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Partech Venture

SFDR RTS Article 8 Partech Venture Fund

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Summary

Partech Venture is classified article 8 under SFDR Regulation (Regulation (EU) 2019/2088).Partech Venture (“The Fund”) intends to invest in software/tech, high-growth European companies with promising unit economics and achievable profitability ambitions, mainly in the European Union, the European Economic Area, the United Kingdom and Israel.While financial performance is the key driver, the Fund aims to track and promote both environmental and social characteristics for the companies it invests in. We believe that this will allow portfolio companies to create competitive advantages, be it for example by attracting talent, clients and later stage investors, as well as provide a positive impact on society and the planet.The Fund promotes environmental and social characteristics at a minimum of 80% of its investees by working with portfolio companies to improve their general Environment and Social Principles (“E&amp;S Principles”) in accordance with international standards. In particular, the Fund has the following E/S characteristics:<ul><li data-block-key="4rtmf">to promote certain minimum environmental and social safeguards by applying exclusion criteria/sector;</li><li data-block-key="5t2kp">to promote E&amp;S policies;</li><li data-block-key="ffo33">to promote carbon footprint monitoring and reduction;</li><li data-block-key="c3l1m">to promote diversity and inclusion.</li></ul>The Fund is committed to considering environmental, social, and governance factors in its investment decisions and portfolio management. We believe that incorporating these considerations into our investment process can generate long-term value for our investors and contribute to a more sustainable future.The Fund promotes E/S characteristics, but will not make any sustainable investments referred to in Article 8 of Regulation (EU) 2019/2088. The minimum proportion of sustainable investments is 0%.The Fund’s asset allocation is structured as follows:#1B: 80-100% of investments are aligned with other E/S characteristics; investments aligned with the environmental or social characteristics that do not qualify as sustainable investments.#2: 0%-20% corresponds to investments which are not qualified as sustainable (derivatives and money market funds, and the small pocket invested in the US and Asia).The following indicators are used to measure the attainment of the E&amp;S characteristics promoted by The Fund and will be monitored according to the ESG Reporting Policy:E&amp;S policy:<ul><li data-block-key="b89ru">% of portfolio companies with board oversight of ESG (included on the rolling board agenda, person/committee overseeing ESG etc)</li><li data-block-key="em8hj">% of portfolio companies with a dedicated person responsible for ESG (to precise if it is not a standalone position, ie. in addition to an existing position)</li><li data-block-key="5cstu">% of portfolio companies that have set up an E&amp;S policy</li></ul>Carbon Footprint monitoring and reduction:<ul><li data-block-key="b3kea">% of portfolio companies tracking their GHG emissions (scope 1 and 2)</li><li data-block-key="3jqsc">% of portfolio companies reducing their GHG emissions aligned with the Paris Agreement</li><li data-block-key="7cdk1">Where applicable, % of portfolio companies whose GHG emissions’ intensity improved</li></ul>Diversity and inclusion:<ul><li data-block-key="bj0ul">% of portfolio companies with group-wide diversity and inclusion policy with targets</li><li data-block-key="a710o">% split of female to male Board members</li><li data-block-key="d4e6t">% split of female to male senior executives (C level and/or VP level and above)</li></ul>To that extent, Partech Venture has set and will maintain ESG Reporting Policy for the Fund with a description of the guidelines and procedures that will be considered to integrate the ESG criteria at the pre- and post-investment phases – Please refer to the ESG Reporting Policy.However, Partech has chosen not to commit to a minimum share of Taxonomy alignment at this stage as it does not have the necessary data to be able to communicate on such a commitment.The integration of ESG factors is carried out throughout the Fund’s investment process, as described in the following paragraph :Firstly, with a screening and exclusion phase based on the application of a defined exclusion list as well as the categorization of sectors as A, B+, B or C according to the IFC framework as defined in the SFDR Note Article 8, in order to avoid investing in companies with prohibited activities or which are too risky in view of the fund strategy.Secondly, an ESG Due Diligence phase is carried out to analyse the level of integration of ESG criteria in the selected portfolio companies, and potentially the consideration of potential corrective actions to enhance performance with these companies.At the time of the investment decision and closing, the investment team and the Chief Sustainability Officer put together a summary of the ESG analysis carried out during the process in order to agree on covenants and a potential action plan for each holding.The ESG evaluation of companies is monitored throughout the holding period through the collection of data in the post-investment ESG questionnaire completed by Portfolio Companies and analysed by the Investment Team, the monitoring of the selected KPI, and the monitoring of the commitments listed in the Side Letters.In order to comply with regulatory requirements, the Investment team ensures that the policies and principles of engagement are applied in the companies it invests in. Similarly, the Investment team ensures compliance with the minimum safeguards and good governance practices, both in SFDR and Taxonomy.

