Preamble

The Vespa Capital III Fund is an Article 8 fund under the SFDR, i.e. it promotes environmental and social characteristics and may invest in sustainable assets but its investments are not structured around a sustainable objective. 

Vespa Capital invests in SMEs at different stages of maturity, particularly in their environmental and social initiatives. Vespa Capital cannot guarantee that it will be able to obtain the information required in order to comply with the RTS (Regulatory Technical Standards) as defined by the European Union (14 indicators) and therefore does not take the principal adverse impacts, as defined in the RTS report, into account.



   
Pre-selection of opportunities

Before investing, Vespa Capital systematically applies an initial sector filter for ethical, moral and environmental reasons. As such, all companies that meet the following criteria are excluded:
    

• Sector criterion: companies involved in:
  • The production or sale of tobacco, drugs or derivative products;
  • Financing the production or sale of any form of weapons or ammunition;
  • Animal mistreatment/animal testing;
  • The production, dissemination or sale of any pornographic content;
  • Casinos and any gambling businesses;
     
• Climate criterion: companies whose revenue is significantly impacted by fossil fuels (coal, shale gas and oil). Depending on the investment opportunities, Vespa Capital reserves the right not to exclude companies that are seeking to make their energy transition;
   
• Legal and regulatory criterion: breaches of internationally recognised principles and regulations (any illegal economic activity).

Vespa Capital has the right to exclude any company with a negative ESG recommendation in its investment analysis.

During the opportunity analysis phase, Vespa Capital follows a Best-in-Universe strategy in order to prioritise the most competitive companies in terms of financial and non-financial performance.


    

Investment criteria

Companies are assessed using a number of criteria:
     

• Environmental: reducing their impact on the environment (absolute greenhouse gas emissions in kg CO2eq, scopes 1 & 2 at least and existence of policies on managing and measuring environmental impacts);
   
• Social : enhancing human capital (net creation of jobs every year and participation of women in the company’s management on three levels: number of women who are members of the management committee, number of women who are executives or in similar roles and gender equality within the company);
   
• Governance/societal: sharing in value (existence of an ESG/CSR charter at the company, employee incentive schemes and shareholding opportunities for employees).

Other criteria specific to each investee company will be determined based on their priority ESG issues in order to ensure more bespoke monitoring in addition to the common indicators.



    
Methodology

In measuring the attainment of the environmental and social characteristics promoted by the Fund, Vespa Capital has developed a monitoring system that combines specificity and comparability: 

• Two indicators on the environmental and social pillars common to all of the Fund's investee companies, i.e. a total of 4 common indicators;
   
• Two indicators on the environmental and social pillars specific to each investee company by reference to their priority ESG issues; i.e. a total of four indicators specific to each investee company to assess their environmental and social performance based on the specific characteristics of their business sectors, their business models, their sustainability risks and their maturity in terms of environmental and social policy.

Accordingly, Vespa Capital measures the achievement of the environmental and social characteristics promoted by the Fund, over the entire term of the investment, via eight indicators for each investee company. These indicators are reviewed annually. A shareholders' agreement is signed for each transaction between Vespa Capital and the managers.




Source of data and process

The data is derived from companies' responses to the ESG questionnaire. 

However, Vespa Capital wishes to stress that: 
   

• Portfolio companies may find it difficult to implement all or part of the action plan, due in particular to their size (SMEs) and/or the lack of growth of such companies;
   
• The analysis will depend on the quality of the information and data reported by companies and third parties.

For each of the priority ESG issues identified at the investee companies, a concrete action plan has been put in place with the managers that reflects the specific characteristics of the sector and the size and resources of the companies invested in. Each portfolio company is committed to complying with the action plan and taking the necessary steps to achieve it. This Action Plan also allows Vespa Capital to monitor changes in the ESG impact of companies in the portfolio on an annual basis. In the event of any difficulties in implementing the Action Plan, it may be adapted by mutual agreement. 

At the time of disposal, Vespa Capital summarises the changes in the pre-selected ESG indicators with a view to measuring the progress made on the objectives set.




Sustainable investment

The Vespa Capita III fund is an Article 8 fund under the SFDR and promotes environmental and social characteristics but does not seek to invest in companies that specialise in sustainable development.




Sustainable Development Goals

The Vespa Capital III Fund integrates three goals into its sustainable development investment process (SDGs), with which its investee companies will be asked to comply:
     

• SDG 5 "Gender Equality", and in particular sub-goal 5.5 "Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life";
   
• SDG 8 "Decent work and economic growth", and more specifically sub-goal 8.5 "By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value";
   
• SDG 13 "Climate Action", and more specifically sub-goals 13.1 "Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries" and 13.3 "Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning".

In addition, based on these specific criteria defined by Vespa Capital, it may also contribute to additional UN sustainable development goals, such as objectives 3 (good health and well-being), 10 (reduced inequalities) and 12 (responsible consumption and production), etc.




Investment strategy 

Vespa Capital stresses that its investee companies are required to implement ESG improvement plans. 

The shareholders' agreements entered into by Vespa Capital and the managers include an ESG clause signed in advance of each investment.

This clause covers the following: 

• Compliance with international standards along their entire production chain (logistics and external service providers, etc.)P
• Producing the necessary information to ensure oversight of the ESG indicators that have been set
• Attending an annual meeting (or meetings at more frequent intervals) with Vespa Capital to assess the Portfolio Company’s progress in attaining the ESG objectives set
• Implementing the action plan put in place by Vespa Capital in accordance with the ESG objectives set
• Implementing remedial action in the event that the ESG objectives are breached
• Implementing, where necessary, policies and procedures to ensure compliance with Vespa Capital's requirements 
• Proactively communicating with Vespa Capital in the event of an ESG incident 
• Raise awareness on sustainable finance within the group on an annual basis.