Regulation (EU) 2019/2088 of 27 November 2019 on sustainability‐related disclosures in the financial services sector (“SFDR”)
SFDR imposes transparency obligations and periodic reporting requirements on investment management firms at both a product and firm level. SFDR forms part of the European Commission’s action plan on sustainable finance.
As financial market participants, Nation 1 GP S.à r.l and Nation 1 GP II S.à r.l. (the “GPs”), as general partner and registered alternative investment fund manager respectively of Nation 1 and Nation 1 VC fund II which are Luxembourg based alternative investment funds (“AIFs”) make the following disclosure in accordance with SFDR.
Integration of Sustainability Risks
Sustainability risks, being environmental, social or governance events or conditions that, if they occur, could cause a negative material impact on the value of the investments, are not considered by the GPs in their investment decision-making processes and due diligence procedures, as the GPs believe that they are not material to the investment decision making process considering the nature and the size of the investments (seed and early-stage financing rounds of startups).
No Consideration of Principal Adverse Impacts
In relation to the consideration of principal adverse impacts, the GPs lacks the necessary resources to acquire the data to comply with the requirements in this regard. Therefore, while supportive of the policy aims of the principal adverse impact regime, the GPs do not currently consider principal adverse impacts. This decision will be kept under review with regards to the indicators foreseen in the technical standards published by the European authorities.
The GPs are remunerated by means of a management fee calculated on the total capital commitment of the limited partners during the Investment Period of the AIFs. Thereafter, the management fee is calculated on invested capital and is subject to management fees and expenses cap. Any money or fees of any description whatsoever to be paid will be offset 100% against the management fee paid in respect of each portfolio, pro rata to the amounts paid in respect of each portfolio. Such mechanism does not encourage excessive risk taking.
The investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.