Partech Venture promotes E/S characteristics

The Fund promotes E/S characteristics, but will not make any sustainable investments referred to in Article 8 of Regulation (EU) 2019/2088. The minimum proportion of sustainable investments is 0%.<h3 data-block-key="crjv0">Integration of ESG factors into investment analysis and decision-making processes</h3>The Fund's investments are based on a defined and organized investment strategy. The strategy involves several actors and governance bodies to ensure the promotion of E&amp;S characteristics by working with companies that will be invested to improve their general Environment and Social Principles (“E&amp;S Principles”) in accordance with international standards.<h4 data-block-key="dhodo">Screening and exclusion</h4>In the pre-investment phase, a screening and exclusion process for activities that are prohibited or contrary to Partech’s objectives, values, and principles is put in place. These activities are following Partech’s risk categorization methodology out of the scope of Partech Venture Fund.For more information on this matter, please refer to the section: “Investment strategy: pre-investment phase”.<h4 data-block-key="o3n2">ESG Due Diligence, compliance assessment and residual risk mapping</h4>ESG Due Diligence is carried out by sending the target company an ESG questionnaire based on international models. This questionnaire aims at reading more about a company’s ESG strategy and mechanisms in place, and/or at identifying potential areas for improvement.A compliance assessment of the target company is also conducted during the Due Diligence process to assess compliance with local rules and regulations (by reviewing the company’s policies and procedures, as well as an assessment of organizational set-up).Depending on the observed level of inherent risks, the Fund has set up a risk categorization system as explained in the fourth section “Investment strategy: screening and exclusion”.After analyzing and identifying these risks during the Due Diligence, a final risk categorization is drawn up with a linked action plan, when relevant. The Chief Sustainability Officer (CSO) verifies the correct implementation of the process. While doing so, she pays particular attention and reviews the E/S criteria.<h4 data-block-key="5ehto">Investment Committee decision</h4>A summary of the ESG analysis is included in every investment memorandum submitted to the Investment Committee. The Investment Committee is responsible for the investment decision and ensures that the investment is in line with the strategy of the fund, notably by implementing a corrective action plan if ESG risks are identified in the ESG due diligence phase.Following validation and ratification of the investment by the Investment Committee, the Investment Team and the CSO work collaboratively to agree on covenants included in shareholder agreements and the agreements signed with the invested companies, and also an action plan.<h4 data-block-key="6up9s">Holding period</h4>Post-investment, the Investment Team assesses the ESG-invested companies’ practices through an annual ESG questionnaire to encourage knowledge and best practices sharing, and the follow-up on the action plan.During the holding period, the Investment Team will identify the E&amp;S evolution and value creation over the life of the investment.<h3 data-block-key="6s9lj">Use of Principal Adverse Impacts (PAI) indicators</h3>The Fund considers two indicators for principal adverse impact to measure the attainment of environmental and social characteristics of its investments (see above) listed below:<ul><li data-block-key="8h3ie">Board Gender Diversity: average ratio of female to male board members in investee companies, expressed as a percentage of all board members (PAI 13, Table 1, as referred to in Annex I of the SFDR Delegated Act - <a href="https://eur-lex.europa.eu/eli/reg_del/2022/1288/oj">EUR-Lex - 32022R1288 - EN - EUR-Lex (europa.eu)</a>);</li><li data-block-key="f2j8">Exposure to controversial weapons (anti-personal mines, cluster munitions, chemical weapons and biological weapons) (PAI 14, Table 1, as referred to in Annex I of the SFDR Delegated Act - <a href="https://eur-lex.europa.eu/eli/reg_del/2022/1288/oj">EUR-Lex - 32022R1288 - EN - EUR-Lex (europa.eu)</a>).</li></ul>The Fund considers the aforementioned principal adverse impacts throughout its investment decision-making process:<ul><li data-block-key="5iubr">pre-investment phase (screening and exclusion, ESG Due Diligence, Investment Committee decision);</li><li data-block-key="c67m6">during the holding period.</li></ul>The promotion of E&amp;S characteristics for each holding and its monitoring, the collection and analysis of data through ESG due diligence, the collection and monitoring of PAIs, all enable the investment teams to monitor the ESG evaluation of the fund and the achievement of the E&amp;S characteristics promoted.Limitations identified in the data collection and processing process will be subject to corrective action plans in order to limit and control these risks (insufficient coverage rate, malfunctioning of the ESG data processing software, inconsistency of data from one year to the next, etc.).The investments included in the “Not sustainable" Category shall at least comply with the following minimum safeguards:<ul><li data-block-key="fm75a">The OECD Guidelines for Multinational Enterprises.</li><li data-block-key="boksd">The UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the 8 fundamental conventions identified in the Declaration of the International Labour Organisation (ILO) on Fundamental Principles and Rights at Work and the International Bill of Human Rights.</li></ul>Each year, a full account of how Partech Venture Fund has considered the aforementioned PAIs during the period will be made available to investors in the RTS periodic template disclosed in its annual report.<h3 data-block-key="am7p0">Respect for minimum safeguards</h3>Partech is committed to respecting fundamental social rights in alignment with OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation (ILO) on Fundamental Principles and Rights at Work and the International Bill of Human Rights.

