We are commited to

sustainability

BETA CAPITAL ESG PROCEDURES

FRAMEWORK

Beta – Sociedade de Capital de Risco, S.A. (“Beta Capital”) is venture capital company which goal is the investment and acquisition of shares in companies with high potential for valorisation, as a way of contributing to their development and benefiting from their appreciation, carried out directly, with own financial means or indirectly, through venture capital funds.

Beta Capital is subject to supervision by the Portuguese Securities Market Commission (“CMVM”) and develops its activity within the framework of national and European legislation, namely:

  • Law No. 18/2015 of March 4 with subsequent amendments;
  • Regulation (EU) 2019/2088 of the European Parliament and of the Council, of 27 November 2019 with subsequent amendments – Sustainability Finance disclosure Regulation (“SFDR”);
  • Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 – Taxonomy Regulation (RT);

 

With the aim of improving transparency and comparability regarding the investments of current and potential investors, allowing them to make more informed decisions, the SFDR requires that fund management companies such as Beta Capital, disclose on their website and in the documentation related to the products financial statements, information related to sustainability and in particular its Sustainability Policy.

Bearing in mind that European Union legislation associated with sustainable finance is currently changing sharply, Beta Capital’s Sustainability Policy is a project under construction and will be subject to changes whenever necessary.

Beta Capital’s Board of Directors is the body responsible for defining these ESG Procedures, detailed below, as well as their implementation and periodic updating :

  • Sustainability Policy (relating to the integration of sustainability risks)
  • Remuneration Policies (in relation to the integration of sustainability risks)
  • Declaration of Principle Adverse Impacts (in terms of sustainability)

SUSTAINABILITY POLICY

The sustainability of the planet and civilization is a cross-cutting issue in economic activity that demands urgent action , in the fight against climate change and social inequality, and inspires Beta Capital’s policy of integrating risks in terms of sustainability in relation to the planet and people in their relationship with stakeholders (investors and projects ) having led it to integrate ESG criteria (environmental, social and governance issues ) in the development of its activity .

In addition, as defined in Article 2 (22) of the SFDR, sustainability risks, “an event or condition of an environmental, social or governance nature whose occurrence is likely to cause a significant negative impact, actual or potential, on the value of the investment”, have a significant impact on value creation.

As a result, Beta Capital adopts this Sustainability Policy, which outlines the guidelines for its action regarding the integration of sustainability risks in the investment decision-making process, monitoring and reporting, and must be fulfilled by all its employees, applying both to investments made directly as well as those performed by funds under management.

Beta Capital’s Sustainability Policy considers the international commitments that have been signed, namely the EU Green Deal, the UN Sustainable Development Goals, and the Paris Agreement

Beta Capital assumes the following commitments in its investments:

  1. Minimum safeguards, pursuant to Article 18 of EU Regulation 2020/852 (Taxonomy Regulation)
  2. Respect for the DNSH principle (do not significantly harm ), with regard to the environmental objectives referred to in Article 9 of EU Regulation 2020/852
  3. Transparency, pursuant to Art º 4, nº 1 a) and Art º 8 nº 1 of Regulation 2019/2022 (SFDR)
  4. Strict application of Internal AML Procedures

And take into account:

  1. United Nations Sustainable Development Goals
  2. United Nations Principles for Responsible Investment

     

Until 31-12-2022, the financial products managed by Beta Capital did not take into account the EU criteria applicable to sustainable economic activities from an environmental point of view, with direct investments to be made and financial products to be launched by Beta Capital, from 01-01-2023 will have the characteristic, among others, of promoting environmental and/or social characteristics (under the terms of article 8 of the SFDR) with a successively increasing percentage of sustainable investments (under the terms of article 9 of the SFDR)

At Beta Capital, the assessment of sustainability risks is part of the due diligence process. diligence that precedes each investment, the results of which are taken into account in the respective decision-making process.

The following sustainability factors are obligatorily considered:

Sustainability factors to be evaluated

Environmental

  1. GHG Emissions
  2. Carbon footprint
  3. GHG emission intensity of investment beneficiary companies
  4. Exposure to companies operating in the fossil fuel sector
  5. Share of non-renewable energy consumption by companies benefiting from the investment
  6. Intensity of energy consumption by sector with high climate impact
  7. Activities with a negative impact on sensitive areas from the point of view of biodiversity
  8. Emissions into the aquatic environment of companies benefiting from the investment
  9. Ratio of hazardous waste and radioactive waste


Social and Labor

  1. Compact principles and the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises
  2. Lack of processes and mechanisms for monitoring compliance with the UNGC principles or the OECD Guidelines for Multinational Enterprises
  3. Unadjusted gender pay gap
  4. Gender diversity on boards of directors
  5. Exposure to controversial weapons (antipersonnel mines, cluster munitions, chemical weapons, and biological weapons)


Additional Factors

In addition to the aforementioned sustainability factors, Beta Capital will select at least one additional indicator among those described in Table 2 of Annex I, and one additional indicator among those described in Table 3 of Annex I of Commission Delegated Regulation 2022/1288, of 06-04-2022 (RTS). These additional indicators will be selected based on the probability of occurrence and severity of adverse impacts, taking into account the specific financial products.

