SFDR’s “Article 10” website disclosures – “Article 8” products
Acting on climate change, its related environmental consequences together with the desire to provide a strong social base for all is a priority for Five Seasons Ventures. For this reason, the Firm invests only into sustainable start-ups and have a dedicated Fund with sustainable investment objectives aligned with Art. 8 SFDR. At Five Seasons sustainability is core of any investment decision and the United Nations’ Sustainable Development Goals (SDGs) has been adopted as a frame of reference.
Consideration of Adverse Sustainability Impacts
Five Seasons Ventures incorporates Adverse Sustainability factors within its investment processes and within its monitoring processes. Sustainability factors are defined as “environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery”.
To identify, evaluate, and prevent principal adverse impacts on ESG criteria, the assessment of ESG related risks and opportunities is an integral part of Five Seasons Ventures’ investment strategy and due diligence. Prior to an investment, ESG matters are evaluated as part of the standard due diligence process. Furthermore, all investees are required to report on ESG criteria at least once per year. In case environmental risks or adverse sustainability impacts were identified, a mitigation strategy is developed in collaboration with the portfolio company sustainability team, or if that is not possible or feasible, the potential investment opportunity is not pursued further to its closing.
Environmental or social characteristics of the financial product
Five Seasons Ventures 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, Fossil fuels and Distilled Alcohol.
Five Seasons Ventures concentrate investment decisions on companies that promote positive environmental, social or governance practices along the food supply chain. Examples include companies focused on:
- Organic, free trade/choice or pant-based ingredients
- Low carbon production (e.g. green energy, zero waste)
- Sustainable packaging and delivery “Healthier for you” food products
- Diversity and inclusion
Five Seasons Ventures invests in Food Consumer products and services with quantifiable impact on the planet and / or human health and entrepreneurs with a vision to build future leaders in existing categories or build products to create a new category, and businesses with high growth potential and early commercial traction (Series A or Series B). We invest only in equity or equity-like between 2-10M€ as first investment.
SDGs goals are consolidated in our investment themes:
- Shifting Diet: Better food and nutrition, at the right price for more demanding consumers
- Trust & Transparency: Customers want to know more about the product journey
- Increase Yield & Efficiency: Increase food production with existing resource footprint and lower environmental impact
- Reduce Wasted Calories: Reduce food waste in domestic / restaurant / retail / production
- Sustainable Packaging: to limit the volume of plastic waste and resources exploitation
- Proportion of investments
Five Seasons Ventures invest 100% of its funds in impact-driven enterprises (i.e. enterprises that have the purpose to achieve societal or environmental impact by providing entrepreneurial solutions to an issue along the food supply chain with scalable approach).
Monitoring of environmental or social characteristics
Five Seasons Ventures Sustainability Team constantly monitors the environmental and social characteristics and performance of the Fund. For that purpose, portfolio companies are required to report on ESG using the Planet, Product and People Impact Framework once per year. Monitoring and reporting models are regularly updated in consultation with the portfolio companies to reflect changes in the start-up’s processes or products. The ESG reporting of each portfolio company is assessed by the Five Seasons Ventures Sustainability 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.
The Planet, Product and People Impact Framework helps us evaluate the impacts and sustainability of our investments, informs our decision making and guides Five Seasons Ventures’ due diligence to ensure our investments contribute to our mission to create a healthier work for the Planet and all its People.
During the holding period of each investment, 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 Sustainability Reporting Guidelines, the Principles for Responsible Investments (PRI), 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 Planet, Product and People reporting tool giving objective statistics and a comprehensive overview about the ESG targets and progress of the portfolio companies. This enables Five Seasons to identify ESG related issues, early and encourage and support actions for improvement by writing and committing to a sustainability strategy with the respective company.
Data sources and processing
At the beginning of each investment, portfolio companies are required, to appoint a Head of Sustainability and perform a complete Life Cycle Assessment (LCA) on a material portion of their products in terms of volumes sold.
Each year, portfolio companies are asked to fill in the PPP SMART framework (via our ESG questionnaire) which covers both general ESG factors included in PAI and specific to food companies ESG metrics, determined at pre-investment stage and reassessed at least annually. Five Seasons Ventures Sustainability Team is in charge of analysing this data and make recommendations on how to improve these KPIs moving forward.
Limitations to methodologies and data
The information collected via the People, Product and Planet questionnaire is internally verified by the Sustainability Team and only if and to the extent misrepresentations are suspected it is sent to a third party for verification.
A Life Cycle Assessment (LCA) on the most sold product for each portfolio company is performed by a selected third-party provider. However, it cannot be ruled out completely that false or inaccurate information may remain undetected in certain cases.
As the Funds’ investments are held for several years, Five Seasons considers it a priority to establish and maintain a trust within a good working relationship with the portfolio company as a safeguard considering the limitations described in this section.
As part of its standard procedure, Five Seasons Ventures conducts a due diligence prior to investing. Such due diligence includes a range of questions relating to environmental, social, or governance-related aspects, thereby also providing a basis for assessing potential sustainability risks.
The outcome of the due diligence, including any information on sustainability risks revealed through the due diligence, guides Five Seasons Ventures’ investment decisions. In its free discretion, Five Seasons Ventures may decide to make an investment even if sustainability risks have been determined upon applying appropriate mitigation measures. Engagement policies.
A key part of our approach to ESG is our role in actively engaging with portfolio companies to influence their behaviour to improve the long-term sustainability of their business model. We assess and measure Planet, Product and People KPIs every year, and we support companies to achieve agreed targets at least 3 and 5 years from investment. Our Sustainability Team engage with portfolio companies on a regular base providing training, support and introduction to suppliers that could help reduce carbon footprint along the supply chain as well as other environmental, social and governance targets.
Our venture capital investment strategy provides the following opportunities for engagement with portfolio companies:
- Minority shareholding with customary voting rights
- Direct access to management of portfolio companies and customary information rights
- Representation on Board of Directors of portfolio companies (or Advisory Boards, depending on legal jurisdiction) as Directors or Observers
- Where applicable, representation on sub-committees of the Board of Directors, like Audit Sub-Committee, Remuneration Sub-committee, ESG Sub-committee, etc.
- Proactive engagement via Shareholders meetings
- References to international standards
Planet, Product and People metrics have been developed in accordance with different international standards such as the GRI, SASB and IRIS metrics.