Partech Venture promotes E/S characteristics, but will not make any sustainable investments

Environmental/Social characteristics

The Fund considers two indicators for principal adverse impact to measure the attainment of environmental and social characteristics of its investments (see above) listed below:<ul><li data-block-key="6ji5g">Board Gender Diversity: average ratio of female to male board members in investee companies, expressed as a percentage of all board members (PAI 13, Table 1, as referred to in Annex I of the SFDR Delegated Act - <a href="https://eur-lex.europa.eu/eli/reg_del/2022/1288/oj">EUR-Lex - 32022R1288 - EN - EUR-Lex (europa.eu)</a>);</li><li data-block-key="d2qa6">Exposure to controversial weapons (anti-personal mines, cluster munitions, chemical weapons and biological weapons) (PAI 14, Table 1, as referred to in Annex I of the SFDR Delegated Act - <a href="https://eur-lex.europa.eu/eli/reg_del/2022/1288/oj">EUR-Lex - 32022R1288 - EN - EUR-Lex (europa.eu)</a>).</li></ul>The Fund considers the aforementioned principal adverse impacts throughout its investment decision-making process:<ul><li data-block-key="85jto">pre-investment phase (screening and exclusion, ESG Due Diligence, Investment Committee decision);</li><li data-block-key="b6sbg">during the holding period.</li></ul>The promotion of E&amp;S characteristics for each holding and its monitoring, the collection and analysis of data through ESG due diligence, the collection and monitoring of PAIs, all enable the investment teams to monitor the ESG evaluation of the fund and the achievement of the E&amp;S characteristics promoted.In addition to the consideration of these two PAIs and the Partech annual ESG reporting, the following indicators are used to measure the attainment of the E&amp;S characteristics promoted by The Fund and will be monitored according to the E&amp;S Reporting Policy:E&amp;S policy:<ul><li data-block-key="d3993">% of portfolio companies with board oversight of ESG (included on the rolling board agenda, person/committee overseeing ESG etc)</li><li data-block-key="aca5e">% of portfolio companies with a dedicated person responsible for ESG (to precise if it is not a standalone position, ie. in addition to an existing position)</li><li data-block-key="dmb8i">% of portfolio companies that have set up an E&amp;S policy</li></ul>Carbon Footprint monitoring and reduction:<ul><li data-block-key="4rq1q">% of portfolio companies tracking their GHG emissions (scope 1 and 2)</li><li data-block-key="1ng7n">% of portfolio companies reducing their GHG emissions aligned with the Paris Agreement</li><li data-block-key="5lg9i">Where applicable, % of portfolio companies whose GHG emissions’ intensity improved</li></ul>Diversity and inclusion:<ul><li data-block-key="bht8u">% of portfolio companies with group-wide diversity and inclusion policy with targets</li><li data-block-key="88ck5">% split of female to male Board members</li><li data-block-key="4jahc">% split of female to male senior executives (C level and/or VP level and above)</li></ul>To that extent, Partech Venture has set and will maintain ESG Reporting Policy for the Fund with a description of the guidelines and procedures that will be considered to integrate the ESG criteria at the pre- and post-investment phases – Please refer to the ESG Reporting Policy.