Consequently, investments in the following sectors are excluded:

Sectors excluded from Beta Capital’s investment

  1. Illegal economic activities ;
  2. Activities that limit individual rights and freedoms or violate human rights;
  3. Activities with a large negative environmental impact and limited capacity for improvement;
  4. Activities directly or indirectly exposed to the fossil fuel industry;
  5. Activities that produce large amounts of non-recyclable or reusable waste.
  6. Activities that negatively affect areas sensitive to biodiversity
  7. Manufacture and/or sale of weapons or ammunition;
  8. Human cloning;
  9. Pornography and related media;
  10. Gambling industry, including online gambling and betting;
  11. Collection of personal data, research, development and implementation of technical applications related to electronic solutions and data programming specifically intended to support the activities listed above;
  12. Investment in sovereign and supranational organizations

INVESTMENT PROCESS

Investment decision making

Risk management namely sustainability risks, is the responsibility of the Board of Directors, through the Compliance.

Sustainability risks identified in the investment analysis process are considered when making investment decisions.

An initial screening will eliminate the investment outright, if it falls within one of the excluded sectors.

After the initial screening, a due diligence detailed by the investment team that analyzes the information provided by the company in the ESG questionnaire and in which, in addition to the technological, legal and fiscal aspects of the business plan, the risks in terms of sustainability and/or the difficulty in overcoming any constraints that may jeopardize sustainability, will be assessed, and the decision may be to not proceed with the investment.

It should be noted, however, that Beta Capital may consider an investment that does not meet all ESG criteria in the initial assessment, provided the team presents a clear and workable plan to meet the required standards within a reasonable period of time after the investment. 

Follow-up

Beta Capital pursues a hand -on policy on its portfolio companies, actively involving itself with those responsible for, throughout its different stages, identifying and managing sustainability risks.

The investment team is responsible for monitoring the environmental, social and governance impact of the investee companies, as well as assessing the main negative impacts and implementing the strategy outlined to achieve the defined objectives . Namely in providing ESG performance support and monitoring and development of appropriate ESG key performance indicators ( KPIs ), as well as their implementation, data collection and processing. Beta Capital considers that it has a capacity to influence its subsidiaries that is likely to make them evolve in this field.

Each portfolio company will prepare an annual Environmental, Social and Governance Report (ESG Report) that assesses its performance on these topics. This report will be used to monitor progress and keep portfolio companies focused on achieving their sustainability goals and preparing for the future.

Exit

Beta Capital will seek to value portfolio companies during the holding period, by managing the sustainability risk. During this period, ESG improvements will be documented, with the aim of making them explicit and incorporating them into the due diligence process at the time of the exit.

INFORMATION DISCLOSURE

It is Beta Capital’s commitment to disclose information related to sustainability, as well as its continuous improvement as regulatory obligations and internal procedures evolve.

Investors in funds managed by Beta Capital will receive an annual Environmental, Social and Governance Report (ESG Report) that assesses their performance on these topics and whose structure and approach will cover the main sustainability risks.

Beta Capital will disclose said information pursuant to European Regulation (EU) 2019/2088 (SFDR) on disclosures relating to sustainability in the financial services sector.

REMUNERATION POLICY

BetaCapital ‘s remuneration policy aims at promoting the professional development of each team member, align interests with investors and integrate risks in terms of sustainability, avoiding encouraging inappropriate risk taking and aligning with sustainable development long-term company.

This focus on long-term sustainability is reinforced by the existence of a stock option plan applicable to directors and all employees

In the case of Beta Capital, taking into account that its investments fall under Article 8 of the SFDR , the variable remuneration of individual and group employees, in addition to being thus correlated with the financial results of each product, will have a additional portion linked to the respective percentage of sustainable investments, thus encouraging the company’s long-term sustainable financial development.

The establishment of the remuneration of employees is the responsibility of the Board of Directors and that of Beta Capital’s Board of Directors is the responsibility of the Remuneration Committee, composed by personalities that do not integrate the company’s Board of Directors.

In addition to this variable remuneration of a quantitative nature, Beta Capital considers that its approach to investment management and its portfolio based on quality, as well as involvement with the hierarchy at the highest level, teamwork, leadership and commitment to results, are factors that contribute decisively to the motivation and well-being of employees.

