PSV TECH ll SFDR
Sustainability-related Disclosure (SFDR) – Website disclosures

Publication date: 31.03.2025
Version: 1.0
Publication URL: https://psv.xyz/psv-tech02-sustainability-related-disclosures
Fund Manager: PSV Tech Management ApS, CVR-no: 41 39 83 02
Financial Product: PSV Tech Fund II K/S, CVR-no: 45 18 47 49 (the “Fund”)

BASIC INFORMATION

Integration of sustainability risks in the investment decision-making process

The Fund Manager follows a responsible investment strategy when making investments for and on behalf of the Fund. By doing so, the Fund Manager seeks to capture and identify responsible businesses and mitigate any sustainability risks. A “Sustainability Risk” refers to an environmental, social or governance (“ESG”) event or situation which, if it occurs, could have an actual or potential material adverse impact on the value of an investment.

Awareness of Sustainability Risks is systematically integrated into all stages of the Fund Manager’s investment decision-making processes, from screening and due diligence of potential target companies to governance and monitoring of portfolio companies. More specifically, the integration of Sustainability Risks is carried out through the following measures and, thus, reflected in the Fund’s investment decisions:

Screening potential investments against environmental, social, and governance (ESG) criteria

• Conducting thorough ESG due diligence on all potential investments
• Incorporating ESG considerations into investment recommendations and decision-making-processes
• Regular portfolio reviews
• Annual monitoring and reporting

The Fund Manager has looked at the Sustainability Risks that, if they occur, could cause a negative impact on the value of the investment. The following risks are assessed to be the Sustainability Risks that portfolio companies are most exposed to:

• data breaches,
• legislative changes,
• employee health and safety hazards,
• diversity and integrity failures of leadership;

The likelihood of these Sustainability Risks occurring and materializing is assessed as low, however, effectively managing these risks is vital for achieving sustainable long-term risk-adjusted returns.

In addition, and based on the assessment of relevant Sustainability Risks, sector specific restrictions are further included in the Fund’s investment policy and outlined below under the section (d) Investment Strategy.

During the due diligence and investment phase, in addition to ensuring that the investment is not within any of the restricted sectors, the Fund Manager identifies the Sustainability Risks set out above and any additional, potential Sustainability Risks.

Throughout the holding period, the Fund continuously evaluates, mitigates, and reports on Sustainability Risks. The results of ESG due diligence are used to monitor and address risks as they arise. This ensures that Sustainability Risks are being handled and eventually are minimized in the investment decision-making process. This process is ensured and overseen by the general partners of the Fund Manager. Further, the Fund Manager ensures that the portfolio company actively works with the identified Sustainability Risks and ensures that even after the investment, the Sustainability Risks are continuously monitored and assessed. In cases where the Fund holds significant influence over a portfolio company’s governance, the Fund ensures that this influence is exercised effectively, particularly at the portfolio company’s board level.

Remuneration policies
The Fund Manager does not have a remuneration policy, and the Fund Manager’s remuneration structures are not linked to the integration of Sustainability Risks. Thus, they are not structured to the effect that they encourage excessive risk taking with respect to Sustainability Risks.

ADDITIONAL INFORMATION FOR FUND MANAGERS MANAGING E/S PROMOTING FUNDS

a. Summary

English:
The Fund promotes the following environmental and/or social characteristics; 1) futureproofing planet earth (environment), 2) trust in technology, and 3) health & wellbeing through investments in early-stage technology companies. It does not have sustainable investment as its objective.

The Fund invests in early stage, i.e. pre-seed and seed portfolio companies from all sectors with innovation capacity and growth potential with a focus on investments in tech enabled companies (“Sectors”) but outside certain prohibited sectors and activities (“Prohibited Sectors & Activities”). The investment strategy is industry agnostic, with particular emphasis on companies in Denmark and the Nordics.

