehmerbelange, die Achtung der Menschenrechte sowie Korruptions- und Bestechungsbekämpfungsbelange.

Um die wichtigsten negativen Auswirkungen auf ESG-Kriterien zu identifizieren, zu bewerten und zu verhindern, führt MVP im Rahmen der Due-Diligence-Prüfung vor einer Investition eine ESG-Bewertung durch. Darüber hinaus sind alle Beteiligungsunternehmen verpflichtet, mindestens einmal pro Jahr über ESG-Kriterien zu berichten. Für den Fall, dass Risiken oder nachteilige Auswirkungen auf die Nachhaltigkeit festgestellt werden, wird eine Strategie zur Risikominderung entwickelt.

Die vorliegende Erklärung ist die konsolidierte Erklärung über die wichtigsten negativen Auswirkungen der Nachhaltigkeit von MVP. Diese Erklärung datiert vom 10. März 2021 und ist bis zu diesem Datum gültig.

Description of principal adverse sustainability impacts

MVP considers principal adverse impacts of investment decisions on sustainability factors on portfolio company level. Principal adverse impacts on sustainability factors are to be understood as those impacts of investment decisions that have adverse impacts on sustainability factors. Sustainability factors mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

Description of policies to identify and prioritize principal adverse sustainability impacts

The assessment of ESG related risks and opportunities is an integral part of MVP’s investment strategy. Prior to each investment, ESG risks and opportunities are evaluated as part of the due diligence process. The results of this assessment are considered when taking investment decisions. Additionally, ESG performance targets are defined, where appropriate.

During the holding period, the ESG practices of portfolio companies are monitored through company specific key performance indicators (KPIs). These metrics have been developed in accordance with the GRI G4 Sustainability Reporting Guidelines, the ICGN Global Corporate Governance Principles, the EFFAS ESG Guidelines, as well as the IRIS metrics. Investees are required to report on the KPIs once per year based on a specific questionnaire. The data gathered is transferred into the MVP reporting tool giving objective statistics and a comprehensive overview about the ESG compliance and progress of the portfolio companies. This enables to identify ESG related issues, early and encourage and support actions for improvement. In case risks or adverse sustainability impacts are identified, MVP takes its best effort to develop a mitigation strategy with the respective company.

Engagement policies

MVP requires from its portfolio companies to report once per year on ESG related issues via an annual questionnaire. In addition, the MVP team undertakes multiple interactions per year with regard to ESG with its investees via e-mail, letter, phone call, meetings, or Board of Directors and shareholder meetings with a view to support the sustainable development of the company. Particularly if represented on the Board of Directors of the portfolio company, the team strives to actively provide value-adding input.

In its free discretion, MVP may decide to make an investment even if risks of potential adverse impacts have been determined. In such case, MVP may apply appropriate mitigation measures including but not limited to offering training for portfolio companies to support their capacity to control, mitigate, and/or reduce such adverse impacts.

References to international standards

To ensure sustainability and ESG compliance, investees are monitored through company specific key performance indicators (KPIs). These metrics have been developed in accordance with different international standards such as the GRI G4 Sustainability Reporting Guidelines, the ICGN Global Corporate Governance Principles, the EFFAS ESG Guidelines, as well as the IRIS metrics.

Summary

MVP Fund II GmbH & Co. KG (“MVP Fund II” or “the Fund”) is managed by MVP Management GmbH (“MVP”). The Fund pursues a venture capital strategy and focuses on investments in transformative technologies which have the potential to fundamentally change value chains in today’s major industry verticals. The Fund promotes environmental or social characteristics but does not have as its objective a sustainable investment. As such, MVP Fund II qualifies as Article 8 product.

As signatory of the UN Principles for Responsible Investment (PRI), MVP has a long-standing history in implementing ESG assessment into venture capital investments. Building on this successful heritage, the Fund is committed to remain a leader in this field. Hence, the integration of ESG criteria in investment decision-making and management is an integral part of the Fund’s strategy. Additionally, MVP has developed an in-house assessment framework enabling to monitor and manage the attainment of the environmental or social characteristics of the Fund which has its roots in the Triple Top Line approach. The Triple Top Line serves both as a due diligence framework as well as a strategic management tool using sustainability indicators, which enables portfolio companies to contribute to the UN Sustainable Development Goals (SDGs).

