SFDR

Sustainability-Related Disclosures

1.Disclosures relating to the Alternative Investment Fund Manager pursuant to Art. 3, 4 and 5 of Regulation (EU) 2019/2088

a. Sustainability Risks

Auxxo Management GmbH (LEI: 391200B2YGO836FKM755, “Auxxo”) considers sustainability risks as part of its investment decision-making process. Sustainability risks are environmental, social or governance events or conditions, the occurrence of which could have an actual or potential material adverse effect on the value of the investment. Auxxo considers sustainability risks as part of its due diligence process prior to any investment. This also includes an assessment of sustainability risks. Such assessment is being conducted by using a checklist. The results of the assessment are taken into account when the investment decision is being taken. However, Auxxo remains free in its decision to refrain from investing or to invest despite sustainability risks in which case Auxxo can also apply measures to reduce or mitigate any sustainability risks. At all times, Auxxo will apply the principle of proportionality taking due account of the strategic relevance of an investment as well as its transactional context.

Auxxo expects sustainability risks within the meaning of Art. 3 SFDR not to negatively affect the returns of Auxxo Female Catalyst Fund II GmbH & Co. KG (the “Fund”) as well as other financial products made available by Auxxo (if any). Where relevant, Auxxo will apply reasonable efforts to appropriately assess such risks and their potential negative impacts on the Fund’s returns.

b. No consideration of adverse impacts of investment decisions on sustainability factors

Auxxo does not consider any adverse impacts of its investment decisions on sustainability factors and, hence, does not use the sustainability indicators listed in Annex I of the Delegated Regulation (EU) 2022/1288 (as amended from time to time, “RTS”) to identify and assess potential adverse impacts. Sustainability factors are environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery. Given that the SFDR, the EU Taxonomy and the accompanying RTS, which determine the sustainability indicators to be used and provide details on mandatory processes to obtain the respective data at portfolio company level, are relatively new legislative acts, there is – as of now – only little practical experience with regard to the application of their respective provisions. Therefore, legal and practical uncertainties would remain when applying those provisions to the strategies pursued by Auxxo. Moreover, the burden associated with considering adverse impacts on sustainability factors by using sustainability indicators is disproportionate in light of the very limited relevance that such impacts could have in the context of Auxxo’s investment strategy: As the Auxxo Female Catalyst Fund invests in European start-ups that operate largely in the digital economy, they are unlikely to cause severe adverse impacts on sustainability factors. Nevertheless, Auxxo takes into account the influence of the investments on some of the sustainability factors (especially diversity, inclusion and equity) and excludes investments in specific sectors, industries and businesses that would affect environmental, social, ethical or governance factors. Going forward, the Auxxo Female Catalyst Fund reserves the right to use the sustainability indicators detailed in the Annex I of the RTS partly or fully. Furthermore, the consideration of principal adverse impacts will largely depend on the availability of the relevant data from the underlying portfolio companies. Especially on early-stage companies, the collection and provision of such data might put an undue burden. Given that Auxxo will only hold minority interests in its underlying portfolio companies, which are generally not sufficient to encourage the companies to collect and report the relevant data, it is currently not foreseeable for Auxxo whether the information for the identification and assessment of principal adverse impacts can be obtained from all portfolio companies on a regular basis as required by Art. 4 SFDR. If and to the extent that the legal uncertainties will be resolved and a practicable market and administrative practice will evolve in this regard, Auxxo will re-evaluate considering principal adverse impacts of its investment decisions in due course.

c. Remuneration policies in relation to the integration of sustainability risks
As a registered AIFM within the meaning of section 2(4) of the German Investment Code (Kapitalanlagegesetzbuch, “KAGB”), Auxxo Fund Management GmbH does not have a remuneration policy or guideline in accordance with the requirements of KAGB of the EuVECA Regulation. The sustainability risks are not integrated in remuneration.

2. Disclosures relating to the Financial Product pursuant to Art. 10 of Regulation (EU) 2019/2088

a. Summary

Auxxo Female Catalyst Fund II GmbH & Co. KG

What environmental and/or social characteristics are promoted by this financial product?

The Fund promotes environmental and social characteristics by implementing certain investment exclusions (cf. below), by considering the EIF’s criteria for Climate Action and Environmental Sustainability (CA&ES) as well as by contributing to the UN Sustainable Development Goal (“SDG”) Diversity & Inclusion (SDG 5 – Achieve gender equality and empower all women and girls¹) and by setting the following gender diversity target:

a minimum of one female founder in the founding team holding at least 20% of the founder shares.

