Article 3, Sustainability risks
Pacenotes Management B.V. (“Pacenotes”) in its capacity as a manager, integrates the evaluation of sustainability risks, pursuant to Article 3 of SFDR (EU 2019/2088) into the internal processes, including the investment decision making process as set forth in this document. Pacenotes’ assessment of sustainability risks is defined as:
A sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of the investment.
Pacenotes has traditionally considered a number of factors when identifying investment opportunities, in its investment decision-making and during the due diligence processes for both direct (technology companies) and indirect (venture capital and growth equity funds) investments. Investments are sought across businesses or funds the activities of which should not result in creating or investing in any large scale resource depletion, waste, pollution or deforestation. Companies and funds Pacenotes invests in are expected to comply with all applicable laws in their country of domicile, including environmental, labour and human rights laws.
Pacenotes investment process integrates consideration of sustainability risks across the phases of the investment cycle, from initial due diligence to investment and monitoring as follows:
Diligence process: Our pre-investment due diligence reviews all aspects of the company including the governance structure, employee relations & welfare and would flag any environmental impacts, social or governance concerns. When conducting due diligence on funds, Pacenotes closely examines how they structure their own SFDR related processes and how the fund performs on ESG related items such as: diversity & inclusion, ESG monitoring, ESG policy, ESG process, ESG reporting and ESG staffing. Pacenotes also encourages the funds to handle a high-quality ESG policy/regime.
Investment monitoring: post investment / Commitment Pacenotes regularly monitors the sustainability risks through management updates in case of an investment in a technology company or through the quarterly - / ESG reporting of the funds by which Pacenotes monitors and discusses any ESG concerns or areas for improvement. Furthermore, when considering a follow- on investment in a company or re-up of a fund commitment in a successor fund, Pacenotes carries out the entire due diligence process including the ESG related items or receives regular updates.
Article 4, Principal Adverse Impacts: No consideration of sustainability adverse impacts
Pacenotes, does not at this stage, consider principal adverse impact factors in the delivery of its services. The nature of the investment activity (venture capital and growth equity funds, technology and SME) and size and scale of operations does not require a focus on assessment of Principal Adverse Impacts. It is anticipated that should the investment focus and strategy change, then a consideration of Principal Adverse Impacts will be considered.
Article 5, Remuneration disclosure
Pacenotes has set forth the remuneration model applicable to its own business. As part of the integration of sustainability risks, set out in its investment process, Pacenotes instils a culture of alignment with ESG across its own teams and avoids remuneration schemes that could encourage ‘greenwashing’ in the selection of investments.
Article 6, Transparency of the integration of sustainability risks
Pacenotes has integrated sustainability risks in its own investment decision-process (see explanation of Article 3) and will assess and report on the likely impacts of sustainability risks on the fund and its return.
Article 8, Promotion of ESG
Pacenotes is a strong promotor of ESG for its fund- and co-investments. However, Pacenotes is not fully able nor, at this moment, has the intention to comply with Article 8 due to Pacenotes’ dependency on the ESG processes of the funds in which Pacenotes invests. When funds do not have ESG processes in place, Pacenotes will encourage them to implement these processes to be able to potentially comply with Article 8 over time.