Round2 Capital Partners SFDR Disclosure
Round2 Capital GmbH (“Round2”) manages its investment portfolio, including Round2 Capital Partners (EuVECA) GmbH & Co KG, to provide long-term reward commensurate with acceptable risk. By assessing and understanding the range of sustainability risks, together with many other investment criteria, our objective is to make us better positioned to deliver consistent, superior long-term investment returns to our investors.
Information for such assessment is collected with a questionnaire completed by target companies during due diligence. No indicators regarding sustainability risks are used. Round2 aims to develop its own indicators out of the questionnaire once sufficiently large data samples are available.
Principal adverse sustainability impacts statement
The evaluation of sustainability risks is dependent on the country, industry, company, and management we are analyzing. Therefore, the particular issues considered vary with each investment. Some specific examples of the broad range of sustainability risks we may consider in our investment analysis process are
- long-term environmental considerations, such as regulation, the availability and costs of raw materials, water, energy, and other significant inputs
- a company’s labor related policies, diversity and labor relations
- supply chain risks related to work stoppages and labor controversies
- the quality and diversity of a company’s management and board
- the current and potential regulatory environment, particularly with regard to highly regulated industries or controversial situations as the world’s economy and industries evolve over time
- the relative quality of a company’s disclosures and its philosophy regarding stakeholder communications and engagement
As of June 30, 2021 we have not identified any adverse sustainability impacts related to our investment decisions.
Sustainability risk policy
At Round2, analysis of our investment targets and the markets where they operate is the foundation of our investment decisions. Through our bottom-up approach, we endeavor to understand the long-term sustainability of a company’s business model and the factors that could cause it to change. We belie-ve that environmental, social, and governance (ESG) issues influence investment risk and return and, therefore, incorporate sustainability risk considerations into our investment analysis process.
‘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.
Such analysis is performed via a questionnaire as part of pre-investment due diligence. The results of the questionnaire are considered in the investment decision. However, the findings relating to the environmental or social or governance aspects are non-binding and any investment decision will also consider the sustainability risks in the context of the size of the investment and the target company’s growth stage and organizational resources.
In case a sustainability risk would be identified Round2 would define measures to reduce or mitigate the risk and will ensure that the target company complies with them.
Portfolio companies are requested to provide annual updates of the sustainability risk questionnaire to assess any change in material adverse impacts of their businesses on sustainability factors.
However, the relevant data may not be available at companies in the seed and early stages and many questions may not be applicable at all. In these cases potential future adverse impacts of their business models as the companies scale can only be estimated.
Responsibility for incorporating sustainability risks into investment decisions is embedded into our investment workflows. At Round2, our principal responsibilities include meeting and building long-term partnerships with the management teams, conducting site visits, and producing company and industry analysis.
In order to leverage our regular assessment of sustainability risk factors, we strive for a gradual improvement in the management of sustainability risk factors in our portfolio companies. We engage company management teams regularly to review their performance and to monitor progress. Our aim is to get a shared understanding with management teams about the environmental, social, and governance issues most relevant to their business and to help ensure constant improvements in the management of the risks related to them.
The fund does not pursue sustainable investments as specified in Article 9(2) of Regulation (EU) 2019/2088 (known as Sustainable Finance Disclosure Regulation or “SFDR”).
References to international standards
Round2 is a supporter of the Principles for Responsible Investment https://www.unpri.org/ (PRI). We believe in the PRI framework as an effective means to encourage better dialogue with our investment targets, portfolio companies and investors that will help improve disclosure from companies globally.