However, no reference benchmark has been designated for the purpose of attaining the environmental or social characteristics promoted by the Fund besides the gender diversity target.

¹) In particular to target 5.5.2 – proportion of women in managerial positions. Further information on the targets and indicators of SDG 5 can be found here: Department of Economic and Social Affairs (un.org).

What sustainability indicators are used to measure the attainment of each of the environmental or social characteristics promoted by this financial product?

The following sustainability indicators are used to measure the attainment of each of the environmental and/or social characteristics promoted by the Fund:

No investments in areas of investment exclusions
Diversity & Inclusion: Monitoring of gender of the founding team to meet the gender diversity target (at least one female founder exists, holding 20% of the founder’s shares). This reflects target 5.5.2 of SDG 5 (please see footnote 1 above).

Concerning the implementation of the CA&ES criteria, Auxxo uses the indicators stipulated in these criteria to track the attainment of its environmental and social characteristics. Also, no investments in areas of investment exclusions (as outlined below) will be performed.

What investment strategy does this financial product follow?

The purpose of the Fund is to build, hold, and manage (including to divest) a portfolio of equity and equity-related investments in portfolio companies. The Fund will invest in new portfolio companies, i.e., portfolio companies where no other investment vehicle managed or advised by Auxxo is already invested. The funds will invest in companies with at least one female founder. It will target investments in the internet, technology, software, mobile, and digital media market with consumer internet, b2b, or digital content business models as well as hardware, products, or platforms enabled by a digital component. The Fund intends to make its initial investments in the early stage, i.e., angel, seed, and series A. As part of the investment strategy, the Fund also implements investment exclusions and has defined certain ESG criteria to be considered in the investment decision-making process. The Fund’s investment strategy is implemented in the investment process continuously: Every investment opportunity will be tested against the Fund’s investment strategy as part of the due diligence prior to any investment made by the Fund. After an investment, i.e., during the holding period, the Fund will monitor its portfolio companies regularly and provide support if and where considered relevant.

What are the binding elements of the investment strategy used to select the investments to attain each of the environmental or social characteristics promoted by this financial product?

The Fund is bound by the investment restrictions and limitations set out in the Fund’s limited partnership agreement and shall procure that such requirements, restrictions and limitations are complied with at all times. In particular, the Fund will screen each investment opportunity against the following investment exclusions and no investments will be made in the area of such exclusions. The Fund shall 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:

(a) performing research and innovation activities considered as illegal according to the applicable legislation in the country of the portfolio company;
(b) any illegal economic activity (i.e., any production, trade or other activity, which is illegal under the laws or regulations applicable to the Fund or the relevant portfolio company, including without limitation, human cloning for reproduction purposes);
(c) the production of, and trade in, tobacco, distilled alcoholic beverages, other non-alcoholic recreational drugs and related products;
(d) the financing and production of, and trade in, weapons and ammunition of any kind, it being understood that this restriction does not apply to the extent such activities are part of or accessory to explicit European Union policies;
e) casinos and equivalent enterprises;
(f) oil and gas or metals and mining exploration, extraction or operations;
(g) retail banking;
(h) pornography;

The research, development or technical applications relating to electronic data programs or solutions, which (i) aim specifically at (x) supporting any activity referred to under lit. (a) through (g) above, (y) internet gambling and online casinos, or (z) pornography; or (ii) are intended to enable to illegally (i) enter into electronic data networks; or (ii) download electronic data;
i) fossil fuel-based energy production and related activities, as follows: (i) coal mining, processing, transport and storage; (ii) oil exploration and production, refining, transport, distribution and storage; (iii) natural gas exploration and production, liquefaction, regasification, transport, distribution and storage; (iv) electric power generation exceeding the Emissions Performance Standard (i.e., 250 grams of CO2e per kWh of electricity), applicable to fossil fuel-fired power and cogeneration plants, geothermal and hydropower plants with large reservoirs).
j) energy-intensive and/or high CO2-emitting industries, as follows:
- (i) manufacture of other inorganic basic chemicals (NACE 20.13)
- (ii) manufacture of other organic basic chemicals (NACE 20.14);
- (iii) manufacture of fertilisers and nitrogen compounds (NACE 20.15);
- (iv) manufacture of plastics in primary forms (NACE 20.16);
- (v) manufacture of cement (NACE 23.51);
- (vi) manufacture of basic iron and steel and of ferro-alloys (NACE 24.10);
- (vii) manufacture of tubes, pipes, hollow profiles and related fittings, of steel (NACE 24.20);
- (viii) manufacture of other products of first processing of steel (NACE 24.30, incl. 24.31-24.34);
- (ix) aluminum production (NACE 24.42);
- (x) manufacture of conventionally-fuelled aircraft and related machinery (sub-activity of NACE 30.30);
- (xi) conventionally-fuelled air transport and airports and service activities incidental to conventionally-fuelled air transportation (sub-activities of NACE 51.10, 51.21 and 52.23).

