Date of Publication: 29.06.2022
[Updated on 12.01.2023]
1. Transparency of sustainability risk policies (Article 3 SFDR)
Maxburg Capital Management GmbH (the “AIFM”) is a long-term investor that embraces its responsibility towards investors, portfolio companies and stakeholders in the wider ecosystem in which the firm and its portfolio companies operate. The AIFM manages sustainability risks through a combination of committed participation on the boards of directors of its portfolio companies as well as ongoing monitoring of the progress of each company. Furthermore, sustainability risks will be considered as part of the due diligence and risk assessment processes in advance of each investment.
2. No consideration of adverse impacts of investment decisions on sustainability factors (Article 4 SFDR)
Article 4 SFDR provides for a framework aimed at achieving transparency with regard to any principle adverse impacts of investment decisions on sustainability factors. For this purpose, financial market participants such as the AIFM must disclose certain information (taking into account the Commission Delegated Regulation (EU) 2022/1288 (“RTS”) with regard to regulatory technical standards). Currently, the AIFM does not take into account any principle adverse impact of investment decisions on sustainability factors as provided for by the RTS, as it believes that the information provided to it by the portfolio companies in relation to the investments is not sufficient to allow it to do so. The AIFM will monitor developments with regard to available information and consider whether it is reasonably possible in the future to disclose the information required by the Article 4 SFDR-framework (including the RTS).
3. Transparency of remuneration policies in relation to the integration of sustainability risks (Article 5 SFDR)
As a registered AIFM within the meaning of section 2(4) of the German Capital Investment Code (Kapitalanlagesetzbuch), the AIFM does not have a remuneration guideline (remuneration policy) in accordance with the requirements of the German Capital Investment Code (Kapitalanlagesetzbuch). Accordingly, the integration of sustainability risks is not considered with respect to the determination of the remuneration.
The Financial Product managed by Maxburg Capital Management GmbH (the “AIFM”), intends to promote environmental and social characteristics and hence envisages to invest only in ethically and socially sound portfolio companies (“Investee Companies”). The Financial Product focuses on equity and equity-related in SMEs in the DACH region. The Financial Product strictly applies a binding exclusion list, the exclusion covers inter alia lethal weapons, tobacco and alcohol. 100% of the invested capital will be in line with the exclusion list which will be taken into account during the entire investment process.
The Financial Product promotes environmental or social characteristics (Article 8 SFDR) but does not have sustainable investments (Article 9 SFDR) as its objective.
The Financial Product promotes environmental and social characteristics through the incorporation of ESG considerations within its investment processes.
Specifically, the Financial Product promotes the following environmental and social characteristics:
The above listed factors are not considered as conclusive or final, since the investments the Financial Product will make, cannot be defined yet (so-called “Blind Pool”). Thus, the factors may be refined and revised at a later date.
The Financial Product intends to build, hold and manage in its own name and for its own account a portfolio of equity and equity-related majority or, on an opportunistic basis, qualified minority investments in small and medium-sized enterprises mainly in the DACH region.
The investment strategy guides investment decisions based on factors such as investment objectives and risk tolerance. The Financial Product intends to promote social characteristics and has adjusted its investment strategy accordingly. Consequently, the Financial Product will strictly adhere to the abovementioned exclusion list in order to attain the environmental and social characteristics of the Financial Product.
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.
The Financial Product refrains from investing in companies involved in activities with negative externalities and adverse social outputs, including any company that contravenes international standards or conventions – including but not limited to, human rights violations, child labor, corruption and environmental degradation, amongst others – or operates and has customers in countries and principalities that systematically violate human rights or are under arms embargo of the UN or EU. The Financial Product will also not invest in businesses that generate meaningful sales out of direct involvement in:
Addictive substances / offerings
Nature & Animal rights
Production or trade of radioactive material. This does not include procurement of medical devices, quality control equipment, or other uses for which the radioactive source is insignificant and/or adequately shielded.
The Financial Product does not commit to make sustainable investments within the meaning of the SFDR or with an environmental objective aligned with the Regulation (EU) 2020/852 (the “EU Taxonomy”). However, the Financial Product targets that its investments will be aligned with E/S characteristics. Since the Financial Product’s asset portfolio consists as a Blind Pool, it reserves the discretion to make sustainable investments and investments in “Other” assets in accordance with its investment strategy as provided in the private placement memorandum and accompanying marketing documents.
The Financial Product does not commit to a minimum extent to make sustainable investments with an environmental objective aligned with the EU Taxonomy. In some Investee Companies the Financial Product will participate as a minority shareholder. The legal limitations of this position do not allow the Financial Product to ensure full compliance with all requirements set out by the SFDR and the EU Taxonomy for sustainable investments with an environmental objective aligned with the EU Taxonomy. In particular, the Financial Product cannot monitor the compliance of the “do not cause significant harm” principle in all its Investee Companies by economically reasonable means. It also assumes that monitoring and reporting on the compliance of this principle would place an economically disproportionate burden on the usually small management teams of its Investee Companies.
The Financial Product does not commit to make sustainable investments with an environmental objective aligned with the EU Taxonomy and will therefore not have a minimum share of investments in transitional and enabling activities.
In order to attain the environmental and social characteristics promoted by the Financial Product, the Financial Product carefully selects its investment opportunities during the pre-investment and investment phase. The Financial Product applies the abovementioned negative screening on all potential investments to determine unsuitable investments.
Also, the Financial Products continuously tracks the following indicators in its Investee Companies: Violations of Equal Employment laws, lawsuit penalties, number of work accidents with leave, absenteeism rate, share of renewable energy in the Investee Companies’ energy consumption and carbon intensity of electricity consumption/€M revenue by requesting the necessary data from the Investee Companies on a quarterly basis.
The methodology of the Financial Product consists of strictly adhering to the exclusion list specified above. The Financial Product will consider the exclusion list in every part of the investment process.
Furthermore, the Financial Product will use the following sustainability indicators to measure the attainment of each of the environmental or social characteristics promoted by this financial product:
Apart from its due diligence (as described below under X. in further detail), monitoring and regular communication between the AIFM and the Financial Product’s Investee Companies, the AIFM does not conduct further research or investigations on a regular basis, at least as long as the data reported by the portfolio does not give rise to any reasonable doubts.
In some of the Investee Companies the Financial Product will participate as a minority shareholder. The legal limitations of this position do not allow the Financial Product to ensure full compliance with all requirements set out by the SFDR and the EU Taxonomy for sustainable investments with an environmental objective aligned with the EU Taxonomy. In particular, the Financial Product cannot monitor the compliance of the “do not cause significant harm” principle in all its Investee Companies by economically reasonable means. It also assumes that monitoring and reporting on the compliance of this principle would place an economically disproportionate burden on the usually small management teams of its Investee Companies.
The assessment of how the Financial Product’s potential investment in the potential Investee Company relates to the promoted environmental and social characteristics is carried out as part of the due diligence process prior to the investment. Further reviews may be conducted beyond such due diligence process and regular monitoring if, and to the extent, the AIFM deems it appropriate to conduct an ad hoc review in a specific case. The AIFM does not foresee to engage external service providers to assess the ecological and social characteristics of a potential investment.
To manage ESG risks during the investment stage, the AIFM commits to its responsible investment approach, partnering with the Investee Companies to:
Should ongoing monitoring raise a concern with respect to ESG for an Investee Company, the AIFM will escalate the finding to determine the appropriate course of action.