Sustainability related disclosures at Rise Fund Entity level
Rise PropTech Fund SComm/Comm V (the “Fund”) has been established in order to make Investments in Portfolio Companies that are innovative early stage and scale-up companies active in the sector of PropTech. Targeted industries for Investments by the Fund include, but are not limited to:
- Technology Transversals (e.g., Artificial Intelligence, Big Data, and Internet of Things)
- Industry Verticals (e.g., Construction Technology & Processes, Design & Build Solutions, Property & Building Management, Smart Buildings, and Resource Efficiency & Circular Economy).
Below we share our sustainability related disclosures on entity level, and more specifically for the Rise PropTech Fund, in conformity with the requirements of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial sector (‘SFDR’).
Integration of sustainability risk in the investment policies
Rise Partners SA/NV (the Fund Manager) considers sustainability risks as part of its investment decision-making process (disclosure as required under Article 3 of the SFDR – 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). 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.
The Fund Manager generally remains free in its decision to refrain from investing or to invest despite sustainability risks in which case the Fund Manager can also apply measures to reduce or mitigate any sustainability risks. The Fund Manager will apply the principle of proportionality in dealing with sustainability risks, taking due account of the size and nature of the investment as well as its transactional context and the respective margins for action. Risk analysis will be part of the due diligence process in the pre investment phase and will be formally repeated on an annual basis during the investment phase.
Principal adverse impact of investment decisions on sustainability factors
The Fund Manager does not consider principal adverse impacts of investment decisions on sustainability in accordance with Article 4 of the SFDR (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).
PAI data is often not readily available and is difficult to collect in early-stage companies. Therefore, the Fund Manager is not in a position to positively assume it will be able to obtain sufficient information from portfolio companies to satisfy the disclosure obligations of Article 4 of the SFDR as further detailed in the Regulatory Technical Standards. The Fund Manager will review its policy on the integration of PAI’s to assess when it will be in a position to provide such information.
Integration of sustainability risk in the remuneration policy
The Fund Manager does not have an obligation to have a formal remuneration policy in accordance with article 40 and following of the Belgian law of 19 April 2014 on alternative entities for collective investments and their managers. As such, ESG criteria are no part of the remuneration policy of the Fund Manager.
Sustainability-related disclosures at Product level
The Fund is a financial product that promotes environmental and/or social characteristics, but does not have as its objective sustainable investment and does not invest in sustainable investments. No reference benchmark has been designated for the purpose of attaining the environmental and/or social characteristics promoted by the Fund.
The daily fund management is characterized by a complementary Fund Manager team with a strong sectoral expertise within the PropTech sector. This independent hybrid fund is backed by a large base of complementary private and institutional groups and can rely on the exclusive network of partners from the construction & real estate eco-system.
No sustainable investment objective
The Fund is considered an Article 8-type product under the SFDR, meaning that the fund promotes, amongst other characteristics, environmental or social characteristics, but does not have sustainable investments as its objective.
Environmental or social characteristics of the financial product
The Fund envisages to make Investments in Portfolio Companies that promote the sustainability of the real estate and construction sector by focusing on property technology solutions which foster:
- Reduction of the carbon footprint of the sector
- Minimizing the impact on the ecosystem,
- Limiting on-site disruption and pollution,
- Promoting circular economy (e.g., on-site energy generation, minimizing waste, and support shared economy).
- Apart from financial returns, the Fund also seek to generate a measurable and beneficial social impact on topics such as employment.
The Fund makes Investments in Portfolio Companies that are innovative early stage and scale-up companies active in the sector of PropTech. Targeted industries for Investments by the Fund include, but are not limited to, (i) Technology Transversals (e.g., Artificial Intelligence, Big Data, and Internet of Things) and (ii) Industry Verticals (e.g., Construction Technology & Processes, Design & Build Solutions, Property & Building Management, Smart Buildings, and Resource Efficiency & Circular Economy).
The objective of the Fund is to invest in innovative companies that create high returns for their shareholders while promoting the sustainability of the real estate and construction sector and with a social impact component.
During the pre-investment phase, the Fund will assess the potential portfolio company, following a set of impact indicators, as foreseen in the general investment strategy of the fund. As part of the due diligence process, the team will also review risks and the effects of these related to environmental and social topics. Finally a screening of the relevant governance topics are integral part of the process.