Environmental/Social characteristics of the financial product

Investment strategy

<h3 data-block-key="ka464">Focus on the Fund’s ESG strategy:</h3>The Fund will invest in early to mid-stage tech companies at Series A and Series B stages that show significant traction and have the potential to become European/global leaders. The Fund will cover the full spectrum of tech investment opportunities in B2B and B2C verticals, with a particular focus on: Enterprise &amp; Health Software, Security &amp; Cloud Infrastructure, B2B &amp; B2C platforms, Fintech &amp; Insurtech.Partech Venture combines an unparalleled access in France and a proven global sourcing engine across the European Union, the European Economic Area, the United Kingdom, and Israel, with a clear expertise in supporting European companies in their US expansion.As part of any investment decisions, the Investment Team identifies the material risks associated with each prospective investment (as defined in “Focus on the ESG investment decision-making process (taking into account sustainability risks and PAIs)”). These material risks include relevant and major material sustainability risks depending on the business activities, the development stage and the operational countries of the Target Company.The Investment Team may leverage the expertise of Partech’s own legal, compliance teams, and selected services providers and conduct a pre-investment due diligence process on the corporate governance (refer to the section “What is the policy to assess good governance practices of the investee companies?”), environmental impact, and social policy for the potential investment opportunities if needed.This analysis is integrated into the investment process implemented for the different Partech Funds and is submitted to the Fund’s Investment Committee as part of the decision-making process for each investment opportunity.Indeed, the Investment Committee assesses all the identified sustainable opportunities, risks and potentials set out in the proposal. The different criteria are monitored and assessed throughout the holding investment period and until the divestment phase.<h4 data-block-key="99ukm">Focus on the ESG investment decision-making process (taking into account sustainability risks and PAIs)</h4>The Fund shall not invest in, guarantee or otherwise provide financial support, directly or indirectly, to companies or other entities listed in the “Exclusion List” defined in the By-Laws.In addition to committing to not investing in the excluded sectors, Partech will follow the procedure described below for each of the Fund’s investments:<h4 data-block-key="2vidd">Pre-investment phase</h4>Depending on the observed level of inherent risks, Partech has set up a risk categorization system:<ul><li data-block-key="48v5i">Category A/B+ (“high risks” sectors): business activities with potential significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented. These out of scope categories are exhaustively covered only by the “Exclusion List” applicable to the Fund, see “Preliminary screening” below.</li><li data-block-key="b0f2p">Category B (“moderate risks” sectors): business activities with potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.</li><li data-block-key="7j74n">Category C (“low risks” sectors): business activities with minimal or no adverse environmental or social risks and/or impacts.<ol><li data-block-key="a21ac">Preliminary screening</li></ol></li></ul>Preliminary screening ensures that the Investment Team avoids investing in activities that are explicitly listed as being banned by Partech Partners or the Fund’s By-Laws.Please refer to the section “What are the binding elements of the investment strategy used to select the investments to attain the sustainable investment objective?” for more detail on the specific sectors banned.Following the screening and exclusion phase, an ESG due diligence questionnaire based on international models is sent to Target Companies entering the final steps of the process by the Investment Team. This questionnaire makes it possible to raise awareness of ESG issues and to identify potential areas for improvement.Compliance assessmentAs part of due diligence, the Investment Team assesses the Target Company compliance with local rules and regulations and its alignment with the frameworks and standards on which the Partech approach is based.The level of compliance of the Target Company will be assessed by reviewing its procedures and policies, examining its regulatory arrangements and documents, and through potential interviews with management.Residual risk mappingAfter analysis and identification of the inherent risks in the Target Company, residual risk is drawn up based on the risk categorization scale presented above, as well as on the following points:<ul><li