The investment strategy consists of a tailored four-step approach for assessing potential portfolio companies: 1) negative screening, 2) ESG risk and opportunities screening, 3) impact screening, and 4) alignment with the environmental and/or social characteristics of the Fund, while also ensuring that portfolio companies adhere to responsible business practices and good governance standards. On this basis, four binding elements are defined and used to select investments. Further, good governance practices are an integrated part of the Fund’s investment strategy during both the due diligence and holding phase. Thus, the Fund actively seeks investments that address at least one of the United Nations Sustainable Development Goals (SDGs).

The Fund will use best efforts to make at least 50% of the Funds venture investments – (based on the number of investments and monitored upon the expiry of the investment period), with venture investments, according to the Fund, meaning investments where the aggregated invested amount is above DKK 5 million – in portfolio companies meeting the environmental and/or social characteristics promoted by the Fund. The remaining investments will be in tech enabled companies that pass the negative screening test, operate in accordance with responsible business practices, but are not eligible to meet the other binding elements of the investment strategy.

The environmental and/or social characteristics promoted by the Fund – and the sustainability indicators used to measure the attainment of these characteristics – are monitored through access to portfolio companies and their data as well as potential influence on the portfolio companies. The portfolio companies are subject to reporting obligations as a part of the Fund’s annual ESG questionnaire.

To be eligible for investment, portfolio companies must pass two key screenings: 1) Negative screening and 2) ESG risk and opportunities screening. To qualify as an impact startup, i.e. E/S promoting case, that helps promote at least one of the environmental and/or social characteristics promoted by the Fund, the portfolio company must also pass the 3) impact screening test, and 4) demonstrate alignment with the Fund’s specific environmental or social characteristics and show a strong ‘impact interlock’—meaning that impact scales proportionally as the portfolio company grows. Also, company-specific KPIs for environmental and/or social characteristics are identified.

The primary data source is portfolio companies and their yearly reporting. Data quality is ensured through internal review, and if necessary, external review or verification will be carried out. The amount of reported data is expected to increase as the portfolio companies mature, however, initially a large proportion of data is expected to be estimated.

Due to the nature of early stage investing, measurement practices, methodologies and data sources are subject to certain limitations. These limitations will be addressed through ongoing actions such as regular review of methodologies to ensure the most up-to-date approach.

The due diligence carried out includes various steps from consideration of ESG and impact factors to assessments of good governance, risks and contribution to the environmental and/or social characteristics.

Where the Fund has substantial influence on a portfolio company, this influence is exercised at the board level to ensure that ESG priorities, and impact priorities where relevant, are incorporated into the agenda of board meetings.

The Fund does not use an index as a reference benchmark.

Danish:
Fonden fremmer følgende miljømæssige og/eller sociale karakteristika: 1) fremtidssikring af planeten Jorden (miljø), 2) tillid til teknologi, og 3) sundhed og velvære gennem investeringer i teknologi-startups i tidlig fase. Fonden har ikke bæredygtig investering som sit mål.

Fonden investerer i tidlige faser, dvs. pre-seed og seed porteføljeselskaber fra alle sektorer med innovationskapacitet og vækstpotentiale, med fokus på investeringer i teknologidrevne virksomheder (“Sektorer”), men uden for visse forbudte sektorer og aktiviteter (“Ikke-tilladte Sektorer & Aktiviteter”). Investeringsstrategien er sektoragnostisk med særlig vægt på virksomheder i Danmark og Norden.

Investeringsstrategien består af en skræddersyet firetrins tilgang til vurdering af potentielle porteføljeselskaber: 1) negativ screening, 2) ESG-risiko- og muligheder screening, 3) impact screening, og 4) overensstemmelse med fondens miljømæssige og/eller sociale karakteristika, samtidig med at det sikres, at porteføljeselskaberne følger ansvarlige forretningspraksisser og god ledelsespraksis-standarder. På denne baggrund defineres og anvendes fire bindende elementer til udvælgelse af investeringer. Derudover er god ledelsespraksis en integreret del af fondens investeringsstrategi både under due diligence- og ejerskabsfasen. Fonden søger aktivt investeringer, der adresserer mindst ét af FN’s verdensmål (SDG’er).