Furthermore, the Fund does not invest in portfolio companies that breach internationally recognized sustainability standards (including portfolio companies that fail to comply with the principles of the United Nations Global Compact (UNGC) or the OECD Guidelines for Multinational Enterprises). Specifically, the exclusions set out in Article 12(1)(a)-(g) of the Delegated Regulation (EU) 20220/1818 (Paris-Aligned Benchmark) apply.

Notwithstanding the above, investments in the sectors mentioned in lit. (j) above shall be allowed if the Manager confirms that the investment either (a) qualifies as environmentally sustainable investments as defined in the EU Taxonomy or (b) is eligible under the EIF’s Climate Action & Environmental Sustainability (CA&ES) objectives in accordance with the latest criteria as published in the EIF’s website from time to time.

In addition, when providing support to the financing of the research, development or technical applications relating to (a) human cloning for research or therapeutic pur-poses or (b) genetically modified organisms (“GMOs”), the Manager shall ensure the appropriate control of legal, regulatory and ethical issues linked to such human cloning for research or therapeutic purposes and/or GMOs

Furthermore, the Fund has bindingly set the following ESG criteria in its limited partnership agreement: The Fund will only conduct investments in emerging non all-male (co-)founded portfolio companies.

The Fund will aim to invest an amount at least equal to 10% of the Fund’s aggregate invested amounts in portfolio companies classified as contributing to CA&ES objectives in accordance with the latest criteria published in the EIF’s website as of the date of which the side letter with the European Investment Fund has been executed.

What is the policy to assess good governance practices of the investee companies?

Good governance practices are assessed through an informal process as appropriate in light of the circumstances of each individual case as part of every due diligence process prior to any investment made by the Fund. Such practices include, in particular, sound management structures, employee relations, remuneration of staff and tax compliance within the portfolio companies. Moreover, the Fund will conduct regular monitoring of the good governance practices in its portfolio companies during the holding period. If the Fund becomes aware of severe governance issues, it will investigate them and work with all parties involved to find an appropriate solution.

What is the asset allocation planned for this financial product?

The Fund will invest fully in line with its investment strategy and investment restrictions, i.e., will only make investments which are aligned with E/S characteristics (#1). As the Fund does not make and does not intend to make sustainable investments, all its investments will fall into the category #1B (Other E/S characteristics). The Fund will not invest a portion of its capital in any other asset class.

In particular, the Fund invests exclusively in portfolio companies with at least one female founder holding at least 20% of the founder shares, thereby contributing to SDG 5 (Gender Equality) and implementing a measurable and objective gender diversity threshold. As a result, 100% of the Fund’s investments qualify as investments aligned with environmental and/or social characteristics in accordance with the binding elements of the investment strategy, meeting the 80% threshold as referred to in the ESMA Guidelines on fund names.

Auxxo Female Catalyst Fund I GmbH & Co. KG

Auxxo Female Catalyst Fund I GmbH & Co. KG (LEI: 391200YG4J9TD5 RNX071) (“Financial Product“) promotes environmental and social (“E/S”) characteristics but does not have a sustainable investment objective.

Specifically, the Financial Product promotes the following E/S characteristics:

Advancing diversity, inclusion and equitable treatment and participation of women in the start-up and venture capital industry.

The Financial Product invests in early-stage female (co-)founded businesses in Europe. Of these investments, none are targeted as sustainable investments but all are targeted to promote E/S characteristics.

The attainment of the E/S characteristics promoted by the Financial Product is primarily achieved through investment decisions. The fund only invests into companies with at least one female founder holding a minimum of 20% of the founder shares. The diversity of the whole investee company team is expected to develop through the promotion of female ownership.

The Financial Product carries out a due diligence process with every investment. Due diligence includes among other things a negative screening list, meaning a list of sectors, business activities and business practices that are excluded due to their acknowledged harm to the society and/or environment. The E/S characteristics are being monitored throughout the lifecycle of an investment. The Financial Product will use different methods for the attainment and monitoring of the E/S characteristics, which may include interviews as well as quantitative and qualitative questionnaires for Investee Companies.

