Our approach to ESG

LitCapital advocates for environmental and social responsibility by selecting investments in companies that prioritize positive impacts on the environment and society. Furthermore, it works closely with portfolio companies to enhance their performance in areas such as climate action, sustainable practices, good governance, and gender equality.

We consider taking into account the following environmental and/or social characteristics:

• We do not invest in enterprises engaged in any of the activities that have or might have significant adverse environmental and/or social impacts, including companies engaged in the manufacture of arms, tobacco and hard liquor (alcohol), gambling, or related activities
• We do not invest in enterprises engaged in any kind of illegal activities or illegal business practices
• We evaluate the main environmental, public health-related, workplace safety, and social issues associated with target companies during the pre-contract phase
• We work on the mitigation of possible environmental and social issues and risks during the period of ownership and exit phase
• We are committed to compliance with applicable national, state, and local labour laws
• We aim to keep our environmental and social responsibility efforts in line with the United Nations Principles of Responsible Investment and the IFC Environmental, Social, and Corporate Governance Disclosure Framework for Private Equity

Sustainable Finance Disclosure Regulations (SFDR), Article 4, Principal Adverse Impacts (PAI) Disclosure

While we incorporate ESG factors in the investment process, we do not currently consider the Principal Adverse Impacts (PAI) of our investment decisions on sustainability factors as defined by Article 4 of the EU Sustainable Finance Disclosure Regulation (SFDR).

This is primarily because we invest in small and medium-sized companies where extensive additional data collection is not generally required and the process is redundant in many cases. Thus, currently, we lack the means to gather and measure all necessary data under the SFDR across our portfolios consistently and cost-effectively.

However, we acknowledge that sustainability risks vary by sector and company stage, and their impact may evolve. Therefore, we continuously monitor their effect on our investment activities. When we do start assessing adverse impacts on sustainability, we’ll disclose relevant information to investors and on our website.

Information on management’s remuneration by Article 5 section 1 of the SFDR Regulation

The Remuneration policy is not measurably or strictly related to the integration of sustainability risks into LitCapital’s operations.