Fonden vil bestræbe sig på at sikre, at mindst 50 % af fondens ventureinvesteringer – (baseret på antallet af investeringer og monitoreret ved udløbet af investeringsperioden), hvor ventureinvesteringer ifølge fonden betyder investeringer, hvor den samlede investerede sum er over DKK 5 millioner – går til porteføljeselskaber, der opfylder de miljømæssige og/eller sociale karakteristika, som fonden fremmer. De resterende investeringer vil være i teknologidrevne virksomheder, der består negativ screening-testen, opererer i overensstemmelse med ansvarlige forretningspraksisser, men som ikke er berettigede til at opfylde de øvrige bindende elementer i investeringsstrategien.

De miljømæssige og/eller sociale karakteristika, som fonden fremmer – og de bæredygtighedsindikatorer, der bruges til at måle opnåelsen af disse karakteristika – overvåges gennem adgang til porteføljeselskaberne og deres data samt potentiel indflydelse på porteføljeselskaberne. Porteføljeselskaberne er underlagt rapporteringsforpligtelser som en del af fondens årlige ESG-spørgeskema.

For at være berettiget til en investering skal porteføljeselskaberne bestå to nøglescreenings: 1) negativ screening og 2) ESG-risiko- og muligheder screening. For at kvalificere sig som en impact startup, dvs. en E/S fremmende investering, der hjælper med at fremme mindst ét af de miljømæssige og/eller sociale karakteristika, som fonden fremmer, skal porteføljeselskabet også bestå 3) impact screening-testen og 4) demonstrere overensstemmelse med fondens specifikke miljømæssige eller sociale karakteristika og vise en stærk ‘impact interlock’ – hvilket betyder, at impact skalerer proportionelt, når porteføljeselskabet vokser. Derudover identificeres virksomhedsspecifikke KPI’er for miljømæssige og/eller sociale karakteristika.

Den primære datakilde er porteføljeselskaberne og deres årlige rapportering. Datakvaliteten sikres gennem intern gennemgang, og hvis nødvendigt vil ekstern gennemgang eller verifikation blive gennemført. Mængden af rapporterede data forventes at stige, efterhånden som porteføljeselskaberne modnes. Dog forventes en stor del af dataene i starten at være estimerede.

På grund af den tidlige fase af investeringer er målingspraksisser, metoder og datakilder underlagt visse begrænsninger. Disse begrænsninger vil blive adresseret gennem løbende handlinger, såsom regelmæssig gennemgang af metoder for at sikre den mest opdaterede tilgang.

Due diligence, der gennemføres, omfatter flere trin fra overvejelse af ESG- og impact-faktorer til vurdering af god ledelsespraksis, risici og bidrag til de miljømæssige og/eller sociale karakteristika.

Hvor fonden har væsentlig indflydelse på et porteføljeselskab, udøves denne indflydelse på bestyrelsesniveau for at sikre, at ESG-prioriteter og impact-prioriteter, hvor relevant, indgår på dagsordenen for bestyrelsesmøder.

Fonden bruger ikke et indeks som referencebenchmark.

b. No sustainable investment objective

The Fund promotes environmental and social characteristics but does not have as its objective sustainable investment.

c. Environmental and social characteristics of the Fund

The Fund promotes one or more of the following environmental and/or social characteristics:

• Futureproofing planet earth (environment): The planet is facing an existential environmental crisis. Climate change, loss of natural resources, and biodiversity harm are all major issues that need to be addressed. Thus, the Fund may e.g. invest in enabled solutions that support the path towards net zero emissions, allows for resilient planetary systems, and can help adapt the societies to the energy transition needed to futureproof planet earth.
• Trust in Technology (social): Technology advancement, AI agents, artificial general intelligence (AGI) and digitalization gives rise to new, global challenges, while also being the key to better and more efficient ways to solve the current ones. The Fund may e.g. invest in solutions that enable a safe life online, secure data, transparency, reduce inequalities, increase information verification, mitigate technological bias and actively promote sustainable, efficient, and a secure digital future.
• Health & Wellbeing (social): Changing demographics calls for a fundamental shift in our healthcare system. Through technology, treatment accuracy and efficiency, preventative care and personalisation can improve health and lessen the pressure and cost of existing treatment models. The Fund may invest in companies allowing for such transformational shift, improving health and well-being globally e.g. solutions that can reinvigorate drug development, prevent and diagnose disease sooner, automate administrative workloads, and enable personalised care.

