Mandatory disclosures under Regulation of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector (EU) 2019/2088 (“SFDR”):
LEA Partners GmbH acts as managing limited partner to LEA Mittelstandspartner GmbH & Co. KG, LEA Mittelstandspartner Annex GmbH & Co. KG, LEA Mittelstandspartner II GmbH & Co. KG, LEA Mittelstandspartner II-A GmbH & Co. KG, LEA Venturepartner GmbH & Co. KG, LEA Venturepartner Annex GmbH & Co. KG, LEA Venturepartner II GmbH & Co. KG and LEA Venturepartner II Feeder GmbH & Co. KG (the “Funds”; LEA Partners GmbH and the Funds collectively “LEA”). Unless the information is explicitly provided in relation to a specific Fund, the following statements refer to the management and investment decision-making processes of all Funds.
The Funds are internally managed alternative investment funds within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) registered with BaFin and as such, LEA publishes the following information on its website also in light of the consideration of sustainability-related aspects in accordance with the SFDR.
I. Sustainability risks
LEA considers sustainability risks as part of its investment decision-making process. Sustainability risks are environmental, social or governance events or conditions, the occurrence of which could have an actual or potential material adverse effect on the value of the investment.
LEA believes in the benefits of rigorous and comprehensive due diligence. This also includes sustainability risks. As such, a thorough ESG review is an essential part of LEA’s target company analysis. The Firm’s due diligence focuses on identifying sustainability risks that can have a material negative impact on investment performance – irrespective of whether related to potential future direct costs or reputational risks. To support the deal teams in their ESG reviews, and to promote consistency and a comprehensive approach, LEA has adopted the Invest Europe ESG Due Diligence Questionnaire.
The results of such assessment are taken into account when the investment decision is being taken. However, LEA remains free in its decision to refrain from investing or to invest despite sustainability risks in which case LEA can also apply measures to reduce or mitigate any sustainability risks.
II. No consideration of adverse impacts of investment decisions on sustainability factors
LEA does not consider any adverse impacts of its investment decisions on sustainability factors and, hence, does not use the indicators listed in Annex I of the Regulatory Technical Standards (Delegated Regulation (EU) 2022/1288, “RTS”) to identify and assess potential adverse impacts. Sustainability factors are environmental, social and employee concerns, respect for human rights and the fight against corruption and bribery.
The SFDR, the Regulation (EU) 2020/852 (“Taxonomy”) and the accompanying RTS are relatively new legislative acts. Considering the numerous legal uncertainties currently related to the application of these provisions – in particular with respect to the consideration of adverse impacts – and the administrative burden resulting from such uncertainties, LEA feels it is not yet in a position to commit to such standard in light of its fiduciary duties to their investors.
Moreover, LEA Venturepartner GmbH & Co. KG, LEA Venturepartner Annex GmbH & Co. KG and LEA Venturepartner II GmbH & Co. KG will only hold minority interests in its portfolio companies. Such minority interests are, however, generally not sufficient to encourage the respective Fund’s portfolio companies to collect and provide the relevant data. The Funds will, however, strive to encourage the respective portfolio companies to collect and provide the relevant data.
LEA will constantly monitor and review the evolution around SFDR and Taxonomy. Once a practicable market and administrative practice will evolve in this regard and the consequences of a commitment towards the consideration of principal adverse impacts are reasonably clear to LEA, LEA will re-evaluate considering principal adverse impacts of its investment decisions in due course.
III. Remuneration disclosures
The Funds are registered alternative investment managers and do, as such, not have renumeration policies. Although LEA considers sustainability risks as part of its investment decision-making process, such risks are not integrated in LEA’s remuneration decisions.