data-block-key="bgrqi">the quality and level of residual risk management at the level of the invested company,</li><li data-block-key="9h7b9">its policies and procedures,</li><li data-block-key="d68ft">the implementation of an action plan-related timetable,</li><li data-block-key="dgt7b">the selection and achievement of E&amp;S characteristics,</li><li data-block-key="91tol">the impact of mitigation measures on the likelihood of risk occurrence,</li><li data-block-key="dfr1p">the impact of mitigation measures on the impact of risk,</li><li data-block-key="a1u61">the coverage rate of the application of the mitigation measures,</li></ul>The Chief Sustainability Officer (CSO) verifies the correct implementation of the process. While doing so, she pays particular attention and reviews the E/S criteria.<h4 data-block-key="2o8cl">Investment Committee decision</h4>A summary of the ESG analysis is included in every investment memorandum submitted to the Investment Committee, which is ultimately responsible for the investment decision. If material ESG risks are identified in the ESG due diligence phase, a corrective action plan is included in a post-investment plan.The Investment Committee systematically reviews the elements identified during the pre-investment phase to ensure that the investment is in line with the strategy of the Fund.<h4 data-block-key="ekpkl">Closing</h4>Following validation and ratification of the investment by the Investment Committee, the Investment Team and the CSO work collaboratively to agree on the implementation of the following elements:Action PlanIf material ESG risks are identified in the ESG due diligence phase, a corrective action plan is included in a post-investment plan. The action plan is discussed with the Portfolio Company, with the following objectives:<ul><li data-block-key="cb341">limiting residual risks,</li><li data-block-key="c4q17">ensuring compliance,</li><li data-block-key="95m03">exploiting the opportunity for impact,</li><li data-block-key="1mr86">ensure compliance with the Fund's investment strategy.</li></ul><h4 data-block-key="4v42l">During the holding period</h4>The Fund acts as a lead or co-lead investor in most cases, with a strong involvement in value creation and build up strategies when it does.During the holding period, the following monitoring actions will be implemented:<ul><li data-block-key="dcccq">Governance: The Investment Team will seek for a seat on the Board of Directors of portfolio companies, which is a powerful means of promoting the integration of ESG issues and ncouraging best practices.</li><li data-block-key="340hc">Annual collection of data through an ESG questionnaire: all the Portfolio Companies receive an annual ESG questionnaire that Partech will send to monitor the main ESG criteria, with the ambition to encourage knowledge and best practices sharing and thus, support them in their different approaches.</li><li data-block-key="ad33a">If a corrective action plan has been defined with the portfolio company (refer above “Action plan” section), it has to be monitored.</li><li data-block-key="3a44v">Coordination between the Investment Team and the CSO to monitor the evolution of the portfolio company and discuss potential changes of the portfolio company’s E&amp;S category when necessary.</li></ul><h4 data-block-key="abeve">The exit</h4>Upon exit, the Investment team will assess all E&amp;S criteria promoted during the life time of the investment to evaluate how beneficial this exercise has been for the company.<h3 data-block-key="f9vio">Good governance practices</h3>The Funds has implemented and will maintain a specific ESG policy reporting with guidelines and procedures to assess whether the investee companies achieve sound environmental and social performance consistent with good governance practices.To that extent and as mentioned above, characteristics with related indicators are considered throughout the investment process of the Fund.This risk assessment is phased at the different stages of the investment process and proportionates to the stage of the investee company.It assesses compliance with the following governance principles, where applicable:<ul><li data-block-key="1ste3">sound management structures,</li><li data-block-key="5nb0l">good employees’ relations,</li><li data-block-key="85bn3">remuneration policy,</li><li data-block-key="9fvts">tax compliance.</li></ul>As part of its ESG strategy, Partech also formalizes an assessment of corporate governance and business integrity principles.Partech will ensure that each Portfolio Company adheres to the corporate governance code or similar provisions pursuant to the relevant laws of the country in which such Portfolio Company is established.Partech will ensure that each Portfolio Company complies with regulations relating to bribery, fraud and AML/FT.

