I. Introduction

Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (hereinafter also referred to as: “SFDR” or “SFDR Regulation”) introduces uniform requirements within the European Union for financial products and financial market participants regarding sustainability-related disclosures, in particular, information on the strategies adopted in the course of their business concerning the integration of sustainability risks (including the consideration of adverse sustainability impacts). These risks are defined as environmental, social, or governance events or conditions that, if they occur, could cause an actual or a potential material negative impact on the value of the investment.

This information is disclosed via the website, during the process of entering into contracts with clients, and, in certain cases, also within periodic reports.

Under the SFDR Regulation:

• the company VO2 Ventures sp. z o.o. (hereinafter also referred to as: “VO2 Ventures”) is classified as a financial market participant because it is an alternative investment fund manager (AIFM, the Company)

whereas:

• VO2 Ventures spółka z ograniczoną odpowiedzialnością ASI S.K.A. (hereinafter also referred to as: “AIF”), which is managed by VO2 Ventures, constitutes a financial product because it is an alternative investment fund (AIF).

Definitions:

• “sustainability factors” – mean environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters;
• “principal adverse impacts of investment decisions” – mean the impacts of investment decisions that result in negative effects on sustainability factors, i.e., environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters, as referred to in Articles 4 and 7 of the SFDR Regulation;
• “sustainability risk” – means an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.

II. Information on the sustainability risk integration strategy
(Article 3(1) of the SFDR Regulation)

The SFDR Regulation requires financial market participants to publish on their websites information about their policies on the integration of sustainability risks in their investment decision‐making process.

VO2 Ventures has a strategy for integrating sustainability risks into its business in the investment decision-making process, defining how environmental, social, or governance events or conditions that, if they occur, could have an actual or potential material negative impact on the value of the investment are taken into account. In principle, the identification of sustainability risks does not have to form the basis for a negative decision regarding an investment by the AIF.

In conducting its investment activity, the AIF will pursue generalist investments, while focusing in the first instance on analyzing projects or companies operating in the following industries: BioTech – Biotechnology, FinTech – Financial Services, SaaS – Software as a Service, CleanTech – Sustainable Technologies, AI – Artificial Intelligence, Cybersecurity – Digital Security, IoT/Hardware – Internet of Things / Hardware, MarTech – Marketing Services.

It should be emphasized that the AIF carries out investments co-financed by EU funds, where the decision-making process and asset allocation strategies take into account significant limitations resulting from legal regulations or the operating principles of the programs providing such funds.

The inclusion of sustainability factors is therefore part of the spectrum of factors considered in the investment decision-making process concerning the AIF.

Environmental, social, and corporate governance issues are integrated into the AIF’s investment process as follows:

1) through the analysis of investment projects, including in terms of sustainability criteria;

2) through investment exclusions regarding investment projects and sectors that involve significant reputational and image risks;

Corporate governance issues and meetings with representatives of management boards also play an important role in the decision-making and investment monitoring process, allowing the AIF to learn about and evaluate the long-term strategy, and to obtain a full picture of the company and the way it operates, including the consideration of sustainability factors.

III. Transparency of adverse sustainability impacts at entity level
(Article 4(1)(b) in conjunction with Article 7(2) of the SFDR Regulation)

Pursuant to Article 7(2) of the SFDR Regulation, it is indicated that VO2 Ventures, when making investment decisions within the framework of the AIF’s operations, does not consider the principal adverse impacts of investment decisions on sustainability factors within the meaning of the SFDR Regulation.

VO2 Ventures considers sustainability risks to be non-material. In the process of selecting the AIF’s investments, environmental, social, and corporate governance issues (ESG criteria) are taken into account, but the identification of sustainability risks does not have to form the basis for a negative decision regarding an investment by the Company. The AIF’s investments are generally made in entities at an early stage of development. The entities in which the AIF invests its assets focus primarily on analytical processes and development work, offering products or services based on their results. In most of these companies, traditionally understood production, processing, or other processes that could have a significant impact on the climate or the environment do not occur or occur to a very limited extent. Additionally, because the teams of the companies the AIF intends to invest in are generally small, highly specialized, and have specific competence requirements, the composition of these teams does not significantly impact the communities in which their members operate, and thus the risk of negative impact on social matters is inherently non-material. For the reasons stated above, the impact of sustainability risks on the returns from investments in the AIF will also be non-material.

VO2 Ventures does not rule out a change to the approach presented above regarding the principal adverse impacts of investment decisions on sustainability factors in the management of the AIF.

IV. Transparency of remuneration policies in relation to the integration of sustainability risks
(Article 5(1) of the SFDR Regulation)

In accordance with the requirements of the SFDR Regulation, financial market participants and financial advisers shall include in their remuneration policies information on how those policies are consistent with the integration of sustainability risks, and shall publish that information on their websites.
VO2 Ventures is not an entity obliged to adopt a remuneration policy. In the event that such an obligation becomes applicable, VO2 Ventures will ensure that the remuneration policy complies with the applicable requirements regarding sustainability factors.

V. Transparency of the integration of sustainability risks (Article 6(1) of the SFDR Regulation).

Financial market participants shall include descriptions of the following in pre‐contractual disclosures:

• the manner in which sustainability risks are integrated into their investment decisions; and

• the results of the assessment of the likely impacts of sustainability risks on the returns of the financial products they make available, and thus in the case of the financial product – the AIF, which the AIFM, as financial market participants, manages.

Where financial market participants deem sustainability risks not to be relevant, the description of the elements referred to in the first paragraph shall include a clear and concise explanation of the reasons therefor.

VO2 Ventures will disclose information on the matters described above to each investor, noting that due to the planned scale of the AIF’s operations and in view of the permitted types of investments, investment selection criteria, and asset diversification principles adopted by the AIF, it considers sustainability risks in the investment decision-making process to be non-material, as they generally have a limited and insignificant impact on the value of investments.

At the same time, these risks are identified and factored into the investment process to an extent appropriate to the nature of the investment.

VI. Products promoting environmental or social characteristics (or both), or having sustainable investment as their objective
(Article 8 and Article 9 in conjunction with Article 10(1) of the SFDR Regulation)

VO2 Ventures does not offer financial products that promote environmental or social characteristics (or both), or that have sustainable investment as their objective.

VII. Additional information

VO2 Ventures ensures that any information published in accordance with Article 3, 5, or 10 of the SFDR Regulation is kept up to date, and in the event that such information changes, it publishes appropriate updates on the same website along with a clear explanation of such changes (Article 12 of the SFDR Regulation).

The investments underlying this financial product (the AIF) do not take into account the EU criteria for environmentally sustainable economic activities.