To ensure an appropriate reaction to sustainability-related incidents, the Financial Product is creating an internal procedure.

Auxxo Female Catalyst Fund I GmbH & Co. KG

(i) English

Specifically, the Financial Product promotes the following E/S characteristics:

Advancing diversity, inclusion and equitable treatment and participation of women in the start-up and venture capital industry.

To ensure an appropriate reaction to sustainability-related incidents, the Financial Product is creating an internal procedure.

(ii) German

Auxxo Female Catalyst Fund I GmbH & Co. KG (LEI: 391200YG4J9TD5 RNX071) (“Finanzprodukt”) fördert ökologische (environmental) und soziale (social) (“E/S”) Merkmale, hat jedoch kein direktes nachhaltiges Anlageziel.

Im Einzelnen fördert das Finanzprodukt die folgenden E/S-Merkmale:

Förderung der Vielfalt, der Eingliederung und der gerechten Behandlung und Beteiligung von Frauen in der Start-up- und Risikokapital-Branche.

Das Finanzprodukt investiert in frühen Unternehmensphasen in von Frauen (mit-)gegründete Unternehmen in Europa. Diese Investitionen zielen auf die Förderung von E/S-Merkmalen ab, sind jedoch nicht als rein nachhaltige Investitionen gedacht.

Die Erreichung der durch das Finanzprodukt geförderten E/S-Merkmale wird in erster Linie durch Investitionsentscheidungen erreicht. Der Fonds investiert nur in Unternehmen mit mindestens einer Gründerin, die mindestens 20 % der Gründeranteile hält. Dies hat unter anderem das Ziel, die Diversität im gesamten Unternehmen zu erhöhen. Es wird davon ausgegangen, dass sich durch die Förderung von einer weiblichen Beteiligung unter den Gründer:innen eine erhöhte Diversität im Team des investierten Unternehmens entwickeln wird.

Das Finanzprodukt führt bei jeder Investition eine Due-Diligence-Prüfung durch. Diese Prüfung umfasst unter anderem eine Negativliste, d.h. eine Liste von Sektoren, Geschäftstätigkeiten und Geschäftspraktiken, die aufgrund ihrer anerkannten Schädlichkeit für die Gesellschaft und/oder die Umwelt ausgeschlossen werden. Die E/S-Merkmale werden während des gesamten Investitionszykluses überwacht. Das Finanzprodukt wird verschiedene Methoden zur Erlangung und Überwachung der E/S-Merkmale anwenden, die unter anderem Interviews mit Geschäftsführer:innen und Mitarbeitenden sowie quantitative und qualitative Fragebögen für die investierten Unternehmen umfassen können.

Um eine angemessene Reaktion auf nachhaltigkeitsbezogene Vorfälle zu gewährleisten, entwickelt das Finanzprodukt ein internes Verfahren.

b. No sustainable investment objective
This Financial Product promotes environmental or social characteristics, but does not have as its objective a sustainable investment.

c. Environmental or social characteristics of the Financial Product
The Financial Product promotes environmental and social (“E/S”) characteristics through the incorporation of ESG considerations within its investment processes.

Specifically, the Financial Product promotes the following social characteristics:

Advancing diversity, inclusion and equitable treatment and participation of women in the technology and venture capital industry.

The above listed factors are not considered as conclusive or final, since the investments the Financial Product will make, cannot be determined yet (so-called “blind pool”). Thus, the factors may be refined and revised at a later date.

d. Investment strategy

(i) Investment strategy

The Financial Product promotes E/S characteristics and incorporates ESG principles in the entire investment process. The investment process consists of the following phases:

Pre-Investment (sourcing and screening);
Investment (due diligence);
Holding (portfolio management, monitoring, reporting); and
Exit (performance evaluation, disclosure).

The investment strategy guides investment decisions based on factors such as investment objectives and risk tolerance.

The purpose of the Partnership is to build, hold and manage (including, but not limited to, to divest) in its own name and for its own account a portfolio of equity and equity-related investments in companies. The Partnership has an emphasis on early-stage female (co-)founded businesses in Europe.

The Financial Product shall observe the German Capital Investments Act (Kapitalanlagegesetzbuch) with regard to its investment activities, and will monitor Investee Companies in order to meet the environmental and social characteristics.