During the investment cycle, the team will foresee an annual follow up of ESG topics and guarantee the necessary monitoring and reporting processes. The Fund Manager team will follow up on progress, based on the impact indicators and may define action points if necessary to mitigate risk exposure and negative impact. The Fund Manager team can rely on its own expertise on several sustainability related topics and will not hesitate to refer the portfolio companies to the broader network of experts within its ecosystem if more specialized support is needed.
Proportion of investments
In line with the ESG methodology, the Fund promotes environmental or social characteristics but does not commit to make only environmentally sustainable investments as defined in the Taxonomy Regulation. We do focus on sustainability and impact on a broader range. Consequently, we do not limit our investment scope only into companies that are in the ‘environmentally sustainable’ category as that could exclude a large portion of, for example, companies supporting the overall digitization of the sector and socially sustainable companies.
The Fund does not intend to make investments in environmentally sustainable investments as defined in the Taxonomy Regulation (minimum percentage of investments in accordance with the Taxonomy Regulation: 0%). The Fund aims to only make investments aligned with the investment strategy and thus, respecting the impact criteria as defined in it.
Monitoring of environmental or social characteristics
The Fund Manager constantly monitors the environmental and social characteristics and performance of the Fund. For that purpose, our portfolio companies are required to report on ESG KPIs at least once per year.
The ESG reporting of each portfolio company is assessed by the Fund Manager team. The results and findings are examined with the Partner, who can bring ESG risks and opportunities to the attention of the Board of the respective company.
The Fund aims to implement an ESG evaluation tool. This tool allows us to assess the companies based on several KPI’s. When the company is funded, those KPI’s are monitored on a yearly basis.
Data sources and processing
Portfolio companies report their financial performance and Impact KPIs on a quarterly basis. Each Partner in the Fund is responsible for reviewing the data and following up on the progress towards achieving ESG-related targets. ESG and the financial performance of the portfolio are reported to our investors on a quarterly basis, or at least on an annual basis.
Further, the Fund Manager team will rely on the knowledge and experience of the internal Rise Manager team and when necessary the team can reach out to the broad network of experts to benchmark available data.
No formal external benchmarks or data sources will be used for monitoring and reporting.
The annual reports will be shared with the fund stakeholders. If the Fund Manager team assumes that further action and monitoring is needed, or escalation is required they will take the necessary actions to address this issue in the existing governance bodies.
Limitations to methodologies and data
The information collected via the Funds Manager’s due diligence process and throughout the lifecycle is externally verified only if and to the extent misrepresentations are suspected. Reliability of data obtained from external sources cannot be guaranteed. As the Fund’s investment is made for several years, the Fund Manager considers it a priority to establish and maintain a trustful working relationship with the Fund’s portfolio companies in order to ensure compliance with the restrictions described in this section.
Due diligence done on underlying assets regarding ESG criteria
All investment decisions are based on commercial, financial, legal, and ESG due diligence, as well as estimated return and key risk components. During the due diligence process, all potential portfolio companies will be asked to complete a detailed ESG questionnaire to give us insights into the materiality of ESG risks, or share the necessary information needed if the requested information is already available.
Prior to each investment, ESG risks and opportunities are evaluated in a due diligence process. No further reviews will be conducted beyond such due diligence process unless the Fund Manager deems it appropriate. In such case it may be necessary to develop an action plan to mitigate possible risks or negative impacts. Such action plan is then formalized in the contractual terms.
- This is clearly formulated but not reflected accordingly:
- Knowing the investment strategy & focus , what are the main risks
- What are main negative impacts
- What are the main positive impacts on environmental, social and governance matters
- How do companies perform? What actions did the fund take to improve/support the portfolio companies.
Follow-up and monitoring during the investment and post-investment phase can be found in the topics ‘investment strategy’, ‘monitoring’, ‘methodologies’ and ‘data sources and processing’.
Should the Fund Manager on behalf of the Fund determine any potential issues relating to environmental or social characteristics, the Fund Manager will engage in discussions with the portfolio company’s manager in order to resolve such issues, provided that such efforts will always remain at a level that the Fund Manager, in its sole discretion, considers to be proportionate in light of the size and strategic importance of the respective investment in the portfolio companies and that takes into account the respective negotiation positions and transactional context.
Information on any designated reference benchmarks used
The Fund does not use any reference benchmark.
Date: 14 July 2023