Proportion of investments

The Fund’s asset allocation is structured as follows:<ul><li data-block-key="3a0d0">80-100% of investments are aligned with other E/S characteristics; investments aligned with the environmental or social characteristics that do not qualify as sustainable investments.</li><li data-block-key="77ojv">0%-20% corresponds to investments which are not qualified as sustainable (derivatives and money market funds, and the small pocket invested in the US and Asia).</li></ul>Partech Venture Fund will make a 0% minimum of environmentally sustainable investments that are aligned with the UE Taxonomy, as no sustainable investment.

Monitoring of Environmental/Social characteristics

The Fund considers two indicators for principal adverse impact to measure the attainment of environmental and social characteristics of its investments (see above) listed below:<ul><li data-block-key="12k50">Board Gender Diversity: average ratio of female to male board members in investee companies, expressed as a percentage of all board members (PAI 13, Table 1, as referred to in Annex I of the SFDR Delegated Act);</li><li data-block-key="909jr">Exposure to controversial weapons (anti-personal mines, cluster munitions, chemical weapons and biological weapons) (PAI 14, Table 1, as referred to in Annex I of the SFDR Delegated Act).</li></ul>The Fund considers the aforementioned principal adverse impacts throughout its investment decision-making process:<ul><li data-block-key="7188s">pre-investment phase (screening and exclusion, ESG Due Diligence, Investment Committee decision);</li><li data-block-key="s5v1">during the holding period.</li></ul>The promotion of E&amp;S characteristics for each holding and its monitoring, the collection and analysis of data through ESG due diligence, the collection and monitoring of PAIs, all enable the investment teams to monitor the ESG evaluation of the fund and the achievement of the E&amp;S characteristics promoted.In addition to the consideration of PAIs and the Partech annual ESG reporting, the Environmental/Social indicators mentioned in the section 3 are used to measure the promotion of the E&amp;S characteristics promoted by The Fund and will be monitored according to the E&amp;S Reporting Policy.Later on, the KPIs will be disclosed to investors in appropriate sustainability reports according to the periodic SFDR RTS template that is sent to investors annually. These E&amp;S characteristics will be appropriately reported in the periodic SFDR RTS template sent to investors annually.

