Policy and Guidelines on Environmental, Social and Governance (ESG) Issues

Target Partners GmbH (“Target Partners”, “we” or “us” to the extent relevant and in accordance with the Funds’ limited partnership agreements (“LPAs”) and relevant constitutional documents) acts as general partner or managing limited partner to various limited partnerships (the “Funds”), with the objective of making investments as described in the LPAs.

The following guidelines contained in this document outline our commitment to responsible and sustainable investing, on the understanding that our obligations towards our investors and the Funds may require us first and foremost to protect their respective interests and to promote the business objectives of the respective Funds.

The Funds are internally managed alternative investment funds within the meaning of the German Investment Code (Kapitalanlagegesetzbuch, KAGB) and as such, Target Partners publishes the following information on its website also in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27th of November 2019 on sustainability disclosure requirements in the financial services sector (the “SFDR”). 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.

1 Implementation

We aim to address ESG issues appropriately at all stages of the investment cycle. This includes conducting due diligence in connection with investments, as well as implementing regular monitoring to ensure consistency with ESG standards. To aid transparency, ESG issues may be specifically addressed in reports prepared by the Funds or their Portfolio Companies, and can be discussed at meetings of the Funds’ investors.

2 Environmental Issues

We are committed to sustainable, environmentally sound business practices and will encourage the Funds’ Portfolio Companies to consider the following environmental factors in pursuing their commercial objectives:

  • Air and water pollution should be minimized and monitored under appropriate regulatory standards
  • Biodiversity should be respected and supported
  • Climate change aspects of industrial operations should be monitored (including policies to mitigate climate change and the impacts of climate change)
  • Deforestation of native vegetation should be minimized
  • Energy efficiency can have direct economic benefits and should be promoted
  • Hazardous materials should be handled according to applicable regulations
  • Land degradation should be avoided or its long-term effects mitigated
  • The depletion of finite resources should be considered
  • Waste management practices should be optimized to maximize environmental benefits
  • Water scarcity in affected regions should be considered

3 Social Issues

We recognize that businesses, including ourselves and the Funds’ Portfolio Companies, can achieve substantial long-term benefits from being socially responsible and by participating as active members in their local communities. Accordingly, we aim to consider the following social issues in pursuing our commercial objectives, and will encourage the Funds’ Portfolio Companies to do the same:

  • Customer satisfaction should be a day-to-day priority
  • Data protection and privacy principles should be respected
  • Diversity and equal opportunity should be promoted both within our own business and, to the extent appropriate, in our external supply chain and service providers
  • Employee attraction and retention aids the long-term success of our business and brand
  • Employee engagement can increase stakeholder satisfaction and improve profitability
  • Government and community relations are an important part of day-to-day operations
  • Human capital management (including training and education) promotes long-term success
  • Human rights and applicable legal frameworks should be respected at all times
  • Indigenous rights and applicable legal frameworks should be respected at all times
  • Labour standards (including freedom of association and collective bargaining, child labor, forced labor, occupational health and safety, living wage) should be considered and monitored regularly
  • Labour-management relations should be courteous, professional and productive
  • Marketing communications should be responsible and convey a positive approach
  • Product mis-selling should be avoided
  • Product safety and liability issues should be monitored and addressed appropriately
  • Supply chain management supports sustainable business operations

4 Governance Issues

We take pride in being recognized as a business run with integrity and accountability. Transparency and good governance are vital to maintaining our standing in the market and to attracting new customers, suppliers and investors. To support these principles, we strive to reflect the following governance factors in pursuing our commercial objectives, and will encourage the Funds’ Portfolio Companies to do the same:

  • Accounting standards should be observed
  • Anti-competitive behavior should be avoided, including through the education of staff
  • Board composition should be carefully considered and appropriately suited to the tasks
  • Anti-bribery and anti-corruption practices should be implemented and staff should be educated
  • Business ethics should serve as the cornerstone for our day-to-day operations
  • Compliance (including fines and other sanctions) is to be taken seriously
  • Executive remuneration should be sustainable and focused on long-term achievements
  • Lobbying should be ethical and conform to applicable guidelines
  • Risk management should play an important role and can be vital to long-term success
  • Separation of chairman and CEO should be observed where possible
  • Stakeholder dialogue should be maintained to avoid conflict and share common goals
  • Succession planning should be addressed from the outset of any appointment

5 External Standards

In addition to the ESG issues outlined above, we consider that certain international standards, including the United Nations Principles for Responsible Investment, should be respected, and shall endeavor not to promote investments by the Funds in Portfolio Companies that:

  • Deliberately and repeatedly violate applicable laws and certain ILO conventions
  • Manufacture or service armaments or firearms
  • Fail to comply with the United Nations Global Compact or that are in countries subject to trade embargoes imposed by the UN or EU
  • Create or trade in pornographic products or in the sex industry
  • Produce or trade in products from the tobacco industry
  • Have a business focus on casino and / or gambling
  • Are engaged in cloning

6 Policies to identify and prioritize adverse sustainability impacts

As an integral part of our business principles, we are committed to promoting responsible investment practices for the benefit of our investors. Sustainability is an important component of our business strategy and underscores our approach as long-term investors. Thus we have developed policies on the identification and prioritization of principal adverse sustainability impacts and indicators.

We heighten the awareness of our investment committee, our whole team, as well as the managers of our portfolio companies. We analyze the opportunities and risks in the ESG domain, both in terms of potential investments and portfolio companies. The methodologies put in place by us reflect the inherent characteristics of investing in startups and innovative technology companies that are expected to grow and scale their operations. Such desired growth in economic activity may lead to an increase in some of the adverse sustainability indicators as specified above. If the ESG policy is breached, we will develop a plan of action together with the company in order to resolve these conflicts. This plan will also include consequences if the obligations defined therein are not complied with.

For principal adverse sustainability impacts that are likely to be severe and are avoidable by implementing good business practices, a “prevent/do not tolerate” strategy will be put in place. For principal adverse sustainability impacts that are intrinsically linked to investee companies’ economic activities, a minimization/mitigation or relative minimization/mitigation strategy will be pursued.

7 Additional Information

Target Partners encourages our employees, suppliers and stakeholders to approach us with any questions in relation to our ESG policy as detailed above. We aim to provide a transparent, supportive environment in which they can discuss ESG issues with us productively. We are available to them at any time to provide additional information upon request.

Target Partners GmbH (Version: 14 April 2021)

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Years of combined experience in software development and R&D