d. Investment strategy

The purpose of the Fund is to build, hold, and manage (including to divest) a portfolio of equity and equity-related investments in portfolio companies. Thereby, the Fund invests in early stage, i.e. pre-seed and seed portfolio companies from all sectors with innovation capacity and growth potential with a focus on investments in tech enabled companies (“Sectors”). The investment strategy is industry agnostic, with particular emphasis on companies in the Nordics and is closely aligned with the Funds overall ESG and impact approach.

As an early-stage investor, the Fund partners with portfolio companies at the very beginning of their journey. The Fund engages with the portfolio companies’ founders to set intentions to promote environmental and/or social characteristics. The Fund places emphasis on the founders’ intention to solve a specific environmental and/or social issue prior to making an investment decision.

The Fund is bound by the investment restrictions and limitations set out in the Fund’s limited partnership agreement and shall procure that such requirements, restrictions, and limitations are complied with at all times.

The Fund follows a four-step approach for assessing all potential portfolio companies. Thus, to be eligible for an investment, the potential portfolio companies need to pass the 1) negative screening and 2) ESG risk and opportunities screening. To be an impact startup i.e. E/S promoting company and, thus, to qualify as an investment that helps attain the environmental and/or social characteristics of the Fund, the potential portfolio company must in addition pass the 3) impact screening test and 4) align with the environmental and/or social characteristics of the Fund.

The Funds four-step approach for assessing the potential portfolio companies are as follows:

1. Negative Screening (Exclusion List)
As part of the Funds deal sourcing strategy, the Fund Manager begin by conducting an initial review to determine whether a potential investment aligns with the Fund’s investment criteria and whether it conflicts with the Funds exclusion list, cf. Appendix 1 (“Prohibited Sectors & Activities”). Companies within the Prohibited Sectors and Activities are not considered further.

2. ESG risk and opportunities screening

During the pre-investment phase, the Fund Manager also evaluates potential investments through both an industry-wide and case-specific lens to identify ESG risks and opportunities. For the industry-level assessment, the Fund Manager use recognized frameworks such as the SASB (IFRS Foundation) Materiality Map, the VentureESG materiality tool, and the SDGs. For the case-specific evaluation, the Fund Manager gathers information from pitch decks, presentations, discussions with industry experts, and meetings with potential customers, stakeholders affected and the management/founder team to assess the unique ESG risks and opportunities.

Good governance practices are assessed during the due diligence phase based on a set of governance questions, including board oversight, employee relationships, personality traits, anti-bribery & corruption, financial & process control, tax control and IT safety & security.

To support the Funds ESG risk and opportunities screening, the Fund Manager has developed its own tools – the ESG Napkin and ESG Sprint – which take a materiality assessment approach. The ESG Napkin provides a quick, high-level overview of key ESG factors relevant to each investment at different stages, while the ESG Sprint is a more in-depth, process-driven workshop that engages the portfolio company’s founder(s) in identifying and addressing material ESG risks and opportunities. The Fund Manager uses these tools in combination with the latest industry frameworks, applying them on a case-by-case basis, as ESG risks and opportunities vary significantly depending on the stage of the portfolio company and the industry in which it operates.

3. Impact screening
In line with the Funds commitment to achieving the environmental and/or social characteristics promoted by the Fund, the Fund Manager actively seek investments that meet the environmental and/or social characteristics promoted by the Fund and thereby qualify as impact startups in alignment with the Funds investment strategy.

An impact startup, as defined by the Fund, demonstrates a strong intention to generate positive and measurable social and/or environmental impact alongside financial growth. These companies should address at least one of the SDGs and be committed to creating value that benefits society and the environment. The Fund Manager place significant importance on the interlock between impact and the portfolio company’s business model – ensuring that impact scales in proportion to the portfolio company’s growth.

