DISCLOSURES ON SUSTAINABILITY

The mission of Propagator Ventures is to propagate science to market and accelerate deep tech solutions to some of the world’s most pressing challenges. We do so by investing in early-stage companies founded on breakthrough science and/or engineering innovation. Propagator Ventures recognizes the role we play as a deep tech venture capital investor – directly and through our portfolio companies – to advance solutions that benefit planet and society at large, including those relating specifically to environmental, social and governance (ESG) matters and the wider 2030 Agenda for Sustainable Development.

Transitioning to more sustainable, inclusive and low-carbon economic models will have wide-ranging implications, also for the industries, sectors, and verticals in which we invest. While environmental or social characteristics are not promoted by Propagator Ventures in accordance with article 8 of Regulation (EU) no. 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector and Propagator Ventures has not defined sustainable investments as its purpose in accordance with article 9 of the SFDR, we hold that considering sustainability factors are an integral aspect of sound investment decision-making.

1. Sustainability Risk Policy

Sustainability risks are environmental, social or governance events or conditions that, if they occur, could cause actual or a potential material negative impact on the value of Propagator Ventures’ investments. As Propagator Ventures does not promote environmental or social characteristics of our investments, nor have sustainable investments as our purpose, we do not currently formally integrate an assessment of sustainability risks in our decision-making process in accordance with Article 3 of the SFDR.

However, portfolio company investments as well as the sectors in which they operate in are subject to scrutiny and consideration prior to any commitment from Propagator Ventures. Given the long horizon for our investments we may decide to actively influence the operations and priorities of our portfolio companies in line with our own principles and operating practices, thereby applying (sustainability) risk mitigation measures for our investments. Given the nature of investments pursued by Propagator Ventures our assessment is that sustainability risks per se have limited probability of negatively impacting the return on our fund(s) under management.

Prior to making investments into portfolio companies, we subject the entities to a comprehensive due diligence process that inter alia extends to ESG and which subsequently informs our final investment decisions.

2.  No consideration of Sustainability Adverse Impacts

‍We are cognizant of the potential sustainability impacts of Propagator Ventures’ investment decisions and of those pertaining to the activities of our portfolio companies. Our selected investment areas span across quantum technologies, new materials, robotics, AI/ML and encryption, where a large number of use cases that may contribute positively towards sustainability may readily be identified. This does however not negate that there may not also be potentially adverse sustainability outcomes stemming from the activities of Propagator Ventures’ portfolio entities. For the purpose of Article 4 of the FSDR we have resolved to act pursuant to Article 4(1) (b) and not consider adverse impacts of investment decisions on sustainability factors for our existing and nascent funds (Propagator Ventures Fund 1 and Propagator Ventures Fund 2).

The primary reasons why Propagator Ventures does not consider adverse sustainability impacts pursuant to Article 4 of the SFDR are that considering our scale, size, and resource constraints, we cannot realistically authenticate with a degree of accuracy what the adverse impacts of our investment decisions entail, based on the criteria set forth in the SFDR. In addition, we invest in early stage companies in multiple jurisdictions that, due to their size, limited resources, and location are not always capable of providing the information required for that purpose.

3. Sustainability-related disclosures

In accordance with Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020, Article 7, Propagator Ventures provides the following disclosure: The investments underlying Propagator Ventures Fund 1 and Propagator Ventures Fund 2 financial products do not take into account the EU criteria for environmentally sustainable economic activities.

4. Integration of sustainability risks into remuneration policy

Sustainability risks are not integrated in Propagator Venture’s remuneration policy.