ESG statement – Mentha Impact

Mentha Capital B.V. (the Manager) makes the following disclosures in accordance with Sustainable Risk Finance Disclosure Regulation with regard to Mentha Impact Fund I Coöperatief U.A. (the Fund).

Summary

The Fund promotes environmental characteristics, but does not have as its objective sustainable investment. It will invest in portfolio companies (the Portfolio Companies). The Fund will exclude certain investments in Portfolio Companies with potentially significant negative climate impacts (Excluded Investment).

The Fund has a dual investment strategy:

• Grow ‘green’: the Fund aims to support growth of companies that are primarily engaged in an economic activity that already contributes to an environmental objective (e.g. CO2 reduction) and support these companies with enlarging their positive impact.
• Transform ‘brown-to-green’: the Fund aims to support transformation of companies currently engaged in an economic activity that is not in line with environmental objectives (e.g. because of a high emissions profile) and support these companies reducing their negative impact with at least 7% on average per year.

Investment objective

The Fund promotes environmental characteristics and integrates sustainability considerations into its investment strategy, but does not have sustainable investment as its sole or overarching objective.

Environmental or social characteristics of the financial product

The Fund will exclude certain investments in portfolio companies with potentially significant negative impact on the environment, as further detailed in the Investment strategy section below.

Investment strategy

The Fund will employ a private equity strategy and will invest in portfolio companies that make a measurable and significant difference to environmental challenges, while delivering private equity returns. The Fund has a dual strategy:

• Grow ‘green’: MIF aims to support growth of companies that are primarily engaged in an economic activity that already contributes to an environmental objective (e.g. CO2 reduction) and support these companies with enlarging their positive impact.
• Transform ‘brown-to-green’: MIF aims to support transformation of companies currently engaged in an economic activity that is not in line with environmental objectives (e.g. because of a high emissions profile) and support these companies reducing their negative impact with at least 7% on average per year.

These impact strategies typically fall within three themes:

• Resource Efficiency
• Sustainable Industries
• Energy Transition

The Manager will apply to investments of the Fund the proven, returns focused, systematic value creation framework which focuses on (in)organic growth and operational and organizational improvements. Each investment will also go through our proprietary impact assessment cycle, focusing on accelerating positive environmental impact.

The Funds’ exclusion policy does not permit investments in portfolio companies that do not act in accordance with good governance principles, including with respect to sound management structures, employee relations, remuneration of staff and tax compliance. In the investment decision making process as applied by the Manager, it is verified whether an investment is excluded based on the exclusion policy of the Fund and if so, the Fund will not invest in it.

Proportion of investments

50% of the investments of the Fund will be sustainable investments within the meaning of article 2 sub 17 of the SFDR. The Fund may make taxonomy aligned investments but currently does not have a minimum commitment to make taxonomy aligned investments.

Monitoring of environmental or social characteristics

The Manager has identified three themes based on market trends and drivers contributing to a future-proof planet. These themes provide an investment focus and strategic direction to maximise the positive impact from investments made by the Fund:

• Resource efficiency;
• sustainable industries; and
• energy transition.

For investments within these three themes, the Manager will determine the potential environmental impact by using the widely adopted framework “Five Dimensions of Impact” (what, who, how much, contribution and risks).

This impact will be made measurable and assessed for significance by defining (a set of) corresponding environmental impact KPI(s) per investment. Examples of impact KPIs the Manager expects to use are:

• CO2 emissions avoided;
• Nitrogen deposition avoided;
• (E)-Waste avoided;

These Portfolio Company specific impact KPIs are vital in tracking and communicating the impact of each investment.  However, in many cases, impact KPIs cannot be measured directly, but need a calculation method taking into account different drivers of impact. This calculation needs input which most likely comprises of:

• Operational / financial data from the Portfolio Company;
• Government statistics;
• Commonly known (market) data;
• (Science based) assumptions.

The Manager will collect and test these inputs and calculate and report the resulting impact for the relevant Impact KPIs on at least an annual basis.

Apart from the Portfolio Company specific Impact KPI(s), the Manager will for each Portfolio Company report on a selection of ESG topics, following the Fund’s existing ESG policy. These ESG topics are not environmentally related, but important enough to monitor and improve. Examples include: female representation (both in top-5 and company-wide), the gender pay gap and absenteeism

Methodologies for environmental or social characteristics

After the investment has been made, the Manager will continue to monitor the Portfolio Company to ensure that the Portfolio Company’s act in accordance with good governance principles, including with respect to sound management structures, employee relations, remuneration of staff and tax compliance.

Data sources and processing

The calculation with regard to the Fund likely requires, inter alia the following inputs:

• Operational / financial data from the Portfolio Company;
• Government statistics;
• Commonly known (market) data; and
• (Science based) assumptions.

The aforementioned data will – when from the Portfolio Company – as much as possible be information that is independently verifiable. Otherwise, this data will be as much as possible retrieved from independent sources. The Fund currently estimates that 25% of the data used will be based on estimations which will be verified by a third party.

Limitations to methodologies and data

Measuring impact through the use of predetermined KPIs may lead to an incomplete image of the total impact of a certain portfolio investment, in particular where such portfolio investment does not fall within the scope of the sustainable investments (where the Fund also takes into account the DNSH principle) the Fund contemplates to make. Also, data can be incomplete and subjective.

The Fund seeks to mitigate the above risks by monitoring the KPIs (which it also needs to do in view of the calculation of carried interest distributions) selected for each portfolio investment. In addition to these specific Impact KPI(s), we will for each investment report on a selection of ESG topics, following the Fund’s existing ESG policy. These ESG topics are not environmentally related, but important enough to monitor and improve. Examples include female representation (both in top-5 and company-wide) and the gender pay gap and absenteeism. Finally, the Fund uses its reasonable efforts to obtain data from independent sources.

Due diligence

The Manager generally performs three types of due diligence: impact, commercial and general. The impact due diligence entails further deepening of the Impact Assessment, including the definition of impact KPI’s, the impact trajectory over the investment period, PAI indicators and ESG metrics. The commercial due diligence entails strategic, management, marketing and sales and operational assessments. Both due diligences are typically conducted inhouse, sometimes supported by and complemented with opinions from (impact) industry experts.

A number of top-priority strategic projects with substantial potential impact are defined. Based on the outcome of the above-mentioned assessment, the Fund will prepare a detailed financial forecast and impact trajectory, including sensitivity analyses, and challenges key assumptions underlying the non-binding offer. Meanwhile, any potential deal-breakers and perceived risks related to the business and the acquisitions are investigated and risk mitigants are identified.

It is intended that the general confirmatory due diligence covers financial, legal, people and culture, fiscal and environmental (ESG) issues, and is performed by external advisors when necessary.

Engagement policies

Not applicable.

Designated reference benchmark

No reference benchmark has been designated for the purpose of attaining the environmental characteristics promoted by the Fund.