To assess this, the Fund applies an “Impact Framework” to the due diligence process. Where the ESG Sprint is process driven and focuses on the “how” – the internal principles, processes, and practices that guide the portfolio company’s operations, the Impact Framework is outcome driven and focuses on the “what” – the actual positive social or environmental outcomes of the portfolio company’s operations or behavior. These two components are complementary, as the Fund Manager believes strong ESG practices are essential for achieving meaningful impact.

4. Alignment with the environmental and/or social characteristics of the Fund
Additionally, to be considered as an impact startup, the portfolio company must demonstrate alignment with the Fund’s specific environmental or social characteristics and show a strong ‘impact interlock’—meaning that impact scales proportionally as the portfolio company grows. This is assessed through the Funds six impact criteria, which guide the Fund Managers’ evaluation process:

1. Intentionality & Problem: Does the founder have a clear intention to solve a specific environmental or social issue? Is the environmental and/or social problem in alignment with the Funds strategy?
2. Evidence & Data: Is their approach to solving the identified issue supported by scientific understanding? Is there clear evidence, data, and research demonstrating that their approach is making a positive contribution
3. Interlock: Is the impact closely integrated with the portfolio company’s business model, ensuring that as the portfolio company grows, its impact scales proportionally?
4. Moving the Needle: Does the approach make a measurable difference in both depth (e.g., the percentage of emissions reduced per product sold) and breadth (e.g., the number of people reached)?
5. Additionality: Would the desired impact occur without this portfolio company’s intervention? What other approaches are addressing the same issue? Is the approach new or innovative? Are the financial returns and environmental/social outcomes intrinsically linked?
6. Measurability: Can the social and/or environmental outcomes be effectively measured and managed to ensure progress toward the desired impact?

These criteria enable the Fund Manager to determine whether a company is truly capable of creating meaningful and measurable impact and thus qualifies as an investment that helps promoting at least one of the environmental and/or social characteristics of the Fund, defined as E/S promoting cases.

In order to measure the attainment of the environmental and/or social characteristics promoted by the Fund, a questionnaire is completed by the potential portfolio companies, typically in close collaboration with the Fund Manager in the course of the due diligence process prior to any investment. The findings from the assessment and questionnaire are consolidated into an investment recommendation document. This document is then presented to the investment committee, which considers it alongside other due diligence outcomes in their investment decision.

To promote and maintain good governance practices within the Fund’s portfolio companies during the holding period, the Fund has implemented a process focused on ESG management, responsible leadership practices, and operational impact. The Funds approach includes but is not limited to: ESG Sprint workshop during portfolio onboarding, Theory of Change Framework i.e. impact thesis development, ongoing ESG guidance, carbon footprint tracking estimations for CO2 emissions measurement, annual ESG questionnaire and support for impact measurements to monitor ESG and impact progress, access to LCA specialists, leadership development, and legal advisory. This “support system” aims to ensure that the Fund’s portfolio companies not only maintain good governance practices but also continuously enhance their impact and ESG performance throughout the investment period. If the Fund becomes aware of severe governance issues, it will investigate them and work with all parties involved to find an appropriate solution. Further, the Fund will use any position as board member to influence the portfolio company to ensure good governance practices are in place throughout the holding period.

To summarize, the binding elements used to select the investments to attain each of the environmental and social characteristics promoted by the Fund are:

• The portfolio company is at pre-seed stage, tech enabled and is not operating within any of the Prohibited Sectors and activities i.e. passes the negative screening
• The portfolio company passes the Fund Manager’s ‘ESG risk and opportunity’ screening
• The portfolio company passes the Fund Manager’s ‘Impact’ screening test i.e. be assessed to have “real impact’ potential
• The portfolio company is in alignment with the environmental and/or social characteristics promoted by the Fund

e. Proportion of investments

The Fund will invest fully in line with its investment strategy and investment restrictions, i.e.,
investments used to meet the environmental and/or social characteristics promoted by the Fund, in accordance with the binding elements of the investment strategy and use best efforts to reach at least 50% of the Funds venture investments (based on number of investments and monitored upon the expiry of the investment period). Venture investments, according to the Fund, are investments where the aggregated invested amount is above DKK 5 million.