The Funds’ investments are contributing to the following environmental objectives as outlined in the EU Taxonomy: Climate change mitigation, Climate change adaptation, Transition to a circular economy, Pollution prevention and control, and Protection and restoration of biodiversity and ecosystems.

Summary

Die MVP Fund II GmbH & Co. KG (“MVP Fund II” oder “der Fonds”) wird von der MVP Management GmbH (“MVP”) verwaltet. Der Fonds verfolgt eine Risikokapitalstrategie und konzentriert sich auf Investitionen in transformative Technologien, die das Potenzial haben, die Wertschöpfungsketten in den wichtigsten Industriezweigen von heute grundlegend zu verändern. Der Fonds fördert ökologische oder soziale Merkmale, verfolgt aber nicht das Ziel einer nachhaltigen Investition. Daher ist MVP Fund II ein Produkt nach Artikel 8.

Als Unterzeichner der UN Principles for Responsible Investment (PRI) verfügt MVP über eine langjährige Erfahrung bei der Implementierung von ESG-Bewertungen in Risikokapitalinvestitionen. Aufbauend auf diesem erfolgreichen Erbe ist der Fonds bestrebt, in diesem Bereich weiterhin eine führende Rolle zu spielen. Daher ist die Integration von ESG-Kriterien in die Investitionsentscheidungen und das Management ein wesentlicher Bestandteil der Fondsstrategie. Darüber hinaus hat MVP einen internen Bewertungsrahmen entwickelt, der es ermöglicht, die Erreichung der ökologischen und sozialen Merkmale des Fonds zu überwachen und zu verwalten, und der seine Wurzeln im Triple Top Line-Ansatz hat. Die Triple Top Line dient sowohl als Rahmen für die Due-Diligence-Prüfung als auch als strategisches Managementinstrument unter Verwendung von Nachhaltigkeitsindikatoren, die es den Portfoliounternehmen ermöglichen, einen Beitrag zu den UN-Nachhaltigkeitszielen (SDGs) zu leisten.

Die Investitionen der Fonds tragen zu den folgenden Umweltzielen bei, wie sie in der EU-Taxonomie beschrieben sind: Eindämmung des Klimawandels, Anpassung an den Klimawandel, Übergang zu einer Kreislaufwirtschaft, Vermeidung und Bekämpfung von Umweltverschmutzung sowie Schutz und Wiederherstellung von Biodiversität und Ökosystemen.

Sustainability focus of the Fund

MVP II pursues a venture capital strategy and focuses on investments in startups that develop transformative technologies to fundamentally change value chains in today’s major industry verticals. Investees are predominantly startups that have a measurable positive environmental and social impact while building a scalable profitable business. This includes among other companies that address climate change, resource efficiency, the adoption and utilization of low-emission energy sources, regenerative agriculture and more.

The Fund promotes environmental or social characteristics but does not have as its objective a sustainable investment. As such, MVP Fund II qualifies as Article 8 product.

Environmental or social characteristics of the Fund

MVP is convinced, that the active management of ESG related issues has an impact on the financial performance of our portfolio and helps us grow profitable and sustainable businesses practices. As such, the MVP continuously monitors the environmental or social characteristics of the Fund.  As signatory of the UN Principles for Responsible Investment (PRI), MVP has a long-standing history in implementing ESG assessment into venture capital investments. Building on this successful heritage, the Fund is committed to remain a leader in this field.

The Funds’ investments are contributing to the following environmental objectives as outlined in the EU Taxonomy: Climate change mitigation, Climate change adaptation, Transition to a circular economy, Pollution prevention and control, and Protection and restoration of biodiversity and ecosystems.

The integration of environmental, social, and governance (ESG) criteria in investment decision-making and management is an integral part of the Fund’s strategy. Additionally, MVP has developed an in-house assessment framework enabling to monitor and manage the attainment of the environmental or social characteristics of the Fund which has its roots in the Triple Top Line approach. The Triple Top Line serves both as a due diligence framework as well as a strategic management tool using sustainability indicators, which enables portfolio companies to contribute to the UN Sustainable Development Goals (SDGs).

Details on the performance of the Fund on environmental and social characteristics are published in the annual MVP Sustainability Report on the website.

