Introduction

At Kreos Capital, we recognise that sustainability and Environment, Social and Governance (“ESG”) considerations are an important feature of our business. By integrating these into each step of our investment process, and also in our day-to-day running and management of our business, we seek to create lasting benefits for our stakeholders, eco-system and communities in which we live and work.

About us

Kreos Capital was founded more than 23 years ago with the mission of pioneering unique financing solutions for high growth companies across Europe and Israel. Since then, Kreos Capital has committed more than €3.7 billion in over 670 portfolio company transactions, in a multitude of industries across more than 17 jurisdictions.

Kreos Capital maintains a presence in London, Sweden, Israel, Germany, Jersey, and Luxembourg.

Sustainable Finance Disclosure Regulation

Under the mandatory disclosures of the Regulation of the European Parliament and of the Council on sustainable-related disclosures in the financial services sector (EU) 2019/2088 (“SFDR”), Kreos Capital is publishing the following information on their website in light of the consideration of sustainability-related aspects in accordance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27th of November 2019 on sustainability disclosure requirements in the financial services sector (the “SFDR”). Unless the information is explicitly provided in relation to a specific fund managed by Kreos Capital the following statements refer to the management and investment decision-making processes of Kreos in general

Sustainability Risk Statement

At Kreos Capital, we recognise the intrinsic importance that sustainability and Environmental, Social and Governance (“ESG”) issues hold, not only within our business but for our wider communities and for the future generations.

In demonstrating our commitment to ESG and Sustainability, Kreos has integrated these considerations into each step of our investment and risk management process and the day-to-day management of our business, we aim to connect our purpose and strategy with the needs of our stakeholders, eco-system and our wider community.

To Kreos Capital, ‘sustainability risk’ is considered to be an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment or to Kreos Capital directly. Kreos Capital operates with a “restricted investments list” which details sectors in which Kreos will not invest and are in the process of developing a standardised, sustainability risk questionnaire that must be completed as part of our investment process and prior to an investment being approved by the committee. This is to ensure full assessment of the main ESG, and sustainability risk factors associated with a proposed investment have been identified. Any material issues discovered during this process are brought to the investment committee’s attention and must be improved or mitigated in order for an investment to be pursued. Further information can be found in Kreos Capital’s ESG Policy and Approach to Responsible Investment (available upon specific request).

The Kreos Capital ESG Committee regularly reviews the sustainability risk policy to ensure that those are being kept in line with applicable regulations.

Governance

The Sustainability Risk Policy concerns the entire Kreos Capital business and operations, and it is the responsibility of all employees to observe it.

The investment team is required to apply Kreos Capital’s ESG policies and approach to responsible investment during all stages of the investment process.

Oversight and implementation of this and other responsible investment policies is conducted by the ESG Committee which includes permanent membership from the Kreos Partners & COO, HR, Investor Relations, and Compliance with rotating membership from the Investment Team.

The ESG Committee regularly reviews the operations and processes at Kreos, in order to ensure optimal practices.

Principle Adverse Impacts (“PAIs”) Statement

The SFDR requires Kreos Capital to make a “comply or explain” decision whether it considers the PAIs of its investment decisions on sustainability factors, in accordance with a specific regime outlined in SFDR.

Kreos Capital will regularly review our decision, but currently have opted not to comply with that regime, both generally and in relation to the Fund. Kreos Capital are supportive of the policy aims of the PAI regime, however, given the nature of the businesses we invest in, there is a concern over the readily available data to comply with many of the specific reporting requirements of this regime, particularly in the short-term. Kreos invests in high-growth companies in the technology and healthcare sectors – these companies are typically focused on disrupting traditional industries and seeking to have a positive impact on society through factors such as job creation, efficiencies and sustainability. However, many of these companies are early in their genesis and as such, lack the infrastructure required for strict reporting requirements at this time.

For these reasons, and in line with the dispositions of the Disclosure Regulation, we have chosen not to report publicly for now on the principal adverse impacts of our investment decisions on sustainability factors. We continue to ad-hoc and tailored reporting on these matters to our investors, and as requested by the Disclosure Regulation, we will aim to provide the full set of KPIs asked by this Regulation by 30/06/2023.

As previously detailed, Kreos Capital has implemented extensive, positive ESG-related considerations into all aspects of our business and will continue to improve in this regard.

 

Remuneration

Kreos Capital’s remuneration policy is applicable to all Kreos Capital entities, employees, and offices.

The remuneration policy has been developed with the aim of supporting Kreos Capital’s business strategy, corporate values and long‐term interests, as well as being in full compliance with any applicable laws and regulations. However, assessment and management of sustainability risks are not currently used when determining individual remuneration packages.

However, it is integral for the ongoing operations of Kreos Capital that the appropriate risk culture is observed and fostered among our team and organisation. As such, the Kreos Capital ESG Committee in conjunction with the Kreos Capital Partners will be reviewing this regularly in order to ascertain the best approach for integrating these considerations into future remuneration packages.

Kreos Capital is proud in its stance of being an Equal Opportunities employer as defined under the Equality Act 2010, and is committed to encouraging equality, diversity and inclusion among our workforce, and eliminating unlawful discrimination.

The aim is for our workforce to be truly representative of all sections of society and for each employee to feel respected and able to give their best.

Kreos Capital regularly compares its levels of remuneration with those of other, comparable companies; ensuring that the total remuneration package remains competitive and provides proper and risk-based incentives. To ensure that Staff members are compensated in accordance with the desired market positioning, the alignment to the desired market position is addressed annually. The annual review is based on a variety of factors amongst others, performance, inflation, and developments in the industry.

Kreos Capital operates in accordance with the Working Time Regulations 1998, ensuring 25 days of paid annual leave per annum.

Moving forward

Kreos Capital is committed to continuously improving our position, practices and behaviours in regards to sustainability and ESG considerations. Our ESG Committee is responsible for ensuring compliance with existing policies and procedures as well as improving our current practices, adapting existing procedures, implementing new policy and continuing to educate our employees.

As part of this, we are considering a number of new initiatives and improvements to our existing positions and can envisage developments in the future such as aligning elements of remuneration with the integration of sustainability criteria and the utilisation of tools to better monitor the sustainability positions of our investments.

ESG Policy – Q1 2022