The purpose of the remaining proportion of investments is to invest in early stage tech enabled companies that pass the negative screening test, operate in accordance with good governance practices, as determined by the Funds ESG risk and opportunities screening process but is not at the time of the investment or during the holding period eligible to meet the other binding elements.

f. Monitoring of environmental or social characteristics

To be able to monitor the environmental and/or social characteristics promoted by the Fund throughout the lifecycle of the Fund, the Fund requires access to the portfolio companies and relevant data. The Fund includes a statement in the legal documentation with each portfolio company that outlines the Fund’s information expectations relating to environmental and/or social characteristics i.e., the relevant data and information necessary to monitor these. Further, the Fund will be able to monitor portfolio companies where the Fund has significant influence on the portfolio companies’ governance and holds a board seat.

The Fund distributes stage-sensitive assessment questionnaires to portfolio companies on an annual basis that are adapted as appropriate to the stage of the portfolio company. Each portfolio company will on an annual basis report on minimum: Responsible Operations (to ensure ongoing adherence to ESG responsibility standards), Ethical Practices (to ensure continued compliance with the negative screening criteria), and their individual impact KPIs identified to ensure it meets the investment criteria and to be able to measure the attainment of the environmental and/or social characteristics promoted.

Internal control mechanisms include regular portfolio reviews to ensure ongoing alignment with the Fund’s environmental and social characteristics. All E/S promoting cases will undergo an annual ESG sprint. This process is designed to track the portfolio companies’ progress on key impact KPIs and support their ongoing development in environmental, social, and governance areas. The Fund has an internal ESG & Impact expert to evaluate and monitor the sustainability performance of the portfolio companies. For external control mechanism, the Fund utilize third-party ESG data providers, when necessary, to obtain an independent assessment of portfolio companies’ alignment with the environmental and social characteristics promoted by the Fund.

g. Methodologies
As described in section d. ‘Investment Strategy’, the Fund follows a tailored four-step decision-making process to ensure the attainment of the environmental and/or social characteristics promoted by the Fund, while ensuring that all portfolio companies adhere to responsible business practices and good governance standards.

To be eligible for investment, potential portfolio companies must pass two key screenings: 1) negative screening and 2) ESG risk and opportunities screening. To qualify as an impact startup, i.e. E/S promoting case, that helps promote at least one of the environmental and/or social characteristics of the Fund, the potential portfolio company must also pass 3) the impact screening test, and 4) the potential portfolio company must demonstrate alignment with the Fund’s specific environmental and/or social characteristics. This is assessed through the Funds six impact criteria, as described in section d. ‘Investment Strategy’, which guides the Fund Managers’ evaluation process. Based on the results of such an assessment, the Fund identifies whether the environmental and/or social characteristics promoted by the Fund are met.

During the holding period, the Fund monitors and consults with its portfolio companies on a regular basis in order to assess whether said characteristics are continuously met.
In addition to the annual stage-sensitive assessment questionnaires, follow-up questions and/or calls or meetings are tailored to the specific environmental and/or social characteristics that the portfolio company is deemed able to help promote.

Based on the decision-making process and assessment, specific KPIs for the portfolio companies will be identified. The Fund Manager will take into consideration the industry, maturity, and the characteristics the portfolio company helps promote as well as the indicators used to measure the attainment of the specific characteristic(s). The Fund Manager do not pre-define KPIs and indicators and ask the portfolio companies to opt in. This means aggregation is more difficult, however the Funds focus is on helping each company define and scale their impact contribution. The KPIs will develop over time. Examples of indicators and KPIs that could be used to measure the attainment of the environmental and/or social characteristics:

During the holding period, the Fund Manager will measure each portfolio company’s progress in achieving the KPIs and will in cooperation with the portfolio company continuously set new KPIs.

