Sustainability-related product disclosure (SFDR)

Disclosures pursuant to the sustainable finance disclosure regulation (EU) 2019/2088

The information provided here sets out how the financial product has sustainable investment as objective as required by Article 9 of 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 (“SFDR”).

A. SUMMARY

ECIIF II (hereafter also referred to as “the Fund”)  is an Article 9 impact fund committed to making sustainable investments that generate both financial returns and measurable positive environmental and social impact. The Fund strategically invests in businesses addressing global challenges across four interconnected impact topics:

  • Education & employment – access to quality education, lifelong learning, inclusive job creation.
  • Health & care – improved healthcare access, digitalisation of services, innovative care solutions and prevention.
  • Circular economy & climate action – circular business models, resilient energy systems, adaptation and decarbonisation.
  • Food & agriculture – transparent and fair value chains, reduced food waste, sustainable livelihoods.

The Fund targets a minimum of 80% of assets as sustainable investments (#1 Sustainable). The remaining up to 20% may be held as cash for liquidity purposes (#2). Within this minimum allocation, the Fund will allocate at least 10% to sustainable investments contributing to environmental objectives and at least 10% to sustainable investments contributing to social objectives. The final allocation between environmental and social objectives may vary depending on the Fund’s strategy, pipeline and investment opportunities.

The Fund does not set a minimum threshold for sustainable investments with an environmental objective aligned with the EU Taxonomy, resulting in a minimum target of 0%. Where applicable, investments with environmental objectives will be assessed for EU Taxonomy alignment.

The Fund assesses, manages and monitors impact and ESG matters throughout the investment lifecycle. For each investment, 2–3 impact KPIs and target values are agreed pre-investment and integrated into the investment agreement; progress is monitored at least annually. Principal Adverse Impacts (PAIs) are assessed during due diligence and monitored during ownership.

No EU-approved benchmark index is designated as a reference benchmark because none fully reflects the Fund’s impact strategy. Progress toward the sustainable investment objective is reported via portfolio- and fund-level impact KPI reporting and sustainability disclosures, including the annual impact report.

B. No significant harm to the sustainable investment objective

ECIIF II ensures that all investments do not significantly harm any environmental or social sustainable investment objectives by implementing a comprehensive impact and ESG investment review process and a robust reporting framework. This framework is designed to provide transparency on Principal Adverse Impacts (PAIs) and ensure adherence to minimum safeguards.

ECIIF II applies strict exclusion criteria aligned with the IFC Exclusion List and Paris-Aligned Benchmark (PAB) exclusion criteria. These exclusions prevent investments in activities that are incompatible with the Fund’s sustainable investment objective, including, among others, fossil fuels, weapons, tobacco, unethical research and other activities with high ESG risks.

Investments are assessed using SASB sector materiality mapping and sector-relevant material PAIs. When possible, the investees’ results are compared against sector standards to assess their maturity on each material risk. Based on the investees’ activities and due diligence findings, investment opportunities are classified according to the IFC framework into different risk categories (A, B or C). High-risk Category A investees will not be considered investable by ECIIF II.

Impact and ESG due diligence findings are included in the information memorandum submitted to the Investment Committee, and investment agreements include ESG clauses as well as impact KPIs and related targets. During the holding period, investees report on impact KPI attainment and relevant PAIs at least annually, and ESG improvement plans with corrective actions are put in place where necessary and monitored at least annually.

Integration of adverse impacts on sustainability factors

ECIIF II integrates Principal Adverse Impact (PAI) indicators into its investment decisions in accordance with Annex I, Table 1 of Commission Delegated Regulation (EU) 2022/1288, alongside additional indicators from Tables 2 and 3 where relevant.

Information regarding mandatory PAIs listed in Table 1 will be gathered and assessed during the due diligence phase of an investment. This data may be obtained directly from the portfolio company’s management team, a trusted third-party advisor or from publicly accessible datasets as relevant. If certain information is not readily available, ECIIF II may, at the general partner’s discretion, utilize proxy data points or indicators from reputable sources.

The additional PAI indicators considered by the Fund include:

  • E4. Investments in companies without carbon-emission reduction initiatives
  • E11. Investments in companies without sustainable land/agriculture practices
  • S1. Investments in companies without workplace accident prevention policies
  • S4. Lack of a supplier code of conduct
  • S5. Lack of grievance/complaints handling mechanism related to employee matters

PAI findings are considered as part of the Fund’s ESG analysis and due diligence process. Relevant findings are reflected in the investment memorandum submitted to the Investment Committee, and, where necessary, corrective actions may be included in ESG improvement plans and monitored at least annually.

Alignment with minimum safeguards

All investee companies are required to respect minimum safeguards and align with internationally recognised standards on human rights, labour rights and responsible business conduct, including the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.
Alignment with minimum safeguards is assessed through dedicated due diligence questionnaires, which are designed to identify potential red flags related to human rights and responsible business conduct. Investees are also expected to respect environmental and labour standards and to have appropriate due diligence processes in place. Activities in developing countries would trigger additional due diligence.

In case of a breach, the Portfolio Manager will investigate and monitor the situation. If a significant impact or ESG breach is confirmed, the Fund will support the investee in setting up a remediation plan. If no significant progress is made within a reasonable timeframe, the Fund may decide to divest from the company.

C. Sustainable investment objective of the financial product

ECIIF II’s sustainable investment objective is to create a sustainable future for people and planet by mobilizing capital for impact ventures.

To achieve this objective, ECIIF II employs a strategic investment framework informed by the team’s extensive impact investment expertise, alongside a deep understanding of evolving social and environmental challenges and macroeconomic trends. The Fund’s investment approach is structured around four key themes:

  • Education & employment
  • Health & care
  • Food & agriculture
  • Circular economy & climate action

ECIIF II’s investment strategy is focused on sustainable investments, with a minimum allocation of 80% to sustainable investments. The remaining up to 20% may be held in cash for liquidity purposes and does not directly contribute to the achievement of the sustainable investment objective. Within the minimum 80% allocation to sustainable investments, the Fund will allocate at least 10% to sustainable investments contributing to environmental objectives and at least 10% to sustainable investments contributing to social objectives. The final allocation between environmental and social objectives may vary depending on the Fund’s strategy, pipeline and investment opportunities.

To fulfil its sustainability objective, the Fund finances early-stage impact ventures whose core business models are designed to generate measurable positive social and/or environmental outcomes. Investments are targeted in the four interconnected areas above, with each investee selected based on its alignment with the Fund’s theory of change and its potential for systemic impact.

To assess the contribution of investments to these social and environmental objectives, the Fund has developed its own impact methodology to assess an investment’s impact across the entire investment process from pre-screening and due diligence over investment, portfolio management up to exit.

The Fund does not set a minimum threshold for sustainable investments with an environmental objective that aligns with the EU Taxonomy, resulting in a minimum target of 0%. Where applicable, investments with environmental objectives will be evaluated for alignment with the EU Taxonomy.

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