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BETA CAPITAL ESG PROCEDURES (PT)

FRAMEWORK

Beta Sociedade de Capital de Risco, S.A. (“Beta Capital”) is venture capital company which goa is the investment and acquisition of shares in companies with high potential pf valorization, 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:

• Decree-Law No. 27/2023, of 28 April 2023;
• Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 with subsequent amendments – Sustainable Finance Disclosure Regulation (“SFDR”);
• Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 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 the products financial statements, information related to sustainability, in particular their Sustainability Policy.

However, bearing in mind that European Union legislation linked to sustainable finance is a recent, unsterilized and evolving reality, Beta Capital’s Sustainability Policy is a project under construction and will be subject to changes whenever necessary. 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.

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

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

Beta Capital’s ESG procedures were approved on 14.03.2023, last reviewed on 21.06.2024 and will be updated as appropriate or necessary, and the information on the website will be updated as changes are made.

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 SFRD, sustainability risk, “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”, 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 into 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, UN Principles of Responsible Investment, and the Paris Agreement.

Beta Capital assumes the following commitments in its investments:

  1. The integration of sustainability risks, taking into account the size, nature and scale of activities and the principal adverse impacts of investment decisions on sustainability factors.
  2. Minimum safeguards, pursuant to Article 18 of EU Regulation 2020/852 (Taxonomy Regulation).
  3. Respect for the DNSH criteria (Do No Significant Harm), with regard to the environmental objectives referred to in Article 9 of EU Regulation 2020/852
  4. Transparency of information provision, taking into account what is stated in paragraph 1 above.

 

Sectors excluded from Beta Capital’s investment

Investments in the following sectors are excluded:

  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.

PRINCIPAL ADVERSE IMPACTS ON SUSTAINABILITY

Beta Capital uses the definition of principal 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.”, with respect to sustainability indicators related to climate and other environmental impacts, social and employee matters, to respect for human rights, and to anti‐corruption and anti‐bribery matters, as defined in Article 2 (24) of the SFDR.

Beta Capital takes into account the principal adverse impacts of investment decisions on sustainability factors, taking into account publicly available information and/or information collected from affiliated companies, and seeks to obtain from them all relevant information on the main adverse impacts affecting their business. 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):

Required sustainability indicators (Table 1 of Annex I):

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. UN 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 sustainability factors, Beta Capital will select at least one additional indicator from among those described in Table 2 of Annex I and one additional indicator from among those described in Table 3 of Annex I. Additional indicators may also be selected based on the probability of occurrence and severity of adverse effects, taking into account the financial products.

Materiality

Beta Capital takes into account, as far as possible, the materiality of the values of the above indicators, taking into account the size, stage of development and other characteristics of the projects in which it invests.

Other considerations

It should be borne in mind that European sustainability legislation is a recent reality, not a stable and evolving one. In some cases, the measurement of significant adverse impacts will be partially subjective and based on 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.

Beta Capital will do its best to collect, monitor and report the principal indicators of adverse sustainability impact listed. Some of these adverse impact indicators are already monitored, while others need to be better integrated into the data collection process.

All members of the investment team are educated regarding the principal adverse impacts on sustainability factors, in order to integrate these considerations into the investment review process. 

 

Beta Capital’s PAI report:

  • As of 31-12-2022 available here: EN | PT
    As of 31-12-2023 available here: EN | PT
 

INVESTMENT PROCESS 

Investment decision making

Risk management namely sustainability risks, is the responsibility of the Board of Directors and the sustainability risks identified in the investment analysis process are considered when making investment decisions. At Beta Capital, the assessment of sustainability risks is part of the due diligence process that precedes each investment, the results of which are taken into account in the respective decision-making process.

An initial screening will eliminate the investment outright if it falls within one of the excluded sectors. After the initial screening, a detailed due diligence is conducted by  the investment team,  which analyzes the information provided by the company in the ESG questionnaire, which in addition to the technological, legal and fiscal aspects of the business plan,  assesses the sustainability risks and/or the difficulty in overcoming any constraints that may jeopardize sustainability, taking into account their materiality, and may decide not to 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 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.

Each portfolio company will prepare an annual Environmental, Social and Governance Report (ESG Report) that assesses its performance on these topics, with a structure and approach based on reporting on material sustainability risks in light of Regulation (EU) 2019/2088. 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.

REMUNERATION POLICY

Beta Capital‘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 will be reinforced by the existence of a stock option plan applicable to directors and 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 an additional portion linked to the respective percentage of sustainable investments, thus encouraging the company’s long-term sustainable financial development.

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 alignment with its policy of sustainability, the motivation and the well-being of its employees.

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.
Thus, Beta Capital ensures that within the scope of investment management and decision-making, the entire team, and 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.

Approved on 14-03-2023.

FUNDS UNDER MANAGEMENT

Beta Innovation Fundo de Capital de Risco Fechado

1. BETA INNOVATION FUNDO DE CAPITAL DE RISCO FECHADO

PAI report:
  • As of 31-12-2022 available here: EN | PT
  • As of 31-12-2023 available here: EN | PT
Template periodic disclosure for the financial products referred to in Article 8, paragraphs 1, 2 and 2a, of Regulation (EU) 2019/2088 and Article 6, first paragraph, of Regulation (EU) 2020/852:
  • As of 31-12-2023 available here: EN | PT
Disclosure for Beta Innovation Fundo de Capital de Risco Fechado pursuant to article 10 of Regulation 2019/2088 on Sustainability-Related Disclosure in Financial Services Sector (SFDR):
  • As of 31-12-2022 available here: EN | PT