If it is difficult to find a meaningful indicator for the portfolio company’s impact, the chances are most likely that the portfolio company is not living up to the Funds six impact criteria and is not truly focused on promoting the environmental/or social characteristics of the Fund. In some cases, the impact is still too distant and uncertain for the founders in the early days but can develop as the portfolio company matures. These companies will be assessed to be ‘a responsible business case’ as described in section f. Monitoring of environmental or social characteristics, and thereby be a part of the proportion of investments in the Fund that pass the negative screening test, operate in accordance with good governance practices, as determined by the Funds ESG risk and opportunities screening process, but is not at the time of the investment or during the holding period eligible to meet the other binding elements.

h. Data sources and processing
In order to attain each of the environmental and/or social characteristics promoted by the Fund, a questionnaire is completed by the potential portfolio companies in the course of the due diligence process prior to any investment as well as on an annual basis during the holding period. Hence, data is obtained only from the potential portfolio companies or supplemented by information publicly available.

The data quality is ensured through internal review and – in some cases – follow up interviews with the portfolio companies. Moreover, a comprehensive internal and/or external review or verification of the information obtained will be carried out if misrepresentations are suspected.

As the Fund invests in early-stage companies a proportion of the data is expected to be estimated, hence the stage-sensitive assessment questionnaires. It is expected that the proportion of reported data will increase as the portfolio company matures.

The Fund is continuously re-evaluating the data process to make it most applicable to the nature of early-stage companies.

i. Limitations to methodologies and data
Due to the nature of the Fund’s investment scope, focusing on early-stage companies leveraging innovative technologies, the methodologies and data sources described have certain limitations, including the reliability of estimations and the lack of historical data for portfolio companies.

There is limited established practice and methodology for measuring impact and the attainment of the environmental and/or social characteristics promoted by the Fund. To address this, the Fund has implemented its own developed ESG & impact process to measure and evaluate the impact of its portfolio companies.

The methodologies outlined in section (g) ‘Methodologies’ and data sources discussed in section (h) ‘Data sources and processing’ provide only a snapshot, as any projections into the future inherently carry uncertainty.

Despite these limitations, the Fund believes the measurements are directionally accurate, ensuring that portfolio companies are on track to achieve the environmental and/or social outcomes promoted by the Fund. To further mitigate these limitations, the Fund will regularly review and refine the methodologies and data used to assess progress, ensuring the most up-to-date approach is applied. This is achieved by gathering feedback from subject matter experts and collaborating closely with impact experts.

j. Due diligence
The due diligence carried out includes various steps to determine whether a portfolio company is eligible for the investment strategy of the Fund.

During the investment process, the Fund’s due diligence considers ESG and impact factors in pre-set questionnaires appropriate for the growth stage of the portfolio company. The ESG-factors evolve around five core business areas that include: workplace culture and employment practices, responsible product design, data privacy and protection, environmental impact, supply chain. These considerations form the basis of the Fund’s ongoing monitoring process and engagement agenda with each portfolio company. The impact factors include an assessment of founder intentionality and motivation, criteria to meet the Fund’s definition of impact investments, and alignment with the UN Sustainable Development Goals. ESG and impact factors from the respective questionnaires are included in a due diligence report that is shared among investors before an investment decision. Further, the Fund will identify and look at Sustainability Risks.

The Fund evaluates good governance during the due diligence phase using a set of key governance criteria, including board oversight, employee relations, anti-bribery and anti-corruption measures, financial and process controls, tax compliance, and IT security. Based on the results, the Fund determines whether the portfolio company meets the required standards for good governance and establishes targets to further enhance governance practices during the Funds holding period.

As ESG and impact related risks differ across industries, markets, and countries, the Fund evaluates them on a case-by-case basis, focusing on the issues most relevant to each potential portfolio company and its specific operating environment. This is achieved through the Funds ESG Sprint, a developed workshop that serves as a materiality assessment with the founders, and the Funds Impact Framework which uses a theory of change approach to assess the portfolio company’s potential impact and its contribution to the environmental and/or social characteristics promoted by the Fund.

Based on the results of the assessments, the Fund will either take additional actions – such as conducting further ESG and/or impact risk reviews internally or by external experts – or finalize the ESG & impact assessment, including recommendations for improvements as part of the due diligence.

Given the Fund’s focus on early-stage investments, it is expected that most potential portfolio companies will have little to no historical burden related to social or governance issues, as the companies are typically newly founded and, in some cases, do not employ any employees beyond the founding team. However, the Fund acknowledges that these companies rarely have established governance processes. This enables the Fund to support the portfolio companies in establishing strong governance policies and processes from the outset.