Investment strategy and a description of the policy to assess good governance practices

In addition to generating superior financial returns for our investors, MVP Fund II focuses on investments generating positive environmental and societal impact. We therefore put great effort in our portfolio companies not only leaving the lowest environmental footprint possible as well as applying the highest social standards but enhancing nature and society as a whole. Our commitment focuses on European investments within the most CO2 emission-intensive value chains such as energy, mobility, agtech and food, as well as the industrial sector

The evaluation of ESG related risks and opportunities is an integral part of our investment strategy. The Fund`s risk management processes consider such sustainability risks by way of identifying, mitigating, or offsetting risks early and effectively. This includes the consideration of potential adverse effects of investment decisions.
For that purpose, ESG practices are assessed and managed in the due diligence phase and on a yearly basis. The results and findings are examined with the investment managers, who can bring ESG risks and opportunities to the attention of the Board of the respective company.

The investment and management process of the Fund‘s sustainable investment objectives are guided by the following principles:

  1. MVP incorporates ESG considerations into the investment and decision-making process as well as into exit and post-investment considerations.
  2. MVP proactively drives the incorporation of ESG matters in the management practices of the portfolio companies.
  3. MVP is dedicated to continuously improve the implementation of ESG principles within the portfolio companies.
  4. MVP continuously improves the transparency and monitoring of ESG issues in portfolio companies.

Furthermore, we use the Triple Top Line as strategic tool to develop and pursue defined sustainability KPIs. Read more about the Triple Top Line.

Proportion of investments

The Fund invests in line with its investment strategy as described above. For all investments of the Fund an ESG assessment is performed annually. 10 out 13 investments of the Fund have the potential to make a significant positive environmental or social impact globally. Nonetheless, also the remaining 3 investments fulfill minimum environmental and social safeguards and are monitored and managed in accordance with the described ESG methodology.

Monitoring of environmental or social characteristics

MVP constantly monitors the environmental and social characteristics and performance of the Fund. For that purpose, our portfolio companies are required to report on ESG and Triple Top Line KPIs once per year. Monitoring and reporting models are regularly updated in consultation with the portfolio companies to reflect changes in the startup’s processes or products.

The ESG reporting of each portfolio company is assessed by the MVP team. The results and findings are examined with the investment managers, who can bring ESG risks and opportunities to the attention of the Board of the respective company.

Methodologies 

Besides the ESG methodology described above, the MVP has developed an in-house assessment framework which has its roots in the Triple Top Line approach. At MVP, we believe that economic, environmental, and societal value are not trade-offs but mutually reinforcing factors, which is also the fundamental premise behind the Triple Top Line concept. It serves both as a due diligence framework as well as a strategic tool, which enables our companies to develop their products towards the SDGs (UN Sustainable Development Goals). Thus, we implement Triple Top Line framework as a strategic steering tool within our portfolio companies, delivering long-term and measurable impact.

Data sources and processing

Portfolio companies are required to report on ESG and Triple Top Line KPIs once per year. For some companies, the reported data is based on assessments conducted by third parties, e.g., life cycle analysis.

For the reporting, each portfolio company has a dedicated set of KPIs that are most relevant for its respective business operations. These KPIs have been developed in accordance with the GRI G4 Sustainability Reporting Guidelines, the ICGN Global Corporate Governance Principles, the EFFAS ESG Guidelines, as well as the IRIS metrics.

The Fund gathers the data on sustainability performance from its investments and reports it accumulated to its investors on an annual basis. The Fund’s sustainability performance is furthermore communicated to the public in MVP’s annual Sustainability Report which can be accessed on the website.

Limitations to methodologies and data

While the current ESG methodology and Triple Top Line framework allow to identify an order of magnitude for impact potential, the general validity of projections far into the future is low. Given the nascent nature of startups and the technologies they develop, the data that can be measured and provided by the startups is limited, and partially based on assumptions and average calculations. Therefore, the actual impact will never be uniquely identifiable and correctly predictable.

Due diligence done on underlying assets regarding ESG criteria

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:

> Alcohol and tobacco
> Gambling
> Weapons
> Pornography
> Genetically Modified Organisms (GMO) or human cloning

Prior to each investment, ESG risks and opportunities are evaluated in an in-depth due diligence process, leading to an ESG risk profile where ESG risks as well as principal adverse sustainability impacts are valued independently, and a risk mitigation strategy is developed.

Designated reference benchmark

The Fund does not use any reference benchmark.