Methodology

The Fund promotes Environmental/Social characteristics. To determine how the Environmental/Social characteristics promoted are achieved, the team has decided to rely on market standard methodologies recognized by market practices, indicated in dedicated reporting SFDR template. Doing so allows the team to rely on a reliable methodology that includes the consideration and monitoring of the Fund’s E&amp;S characteristics ; please refer to section 3 “Environmental/Social characteristics of the financial product”.To ensure that the environmental and/or social characteristics promoted by the fund are met, the fund acts as a lead or co-lead investor during the holding period, notably to:<ul><li data-block-key="d4tim">Monitor shall be conducted to portfolio companies:<ul><li data-block-key="85tbd">at least annually through a questionnaire.</li><li data-block-key="4otk4">When necessary if an action plan has been defined with the portfolio company.</li></ul></li><li data-block-key="b6t4u">Analyze and review the E&amp;S criteria of portfolio companies through an annual assessment.</li><li data-block-key="cv35a">Coordinate with the Chief Sustainability Officer to monitor the evolution of the portfolio company and discuss potential changes of the portfolio company’s E&amp;S category when necessary.</li><li data-block-key="apdvl">Collect and share best practices with the Chief Sustainability Officer and the portfolio companies when relevant.</li><li data-block-key="do55t">Based on the inputs, review and update of the Fund E&amp;S Reporting Policy when necessary.</li><li data-block-key="clev5">Report on the Article 8 SFDR Reporting template</li></ul>The ESG Framework enables to evaluate our investments yearly, as well as the due diligences conducted ensure that the standards and practices are in line with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

Methodology used to determine how the Environmental/Social characteristics promoted are achieved

Data sources and processing

The data collected through the ESG annual questionnaire sent to invested companies are used and consolidated by the Investment Team, with the support of the Chief Sustainability Officer (CSO), to produce the follow-up on the Fund’s E&amp;S characteristics at the Board level of the invested companies as well as the annual report transmitted to investors.To ensure the quality of the selected data during the entire process, the Investment Team has selected KPIs as described above, referring to international standards and the Partech engagement.For each portfolio company, those KPIs will be reviewed by the Investment Team, the Chief Sustainability Officer and to the extend possible discussed at Board level. If possible and applicable, preference will be given third-party assessment.However, the Investment Team will explore in H1 2024, based on feedback, the opportunity to implement data collection, analysis, and monitoring tools and to use other third-party data providers.

Limitations

The limitations of data processing are an inherent issue for investment companies. It is more particularly a problem when tracking ESG data as the data quality on these issues is less mature than for financial ones.Aware of these problems, the Investment Team is always making the best effort to ensure that risks are properly and continuously monitored and limited through the following means.The Investment Team constantly ensures that these risks are identifiable and identified by our teams to limit them. The risks identified at this stage are the following:<ul><li data-block-key="a6kep">A risk of data coverage rate: there is a risk that some investment companies do to provide all necessary KPIs to the Investment Team in due time, all the more for KPIs tackling the supply chain.</li><li data-block-key="9s197">A risk of mishandling the software, as it is not automated, which might lead to data inconsistencies</li><li data-block-key="9anil">Difficulty in analyzing the consistency of data variation from one year to the next</li></ul>Inside the Investment Team, various levels of control on ESG data are made. A first level of control is performed by the Investment Team, with the support of Partech's CSO. Then, a second level of control is performed by the Compliance Team, which ensures that compliance and respect for the fund's regulatory provisions are assessed by reviewing and updating the policies, procedures, and systems in place.Additionally, the team is in the process of providing means and new resources that will make it possible to limit the risks of anomalies and inconsistencies in data through investment in more automated tools. Throughout the years Partech has gathered a lot of ESG data on companies. Therefore, it is not able to detect discrepancies when comparing a company to another with similar business models, to ensure that the data shared by the fund's holdings are consistent.Moreover, awareness-raising and training on ESG issues for our invested companies are also part of our risk mitigation actions. In this way, we ensure that companies properly integrate ESG issues and understand the importance of transparency of related data.

