ACT Venture Capital (“Act”) is a venture capital manager focused on seed and expansion investment opportunities. We invest in business and management teams who have the ambition and potential to become market leaders.
The Sustainable Finance Disclosure Regulation (“SFDR” or “the Regulation”), effective from 10 March 2021, was introduced by the European Commission as part of the Action Plan on Sustainable Finance. The Regulation requires fund managers to disclose to investors the integration of sustainability risks, consideration of adverse sustainability impacts, promotion of environmental or social characteristics, and the overall practice of sustainable investing.
The EU Sustainable Finance Disclosure Regulation (2019/2088) on sustainability-related disclosures in the financial services sector defines “sustainability risks” as environmental, social or governance events or conditions that, if they occur, could cause an actual or potential material negative impact on the value of the investment”.
Act’s mission is to realise the potential of portfolio companies, management teams and employees to create long-term sustainable value, which in-turn will generate market-leading returns for our investors. We recognize the effective assessment and management of ESG matters can have a positive effect on the financial performance and value of our portfolio companies.
Our definition of responsible investment
The incorporation of environmental, social and corporate governance (ESG) factors into our investment processes, decision-making and ownership practices.
Commitments and Principles
To adhere to the principles of responsible investment, we will:
Incorporate relevant ESG factors into our investment processes, decision-making and ownership practices that directly influence portfolio companies to enhance performance in these areas;
Prior to an investment, ESG matters are evaluated as part of the due diligence process. Furthermore, all portfolio companies are required to periodically report on ESG criteria;
Ongoing engagement with the company on material ESG issues is carried out. Where appropriate, agree an ESG action plan to address material ESG risks and opportunities;
Seek appropriate disclosures and assurances on relevant ESG issues from the entities in which we invest and its management team;
Be active shareholders and incorporate relevant ESG issues into our ownership policies and practices;
Actively work to improve diversity and inclusion in our portfolio companies as well as within Act Venture Capital.
We have secured certification with Diversity VC Standard (https://diversity.vc/diversity-vc-standard/)
We are members of ESG VC (https://www.esgvc.co.uk/)
Our ESG Approach
Ensure the company complies with our excluded/prohibited activity policy.
2. Due Diligence
Identify material ESG issues.
Incorporate ESG clause in legal agreements.
Completion of ESG questionnaire.
Periodic portfolio ESG review.
Adopt a risk-based approach, and engage with the company on material ESG issues.
Participation at the Board level, ensuring ESG is a Board issue.
Support the company in demonstrating to potential investors how ESG risks have been mitigated and opportunities realised.
Remuneration policies at Act are consistent with the degree of integration of sustainability risks in the investment process.
Remuneration is generally provided on a fixed basis and may include a variable bonus element and participation in the firm’s client funds’ carried interest. Remuneration levels are justified according to role and performance of the individual concerned including the conduct of the employee under any relevant internal procedures, policies, and compliance requirements.
The firm’s general remuneration policy promotes sound and effective risk management with respect to business risks, ensuring that the structure of remuneration does not encourage excessive risk-taking. Act also considers the effect of potential conflicts of interest on remuneration.
This will be reviewed as appropriate on a regular basis.
No Consideration of Principal Sustainability Adverse Impacts
The SFDR defines principal adverse impacts (PAI) as those impacts caused by, contributed to, or directly linked to investment decisions and advice that result in negative, material, or likely to be material impacts on sustainability factors.
Sustainability is the practice of operating a business in a way that meets the economic, social and environmental needs of the present without compromising the ability of future generations to meet their own needs.
Act Venture Capital does not consider the principal adverse impacts of its investment decisions as set forth in article 4 sub 1 (a) of the Disclosure Regulation and therefore does not make the disclosures as described in article 4 sub 1 (a) of the SFDR. Given the size of Act Venture Capital’s team ( less than 500 employees) and the fact that there are rarely adverse impacts on sustainability factors within the digital economy; such disclosure and the administrative burden in connection therewith would not be proportional. While the integration of material ESG issues is a fundamental component of our investment process, we do not believe our investment decisions have a direct adverse impact on sustainability factors