Our SFDR disclosures
To reorient capital flows towards a more sustainable economy, the EU has adopted a series of new regulations. One of them, the Sustainable Finance Disclosure Regulation (SFDR) aims to provide greater transparency regarding the sustainability of financial products.
By 10 March 2021, funds promoted as ESG aligned are required to classify as being Article 8 (“Light Green”) or Article 9 (“Dark Green”). Article 8 funds “promote environmental and social characteristics”, while Article 9 funds “have sustainable investment as their objective”.
An investment scope designed for impact
Norselab Fund I invests in industry related, data driven technology companies with a net positive impact on people and the planet. More specifically, this means that we invest within the following scope:
1. Industry-related companies
Resource-intensive industries where emerging technologies and novel business models are likely to provide high impact.
Examples include industries such as construction, agriculture and waste management, where the current way of functioning does not ensure efficient use of natural resources, nor economic prosperity.
2. Data-driven companies
Technology companies using data as a key element of their product offering to enable a sustainable transition.
Industries such as the ones mentioned above are typically among the least digitized. As they are still not equipped to leverage the power of data, data-driven industry companies are positioned to radically increase these industries’ resource efficiency.
3. Impact-native companies
Companies whose technology and products are designed to create net positive impact for people and the planet.
We choose to invest in companies that contribute to sustainability in the same way they make money. For example, a company offering waste management software that incentivizes better waste sorting is impact native. The more users they have, the more impact they create.
Norselab Fund I will only consider investments in companies fulfilling all three criteria.
Thanks to our investment scope, combined with our Meaningfulness Policy, the criteria in most ESG and sustainability frameworks are prerequisites for a Norselab Fund I investment.
A light green fund
As the technical requirements for the disclosures for Article 8 and Article 9 funds are not yet finalized, we have elected to classify Norselab Fund I as an Article 8 (“Light Green”) fund for the time being.
However, we emphasize that we aim for a top of the range approach to sustainable investments with superior returns. We will therefore seek to comply with the highest standards of sustainable investments, independently of our current classification.
Sustainability Risk Policy
Norselab considers sustainability as part of its investment process. However, Norselab Fund I may be exposed to sustainability risks from time to time. A sustainability risk is defined in the EU Sustainable Finance Disclosure Regulation as an environmental, social or governance event or condition that could cause an actual or a potential material negative impact on the value of investments.
The universe of sustainability events or conditions is very broad, and their relevance, materiality and impact on investments will depend on a number of factors. If they materialise, sustainability risks can reduce the value of investments held within Norselab Fund I and could have a material impact on the performance and returns of the Fund.
Norselab’s remuneration policy has been reviewed and updated to meet the requirements of SFDR. The management of long-term risks including sustainability risks are reflected within the remuneration policy.
No consideration of Principal Adverse Impacts
Thanks to our investment scope described above, as well as our Meaningfulness Policy, Norselab rules out companies exposed to principal adverse impacts. Norselab Fund I is therefore opting out of SFDR-related consideration of Principal Adverse Impacts. This decision will be reviewed periodically.
We do however consider and monitor potentially negative impacts. By conducting regular net impact analysis across portfolio companies with the model developed by Upright Project, we have a comprehensive understanding of both positive and negative impacts on people, planet, society and knowledge generated by our portfolio companies.
As an Investment Manager focusing on investments with net positive impact on people and the planet, we warmly welcome the new sustainability related regulations. We believe that these new regulations will strengthen Norselab’s approach, as they are likely to reduce some of the noise around sustainability and define a new, more transparent and less subjective standard for ESG.