SFDR Disclosures – SMOK Ventures Partners B.V. and of SMOK Ventures II Coöperatief U.A.
Dec 20th, 2023
SMOK Ventures Partners B.V. (the AIFM), a Dutch-based registered alternative investment fund manager within the meaning of article 3(2)(b) of Directive 2011/61/EU of 8 June 2011 on alternative investment fund managers (AIFMD), makes the following disclosures for the purposes of Regulation (EU) 2019/2088 of 27 November 2019 on sustainability‐related disclosures in the financial services sector (SFDR) and Regulation (EU) 2020/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment (the Taxonomy Regulation). As clarified by the European Commission in its Q&As on sustainability-related disclosures published on 14 July 2021, the AIFM must comply with certain SFDR requirements applicable to registered alternative investment fund managers.
The AIFM acts as registered alternative investment fund manager of SMOK Ventures II Coöperatief U.A. (the Fund). The Fund qualifies under article 6 of the SFDR as it does not promote environmental or social characteristics (article 8 of the SFDR) nor does it have sustainable investments as its objective (article 9 of the SFDR).
I. AIFM-related disclosures
Transparency of sustainability risk policies and transparency of the integration of sustainability risks – article 3(1) and article 6 of the SFDR
A sustainability risk refers to an environmental, social or governance (ESG) event or condition that, if
it occurs, could cause an actual or a potential material negative impact on the value of an investment.
Financial market participants shall include in their pre-contractual disclosures a description of the
– how sustainability risks are incorporated into their investment decisions; and
– results of the assessment of the likely impact of sustainability risks on the return on the
financial products they provide, and therefore in the case of the financial product – AIFs that
AIFM as financial market participants – manage.
The AIFM has a sustainability risk policy for integrating sustainability risks into the business in the
investment decision-making process, setting out how to take into account environmental, social or
governance situations or conditions that, if they occur, could have an actual or potential material
adverse impact on the value of the investment. Its main principles are described in detail below.
The AIFM reviews and assesses potential sustainability risks within the meaning of SFDR as part of its
decision-making process and ongoing risk monitoring with respect to investments made or to be
made by the Fund and has integrated such review into its internal procedures and policies, as further
Relevance of sustainability risks
Sustainability risks may affect the Fund’s performance having regard to the types of investments
made or to be made in accordance with its investment policy and objectives, meaning that if any such
risk occurs, returns on investments may be materially negatively affected as a result. Investors and
potential investors should note that it is difficult to assess with reasonable certainty the probability of
the occurrence of such risks and the likely impact of such materialized sustainability risks on the value
The identification and assessment of risks, including sustainability risks, will take place on an ongoing
basis if and when investments are made in accordance with the Fund’s investment policy. Such review
is performed by the AIFM, as summarized below:
(i) prior to an investment decision being taken on behalf of the Fund, the AIFM identifies the
material risks, including sustainability risks, associated with the proposed investment.
(ii) these risks form part of the overall investment proposal to be assessed by the AIFM.
(iii) ultimately and following its assessment, the AIFM makes the relevant investment decision having
regard to the Fund’s investment policy and objectives and subject to the Investment Committee’s
Environmental, social and governance (ESG) issues are also taken into account in the AIF investment
process through investment exclusions for investment projects and sectors that involve significant
reputational and reputational risk, in particular:
production or trade or other activity deemed inconsistent with the laws or regulations
applicable to the AIFM or in the country in which it is carried out or with international
conventions or agreements, or subject to international prohibitions, in particular activities
related to products or substances that deplete the ozone layer or the environment;
production or trafficking in arms and ammunition;
production or trade in hazardous substances such as radioactive materials, poisonous
substances and unbound asbestos fibres;
production or activities involving any form of exploitation or forced or child labor;
gambling, casinos and equivalent enterprises;
nuclear and coal-fired power generation;
production or trade of timber or other forest products other than from sustainably managed
Issues related to corporate governance and meetings with representatives of company management
boards also play an important role in the decision-making process and investment monitoring, thanks
to which the AIFM has a chance to learn about and evaluate the long-term strategy, as well as to
obtain a full picture of the company and the way it operates, including taking into account sustainable
The AIFM has concluded that sustainability risks are negligible because they are unlikely to occur and
the assessment of environmental, social or governance conditions for a given investment is positive or
indicates effective mitigation of these risks.
Accordingly, the Fund in its updated sustainability risk policies, which will be disclosed to each
investor prior to joining the Fund, discloses the issues described above.
No consideration of adverse impacts of investment decisions on sustainability factors – article 4(1)(b) and 7(2) of the SFDR
Article 4(1) of the SFDR requires fund managers such as the AIFM to provide a clear statement as to
whether or not they consider the “principal adverse impacts” of investment decisions on sustainability
factors, e.g. environmental, social and employee matters, respect for human rights, anti-corruption
and anti-bribery matters.
Although ESG and sustainability risks are important to the AIFM, the latter does not consider the
adverse impacts of investment decisions on sustainability factors in the manner prescribed by article
4(1) of the SFDR, in particular due to the fact that (i) no reliable and sufficiently available or accessible
data is available to perform such impact measurement and provide the mandatory reporting imposed
by the regulatory technical standards in a consistent manner; and (ii) the underlying investments are
not generally required to report on such factors in the manner prescribed by SFDR.
How and to what extent we address the main adverse impacts on sustainability factors may change
over time, and this statement may change as a result. In particular, in our view, over time there will be
an increase in data coverage, which is necessary to account for the main adverse impacts on
sustainability factors in the investment decision-making process.
Transparency of remuneration policies in relation to the integration of sustainability risks – article 5(1) of the SFDR
The AIFM, as an entity referred to in Article 3(2) of Directive 2011/61/EU of the European Parliament
and of the Council of 8 June 2011 on alternative investment fund managers and amending Directives
2003/41/EC and 2009/65/EC and Regulations (EC) No. 1060/2009 and (EU) No. 1095/2010, is not
obliged to adopt the remuneration policy referred to in Article 23(1) of this Directive.
In connection with the above, for the purposes of article 5(1) of the SFDR, the AIFM declares that it
has not put in place a remuneration policy. In addition, the AIFM declares that in any case in its
remunerations, sustainability risks are not taken into account.
In accordance with the disposition of Article 12 of the SFDR Regulation, the AIFM ensures that all
information published in accordance with Articles 3 or 5 of the SFDR is updated on an ongoing basis
and, therefore, AIFM verifies the need for such update periodically.
In the event that a financial market participant changes such information, it shall publish on the same
website a comprehensible explanation of such change, which is also a requirement that the AIFM
II. Fund-related disclosures
Transparency of other financial products in pre-contractual disclosures and in periodic reports – article 7 of the Taxonomy Regulation
The investments underlying this financial product do not take into account the EU criteria for
environmentally sustainable economic activities.