In order to attain the E/S characteristics set out above the Financial Product carefully selects its investment opportunities during the pre-investment and investment phase. The Financial Product applies a negative screening on all potential investments to determine unsuitable investments. The negative screening contains exclusion lists with regards to certain branches and products. In particular, the exclusion covers:

Production of or activities related to exploitative forms of forced/child labor;
Illegal activities or activities, which violate international conventions or agreements;
Production and distribution of racist or anti-democratic media;
Economic activity related to ammunition and weapons, their major components, military/police equipment, or penitentiary infrastructure. This limitation does not apply to the extent that these activities are part or annex of an express policy of the European Union;
Gambling, casinos, including Internet gambling and online casinos;
Production and trade of distilled alcoholic beverages;
Production and trade of tobacco;
Production and use or trading of toxic materials e.g. radioactive materials.
Cross-border trade in waste and waste products unless in accordance with the Basel Convention and underlying national and EU legislation;
Human cloning; and
Production and trade of wildlife or wildlife products regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CETES).

The Financial Product monitors the development of female ownership in the Investee Companies on an ongoing basis.

(ii) Assessment of good governance practices
Good governance practices include sound management structures, employee relations, remuneration of staff and tax compliance.

The assessment of good governance practices of Investee Companies is incorporated in the Financial Product’s legal due diligence as far as good governance practices have been adopted by law. Due diligence is often conducted in collaboration with other investors and/or utilizing external experts and third parties in evaluation. The Financial Product does not invest in any companies with lacking governance practices at the time of the evaluation or does so only conditionally.

e. Proportion of investments
The Financial Product does not make any sustainable investments within the meaning of the SFDR and the Taxonomy Regulation (Regulation (EU) 2020/852). The Financial Product targets that all investments are aligned with E/S characteristics. Since the Financial Product’s asset portfolio consists a blind pool, it reserves the discretion to make investments in “Other” assets (i.e., investments that are neither aligned with the E/S characteristics, nor are qualified as sustainable investments) in accordance with its investment strategy as provided in the pitch deck and accompanying marketing documents.

The Financial Product will directly hold equity and quasi-equity investments in Investee Companies.

f. Monitoring of environmental or social characteristics
The Financial Product undertakes to monitor E/S characteristics on an ongoing basis. To this end, the Financial Product may obligate Investee Companies to monitor and provide information on E/S characteristics. Additionally, the performance with regard to the sustainability indicators used to measure the attainment of the E/S characteristics is monitored throughout the lifecycle of an investment.

g. Methodologies
The Financial Product may apply one or a combination of the following methods to collect information and to assess its alignment with the promotion of the E/S characteristics listed above:

Negative screening with regards to branches, products and practices;
Quantitative and qualitative questionnaires;
Interviews with the management team and (key) employees of Investee Companies; and
Obligate Investee Companies to submit periodic environmental and social reports.

Based hereon, the Financial Product may apply one or a combination of the following measures to adjust its alignment with the promotion of the E/S characteristics listed above:

Discarding of investment opportunities;
Setting target agreements with Investee Companies;
Execution of minority shareholder rights in Investee Companies; and
Execution of rights as an advisory board member to Investee Company (where available).

h. Data sources and processing
Data for measuring the attainment of E/S characteristics can be provided by Investee Companies in the form corresponding to the applied method(s) of data collection listed above. Data is collected in both quantitative and qualitative forms.

The proportion of data that is estimated by Investee Companies is unable to be quantified in advance. No external sources are used to verify the data received from Portfolio Companies.

i. Limitations to methodologies and data
An identified limitation to the methodology referred to in subsection (g.) above with regard to the use of questionnaires to measure the attainment of E/S characteristics is that whilst the questionnaire may indicate trends or data points, it is limited with regard to detailed information provided on the underlying reasons for the outcome.

However, this does not affect the attainment of the E/S characteristics promoted by the Financial Product. In order to address such a limitation, ongoing dialogue is maintained with Investee Companies to gain a more comprehensive understanding of E/S characteristics measured.

j. Due diligence
In order to attain the E/S characteristics set out above the Financial Product carefully selects its investment opportunities during the pre-investment and investment phase. As stated above, the Financial Product applies a negative screening on all potential investments to determine unsuitable investments and only invests in companies that promote diverse, inclusive and equitable treatment and participation of women in start-ups and venture capital through its ownership structure.

k. Engagement policies
The AIFM has appointed an internal ESG representative within the partnership to ensure ESG compliance in the investment process and a team member to take on the operative ESG tasks of the fund.

In order to further develop its ESG responsibilities, the Fund Manager has developed an ESG policy setting out processes for improved analysis, monitoring and reporting of ESG related factors and risks, and to appropriately react to any potentially occurring incidents.