Thus, Beta Capital ensures that within the scope of investment management and decision-making, the entire team and also the members of the Board of Directors responsible for investment decisions and risk management and control, take into account the sustainability factors enshrined in its policy.

PRINCIPLE ADVERSE IMPACTS ON SUSTAINABILITY

Beta Capital uses the definition of principle adverse sustainability impacts, as described in recital (20) of the SFDR, as being “those impacts of investment decisions and advice that result in negative effects on sustainability factors”, in which, sustainability factors sustainability are environmental, social and labour issues, respect for human rights, the fight against corruption and bribery, as defined in Article 2 (24) of the SFDR.

Beta Capital takes into account the principle adverse impacts of investment decisions on sustainability factors , taking into account publicly available information and/or information collected from affiliated companies. With that objective in mind, it is implementing a periodic reporting system that will allow it to have a set of indicators in terms of impact on sustainability factors in the areas of action that it considers priorities.

This report will be made in accordance with the Commission Delegated Regulation 2022/1288 of 06-04-2022 (RTS). Beta Capital will thus report all the mandatory indicators described in Table 1 of Annex I of the SFDR Regulatory Technical Standards; in addition Beta Capital will select at least one additional indicator among those described in Table 2 of Annex I, and one additional indicator among those described in Table 3 of Annex I additional indicators will be selected based on the probability of occurrence and severity of adverse impacts , taking into account the specific financial product.

Beta Capital will do its best to collect, monitor and report the principle indicators of adverse sustainability impact listed. Some of these adverse impact indicators are already being monitored and reported, others still need to be integrated into the data collection process. Until 30-06-2023, Beta Capital will update this statement with the data collected for the period from 01-01-2022 to 31-12-2022.

However, it is important to take into account and mention that this European legislation on sustainability is a recent and not stabilized reality, in accelerated evolution, so that in some cases, the measurement of the principle adverse impacts will be partially subjective and based on a qualitative assessment. Beta Capital will seek to ensure accuracy by implementing internal and/or external reviews where appropriate, to reduce the margin of error and/or progressively increase confidence in the indicators.

All members of the investment team are educated regarding the principle adverse impacts on sustainability factors, in order to integrate these considerations into the investment process, in line with Beta Capital’s sustainability policy.

And Beta Capital will act proactively with the companies in its portfolio, in relation to the principle adverse impacts on sustainability factors, seeking to obtain from them all relevant information regarding the principle adverse impacts that affect their businesses.

All functional areas of Beta Capital will guide their actions taking into account the sustainability principles established in this document, as well as acting in order to achieve the established objectives and priorities.

The integration of sustainability risks considers the size, nature and scale of activities, and Beta Capital is committed to taking into account the principle adverse impacts of investment decisions and the sustainability factors on investment decisions. 

Porto, 14-03-2023

  • PAI Report as of 30-06-2023 available here.

PRINCIPLE ADVERSE IMPACTS OF OUR FUNDS

1. BETA INNOVATION VENTURE CAPITAL FUND

Although when it was launched in 2020, FCR Beta Innovation did not take into account the EU criteria applicable to sustainable activities from an environmental point of view, as of 01-01-2023, FCR Beta Innovation will only invest in projects that promote environmental or social characteristics, under the terms of Article 8 of the SFDR, taking into account the main negative impacts of investment decisions on sustainability factors and outright refusing investments in sectors excluded by Beta Capital’s Sustainability Policy.

For the purposes of investment decisions, follow-up and reporting, Beta Capital uses publicly available information and/or information collected from affiliated companies and is implementing an information collection system that allows it to have a set of indicators in terms of impact on the sustainability factors in the areas of action that it considers priorities.

As of 30-06-2023, this information will be reported under the terms of Delegated Regulation 2022/1288 of the Commission, of 06-04-2022 (RTS). Thus, FCR Beta Innovation will report all mandatory indicators described in Table 1 of Annex I of the SFDR Regulatory Technical Standards; in addition, Beta Capital will select at least one additional indicator among those described in Table 2 of Annex I, and one additional indicator among those described in Table 3 of Annex I, selected based on the probability of occurrence and severity of adverse impacts.

It is important, however, to note that this European legislation on sustainability is a recent reality and has not stabilized, evolving at an accelerated rate, so that in some cases, the measurement of the main adverse impacts will be partially subjective and based on a qualitative assessment. However, Beta Capital, as a management entity, will seek to ensure its accuracy, implementing internal and/or external reviews when appropriate, to reduce the margin of error and/or progressively increase confidence in the indicators.

All Beta Capital employees are instructed regarding the main adverse impacts of investments on sustainability factors, to integrate these impacts into their investment, monitoring and reporting process, under the terms of Beta Capital’s Sustainability Policy.

Porto, 14-03-2023

 

  • PAI Report as of 30-06-2023 available here.