Due Diligence

Preliminary the screening and exclusion phase ensures that the Investment Team avoids investing in activities that are explicitly listed as being banned by Partech Partners or the Fund’s By-Laws.Depending on the observed level of inherent risks, Partech has set up a risk categorization system:<ul><li data-block-key="kkno">Category A/B+ (“high risks” sectors): business activities with potential significant adverse environmental or social risks and/or impacts that are diverse, irreversible, or unprecedented. These out of scope categories are exhaustively covered only by the “Exclusion List” applicable to the Fund.</li><li data-block-key="cjfli">Category B (“moderate risks” sectors): business activities with potential limited adverse environmental or social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.</li><li data-block-key="2vk99">Category C (“low risks” sectors): business activities with minimal or no adverse environmental or social risks and/or impacts.</li></ul>These activities from prohibited sectors are, following the Partech’s risk categorization methodology, classified as “High-Risk” (Category A) sectors and “Substantial-Risk” (Category B+) sectors. These categories are out of the scope of the Fund.For more information, please refer to the listed in the “Exclusion List” defined in the By-Laws.Following the screening and exclusion phase, an ESG due diligence questionnaire based on international models is sent to Target Companies entering the final steps of the process by the Investment Team. This questionnaire makes it possible to raise awareness of ESG issues and to identify potential areas for improvement.As part of due diligence, the Investment Team ensures that the Target Company is compliant with local rules and regulations and that they are properly aligned with the frameworks and standards on which the Partech approach is based.The level of compliance of the Target Company will be assessed by reviewing its procedures and policies, examining its regulatory arrangements and documents, and through potential on-site visits or interviews with management.After analysis and identification of the inherent risks in the Target Company, residual risk is drawn up based on the risk categorization scale presented above, as well as on the following points:<ul><li data-block-key="4bnru">the quality and level of residual risk management at the level of the invested company,</li><li data-block-key="1dvn7">its policies and procedures,</li><li data-block-key="3fqti">the implementation of an action plan-related timetable,</li><li data-block-key="6k7t8">the selection and achievement of measurable objectives,</li><li data-block-key="f90m1">the impact of mitigation measures on the likelihood of risk occurrence,</li><li data-block-key="aa0ai">the impact of mitigation measures on the impact of risk,</li><li data-block-key="aque7">the coverage rate of the application of the mitigation measures,</li></ul>The Chief Sustainability Officer (CSO) verifies the correct implementation of the process. While doing so, she pays particular attention and reviews the E/S criteria.

Engagement policies

Partech Venture Fund ensures that the engagement policies and principles are applied throughout the fund’s investment strategy.At Partech level, the firm is engaged in French and European initiatives linked to the climate change (Initiative Climat International) and diversity (SISTA, France Invest Charte pour la parité). These formal engagements are included in our Fund strategy and engagement policy.At the Fund’s level, engagement is ensured through the investment decision-making process by:<ul><li data-block-key="6a6sm">Monitoring of E&amp;S indicators dedicated to promote an E&amp;S policy and governance</li><li data-block-key="e79u6">Annual collection of data through an ESG questionnaire to monitor the main ESG criteria, with the ambition to encourage knowledge and best practices sharing and thus, support them in their different approaches.</li><li data-block-key="c5ipu">Set-up of an Action Plan if material ESG risks identified</li><li data-block-key="3qbei">Coordination between the investment team and the CSO to monitor the evolution of the portfolio company and discuss potential changes of the portfolio company’s E&amp;S category when necessary</li><li data-block-key="2ovhd">Seeking for a seat on the Supervisory Board of portfolio companies, which is a powerful means of promoting the integration of ESG issues and encouraging best practices.</li></ul>Exchanges, communications, and periodic reporting also keep companies constantly informed of the fund's strategy and potential new standards of engagement to be incorporated and met.