Introduction

F3 Finance qualifies as a “financial market participant” pursuant to EU Regulation (EU) 2019/2088 on sustainability related disclosures in the financial services sector (the SFDR).

Under the SFDR, financial market participants are required to publish information on their website, including:

• information on the integration of sustainability risks in their investment decision-making process;

• if and how they consider principal adverse impacts of investment decisions on sustainability factors; and

• how they integrate sustainability risks into their remuneration policies.

Sustainability Risks Integration (art. 3 SFDR)

Sustainability risks are integrated into the investment decision-making and risk monitoring to the extent that they represent a potential or actual material risk or identify an opportunity to put in place remedial actions to mitigate these risks. In this context, a sustainability risk means an environmental, social or management situation or condition which, if it occurs, could cause an actual or potentially material negative effect on the value of the investment.

F3 Finance has identified the sustainability risks which it assesses as relevant for its funds under management (which are considered to be the “products” within the meaning of the SFDR) split over “environmental risks”, “social impact risks” and “governance risks”. The following types of sustainability risks have been identified as likely to impact the return of the value of the investment:

• Environmental risks include, but are not limited to, climate change risk, energy- risk, eco-systems, waste & water management risk, process and material greenhouse gas emission risks.

• Social risks include, but are not limited to, user health & wellbeing risk, discrimination and social exclusion risk, and occupational health and safety risk.

• Governance risks include, but are not limited to, risks related to cybersecurity, corruption, tax compliance, money laundering, the monitoring of ESG data as well as due diligence risk.

When identifying the relevant sustainability risks, F3 Finance has taken into account that its investment strategy covers a wide variety of assets. Firstly, F3 Finance manages a number of funds according to its (Global) PIPE’s strategy. These funds invest in (European) publicly listed companies, controlled by a family shareholder. Secondly, F3 Finance manages Private Equity funds. These funds either invest directly in companies or in Private Equity funds. Lastly F3 Finance manages FGR funds. These funds focus on an international asset allocation mostly limited to institutional investors. The wide variety of funds managed entails that sustainability risks may manifest differently based on the funds and assets in question. As such, F3 Finance may consider other sustainability risks in its investment decision-making process to align with a specific investment focus of a fund under management. It should be noted that F3 Finance only manages article 6 funds, which mitigates to a certain extent the impact of sustainability risks.

F3 Finance integrates these main sustainability risks which it has identified:

• For the (Global) PIPE’s funds, through the use of hard and soft filters. The hard filters allow F3 Finance to narrow the selection of companies that fit within the investment strategy. The soft filters are subsequently used for a qualitative analysis of these companies. Sustainability risks are included in these soft filters.

• For the Private Equity funds, through a thorough due diligence and ongoing monitoring which amongst others takes the sustainability risk into account.

• For the FGR funds, through the selection of a competent external asset manager, who takes into account the applicable selection criteria.

Sustainability related impacts may be numerous and vary depending on the specific risk, region and character of investment (quoted or non-quoted equities). ln general, where a sustainability risk occurs in respect of an investment, there will be a negative impact on, or even an entire loss of its value. Also, there is a reputational risk connected to the occurrence of sustainability risks, which may have a negative impact on the fund as a whole, certainly in case of the quoted funds.

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Principal Adverse Impacts Statement (art. 4 SFDR)

F3 Finance does not consider principal adverse impacts of investment decisions on sustainability factors on entity level, within the meaning of the SFDR. F3 Finance has only limited resources and personnel. To determine in a quantifiable manner what the adverse impacts of our investment decisions would be, based on the different criteria set forth in the SFDR and its guidelines, would require additional resources not suitable for its current size. Moreover, the lack of availability of relevant data in the market is also an impediment to quantify principal adverse impacts of investment decisions on sustainability factors. This played an important role in our decision.

However, in its role as financial market participant, F3 Finance takes sustainability considerations into account in its investment selection. This is one of the soft filters applied when selecting investments and used to make an investment decision. Once the investment is made, regular checks are carried out to ascertain whether the investments continue to meet the requirements of the investment policy. This includes checking whether sustainability risks (and associated negative impacts) have materialised or may materialise in the near future. If this is the case, timely and appropriate action can be taken. F3 Finance monitors the issuance of further regulatory guidance and the development of industry and market practice in this area, in order to decide whether principal adverse impacts will be included in the future on an entity level.

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Integration of Sustainability Risks in the Remuneration Policy (art. 5 SFDR)

The remuneration policy of F3 Finance implicitly integrates sustainability risks in its remuneration policy through a number of key principles, such as:

• The remuneration policy is consistent with and promotes sound and effective risk management (such as sustainability risk management) through a limited variable remuneration: Individual variable compensation of the quoted team and variable compensation through the carried interest schemes are of such a nature and size that it does not determine the investment behaviour of the investment team and are always aligned with the interests of the investors.

• The evaluation criteria to calculate the amount of variable compensation take compliance with internal procedures and legal obligations into account. Besides that, it considers the general conduct of the employee and investor satisfaction. In case the employee does not preform sufficiently on these criteria, it may result in a negative financial consequence on the remuneration of that member of staff.

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This website disclosure will be reviewed in case of a material change in approach, and at least annually by F³ Finance’s compliance officer and the changes will be validated by the Board of Directors.