The Fund expects that (potential) portfolio companies in regulated industries – such as finance, healthcare, or other heavily regulated sectors – will require significant attention during the analysis process. Striking the right balance between disrupting an industry with pushing the regulatory boundaries without crossing legal lines is crucial. Portfolio companies must always comply with relevant regulations and ensure their governance practices meet acceptable standards prior to the investment decision.

k. Engagement policies
The Fund engages with portfolio companies to encourage adoption and effective implementation of the environmental and social characteristics promoted by the Fund. This includes ESG and impact in-person and online sessions and workshops.

Where the Fund has substantial influence over the portfolio company’s structure and governance, the Fund will leverage this influence at the board level to ensure that ESG priorities, and impact priorities where relevant, are incorporated into the agenda of board meetings. Further, influence will be exercised to ensure that Sustainability Risks are mitigated and relevant KPIs are developed.

Beyond board-level discussions, the Fund maintains ongoing engagement with portfolio companies to provide guidance and support on ESG and impact matters as well as ensuring that risks and ESG-related incidents are managed properly. This may involve sharing best practices, connecting them with relevant resources, industry experts, and collaborating to identify and address areas for improvement. The Fund has developed its own ESG Napkin and ESG Sprint to ensure this integration for early-stage technology companies.

However, there are situations where the Fund does not gain influence over the portfolio company. In these cases, the Fund will utilize the support available to all portfolio companies on ESG and impact matters to collaborate on addressing and mitigating any ESG-related incident, should they arise.

Upon closing a new investment, a discussion on the ESG and impact-related issues takes place between the Fund and the portfolio company. This includes reviewing the findings from the Fund Managers ESG risk and opportunities screening, as well as the impact screening during the due diligence process. The Fund will also establish expectations for financial and ESG reporting.

Each portfolio company is responsible for developing its own ESG Policy (or equivalent) tailored to its operation, with the Fund offering support throughout the process. This helps ensure that ESG considerations are embedded in the portfolio company’s strategic direction and that progress is being made as they mature. Further, this ensures that management procedures for handling any potential sustainability-related controversies are considered.

Overall, the Funds engagement policies are designed to integrate ESG considerations into the core operations of the Fund’s portfolio companies and to offer continuous support in enhancing their ESG performance.

I. Designated reference benchmark
No index has been designated as a reference benchmark for the Fund, as the Fund invests in early-stage businesses, where no relevant benchmark has been identified.

Appendix 1

Negative Screening (Exclusion List)

The Fund will not make any investment in portfolio companies that, to the Funds knowledge, engages in the following:

i. Activities being illegal in the jurisdiction where such activities take place;
ii. activities or persons (physical or legal) that are subject to or is managed or otherwise
affiliated with persons that are subject to restrictive measures (sanctions) imposed by the
United Nations, OFAC, the European Union or Denmark from time to time;
iii. the manufacture, sale or distribution of tobacco, E-cigarettes and/or nicotine products and
any other products categorized as tobacco by the relevant authorities;
iv. the cloning of human beings for reproductive purposes;
v. the manufacture, sale and/or storage of UN defined unconventional weapons;
vi. activities which can be considered as pornography, or which can be associated with prostitution;
vii. fishing activities and/or fishing gear such as bottom trawling, beam trawling, spinning
rods and dredges etc., which levels out the sea floor, disrupts the biodiversity and risks
by catching other species; and/or
viii. activities within fossil raw materials including fossil fueled power plants as well as activities which have drilling, investigations, extractions, refining and sale of crude oil, natural gas
and thermal coal or storage of fossil fuels and the underlying infrastructure (pipelines etc.)
as its purpose.
ix. exploration and/or extraction of fossil fuels (coal, oil or gas) (not including any company
or other entity providing services to such companies or other entities)
x. utility company where the CO2 intensity of the energy production exceeds p00g CO2/kWh
or it bases more than 50% of its energy production on thermal coal (not including any
company or other entity providing services to such companies or other entities)

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