Sustainability related disclosures

Mandatory disclosures under Regulation of the European Parliament and of the Council on Sustainability-Related Disclosures in the financial services sector (EU) 2019/2088 (“SFDR”)

Sunfish Management GmbH (“Sunfish”) is an alternative investment fund manager within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and as such publishes the following information in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosure requirements in the financial services sector (“SFDR”).

Art. 3 SFDR –Sustainability risk policies statement

Sunfish addresses sustainability risks in its investment decision-making process insofar as relevant. “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. During the due diligence on potential investments, Sunfish conducts a careful analysis of the investment’s exposure to environmental, social, and governance risks that could impact its value. When identifying a sustainability risk during the due diligence on potential investments, Sunfish decides in light of the specific situation taking due account of the proportionality principle whether it gives up on the investment or proceeds with the investment alongside appropriate measures to mitigate the relevant sustainability risk. Sunfish regularly reviews its policies to ensure that they address new and emerging risks as well as investors’ concerns.

 Art. 4 SFDR – No consideration of principal adverse impacts

Sunfish does not consider principal adverse impacts (“PAI”) of investment decisions on sustainability factors. “Sustainability factors” mean environmental, social, and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters. Sunfish does not use sustainability indicators. The standardized catalog of key performance indicators (“KPIs”) provided by Annex I of the regulatory technical standards (“RTS”) issued under the SFDR is not tailored to the specific needs of the Partnership’s investment strategy. In many instances, data will be insufficient for analyzing PAI, and on occasions where data is obtainable, it tends to offer little in terms of comparability and fails to provide additional insights for the Managing Limited Partner. Therefore collecting data on PAI will not only increase the administrative burden and costs but also fail to provide a new perspective for the Managing Limited Partner.

Art. 5 – Remuneration Disclosure

As a registered alternative investment fund manager within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB), Sunfish does not have, and does not need to have, a remuneration guideline or policy in accordance with the requirements of the KAGB. Sustainability risks are not considered with respect to the determination of remuneration.

Art. 10 SFDR – Sustainability-related information about financial products that promote environmental or social characteristics

Sunfish Management GmbH (“Sunfish”) is the alternative investment fund manager of Sunfish CEE II GmbH & Co. KG (“Sunfish CEE II”) within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and as such publishes the following information in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability disclosure requirements in the financial services sector (“SFDR”).

Summary

This financial product promotes environmental or social characteristics but does not have as its objective a sustainable investment. The promoted characteristics are investment restrictions. 100% of the investments will be in line with its investment strategy and investment restrictions.

No reference benchmark has been designated to attain the environmental or social characteristics promoted by the financial product.

Zusammenfassung

Dieses Finanzprodukt bewirbt ökologische oder soziale Merkmale, strebt aber keine nachhaltigen Investitionen im Sinne der Definition des Art. 2 Nr. 17 SFDR an. Bei den beworbenen Merkmalen handelt es sich um Ausschlusskriterien. 100 % der Investitionen werden im Einklang mit der Anlagestrategie und den Anlagebeschränkungen getätigt.

Es wurde kein Referenzwert benannt, um die mit dem Finanzprodukt beworbenen ökologischen oder sozialen Merkmale zu erreichen.

No sustainable investment objective

This financial product promotes environmental or social characteristics but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

The promoted characteristics of this product are investment restrictions. Investments in sectors which are not in line with Sunfish’s pursuit of a responsible investment philosophy are excluded, including investments in the fields of

  • gambling,
  • adult entertainment,
  • production of and trade in tobacco, and
  • distilled alcoholic beverages.

No reference benchmark has been designated for the purpose of attaining the environmental and social characteristics promoted by the Partnership.

Investment strategy

Sunfish CEE II intends to seek long-term capital appreciation through equity and quasi-equity investments in early-stage technology companies with a focus on digital health, dual-use in space and defense, or data infrastructure within Central and Eastern Europe.

Sunfish CEE II will invest fully in line with its investment strategy and investment restrictions. As part of the due diligence and ongoing investment management, the investment team for the Partnership will initially and continuously monitor whether the investment restrictions are abided by and whether the investment falls within the investment policies.

Policy to assess good governance practices of the investee companies

As part of the due diligence and ongoing investment management, the investment team will review whether a potential investee company has good governance practices in place. This might include using ESG (environmental, social, and governance) criteria to evaluate companies’ performance in areas such as labor practices, human rights, and corporate governance, conducting due diligence on investee companies to assess their management structures, employee relations, and tax compliance, engaging with investee companies through to encourage improvements in governance practices if necessary. The intensity of the assessment is carried out in accordance with the principle of proportionality. Where the manager sees higher risks of non-compliance, they will intensify the audit. Sunfish will be at least partly reliable on the information provided by the Portfolio Companies. Unless there is evidence to suggest that the information provided is incorrect, it will not be examined for accuracy.

Proportion of investments

Sunfish CEE II will invest fully in line with its investment strategy and investment restrictions. Sunfish CEE II will not invest a portion of its capital in any other asset class.

Monitoring of environmental or social characteristics

The investment team for Sunfish CEE II will initially and continuously monitor whether the investment restrictions are abided by and whether the investment falls within the investment policies. Sunfish CEE II will not make any investment in the excluded sectors unless previously approved by the advisory committee. Therefore, the achievement of the promoted ESG aspects – no investment within the excluded sectors – can be tracked in a simple way.

Methodologies for environmental or social characteristics

See above. The exclusion list is used to measure how the social or environmental characteristics promoted by the financial product are met.

Data sources and processing

Sunfish CEE II receives data provided by the portfolio companies as part of the due diligence process and at regular intervals after the investment. Where necessary or beneficial, Sunfish CEE II also makes use of publicly available data. Data processing is exclusively internal and DSGVO compliant. Estimates of data are not made.

Limitations to methodologies and data

Sunfish is partly reliant on the information provided by portfolio companies during the due diligence process. Moreover, in the post-investment phase, Sunfish is reliant on the company’s reported data. In both cases, complete data may not always be available due to the nature of the investments. The information is verified only if and to the extent misrepresentations are suspected.

Since Sunfish CEE II’s investments are made for a multi-year investment period, Sunfish places a high priority on establishing a trusting working relationship with the portfolio companies to ensure that data is submitted reliably and completely and that the above restrictions are met.

Due Diligence

Sunfish considers the promoted environmental and social characteristics when sourcing new portfolio companies for Sunfish CEE II and during the due diligence on targeted portfolio companies.

Sunfish CEE II engages in a multi-faceted due diligence process that encompasses comprehensive financial and legal checks, thorough reputation assessments of founders via an extensive array of public sources, and the collection of pertinent representations and warranties from founders. We actively integrate ESG considerations into our due diligence framework, including the scope of discussions with the founders, aligning our investment strategy with sustainable and responsible business practices.

The due diligence process is not externally monitored.

Engagement policies

Sunfish CEE II invests in the portfolio companies for a period of several years. Therefore, Sunfish makes it a priority to establish and maintain a trusting working relationship with the portfolio companies in order to comply with the investment restrictions continuously. Sunfish thus also intends to establish or strengthen the consideration of sustainability risks at the portfolio level. Sunfish is in constant dialogue with the portfolio companies, but as a venture capitalist without majority ownership, the influence Sunfish can exert on the portfolio companies is limited.

Date of Publication: March 21st, 2024