Sustainability
disclosures.

The Sustainable Finance Disclosure Regulation (SFDR) is a European framework established by Regulation (EU) 2019/2088. Its primary purpose is to create a unified set of rules for how financial market participants and advisers report on sustainability. The regulation mandates transparency regarding the integration of sustainability risks into their investment processes, the consideration of negative sustainability impacts, and the clear labeling of financial products.

Satgana Fund I is classified as an Article 9 fund under the Sustainable Finance Disclosure Regulation (SFDR), reflecting our commitment to sustainable investments as our core objective. We exclusively support early-stage ventures that generate a measurable positive environmental impact, while ensuring our portfolio companies do no significant harm to any social or environmental goals.

The Fund's sustainability objective is to invest exclusively in pre-seed and seed startups developing solutions with a net-positive environmental impact. Our primary focus is on businesses with the potential to drive meaningful emissions reductions (climate mitigation). Secondarily, we consider startups developing circular business models (circular economy) and climate adaptation solutions.

As such, the Fund's environmental objectives align with those defined in Regulation (EU) 2020/852, which include:

(i) climate change mitigation;

(ii) climate change adaptation;

(iii) the sustainable use and protection of water and marine resources;

(iv) the transition to a circular economy;

(v) pollution prevention and control; and

(vi) the protection and restoration of biodiversity and ecosystems.

Our commitment to the "do no significant harm" (DNSH) principle is a cornerstone of our investment strategy. We ensure that while our portfolio companies work to reverse or reduce the effects of climate change, they do not inadvertently harm other environmental or social objectives.

This commitment begins with our rigorous due diligence process. Before investing, we assess each startup's complete impact profile, weighing its positive impact contributions against any potential adverse effects (ESG risks). To do this systematically, we consider all relevant Principal Adverse Impact (PAI) indicators outlined in the SFDR's technical standards (Tables 1, 2, and 3), and supplement this with key diversity and inclusion metrics as well as other business and ESG risks relevant to the particular opportunity. This assessment ensures that the scale of any negative impact is insignificant compared to the intended positive environmental outcome.

Our oversight continues post-investment through continuous monitoring, collecting the PAIs and other relevant impact and ESG data on an annual basis, and conducting workshops on topics relevant to early-stage startups scaling a climate solution such as Theory of Change exercises, Double Materiality Assessments, and introducing Life Cycle Assessments. All this to ensure the intended positive impact is fully realized while any potential negative outcomes are proactively managed.

The Fund invests exclusively in early-stage startups, typically with ticket sizes of €100–300k in fundraising rounds ranging from €500k to €4m. At the time of our investment, both the positive and negative impacts of portfolio companies are generally negligible, as teams are primarily focused on building their core product or service, advancing their technology, and working toward product–market fit. As such, any potential environmental or social outcomes—positive or negative—are contingent on the company’s ability to successfully achieve product–market fit and scale its operations.

Governance structures at this stage also remain limited, with team sizes typically fewer than ten people and no material environmental or social impacts generated to date. Consequently, impact assessments and the data collected from portfolio companies at this stage are to large extent speculative and based on market and startup assumptions.  

It is also important to highlight that the Sustainable Finance Disclosure Regulation (SFDR) was not conceived with early-stage impact startups in mind. Many of its requirements are therefore not aligned with the realities of a fund investing at this formative stage.

The Fund's investment strategy is to invest in companies with a direct or enabling positive climate impact. Our investment thesis is prioritized into three key areas:

1. Climate Mitigation: Our primary objective is to support startups with a promising potential to significantly reduce, avoid, or remove greenhouse gas emissions from the atmosphere. 

2. Circular Economy: Our secondary focus is on startups developing innovative circular models or solutions, thus reducing or avoiding the amount of waste generated and, as a result, lowering emissions from waste generation or material use.

3. Climate Adaptation: Finally, we consider startups that help stakeholders prepare for, respond to, or recover from changing weather patterns. For these investments, we track the number of people positively impacted or reached.

This investment strategy directly aligns with the following UN Sustainable Development Goals (SDGs) where we primarily seek to contribute to the following goals; 

• SDG 7: Affordable and Clean Energy, 

• SDG 9: Industry, Innovation and Infrastructure, 

• SDG 11: Sustainable Cities and Communities, 

• SDG 12: Responsible Consumption and Production

• SDG 13: Climate Action

• SDG 15: Life on Land

Each potential portfolio company is assessed for its positive climate potential before any investment from the Fund. This assessment is conducted internally by the Fund team through gathering information from founders via calls, email, data room documents, reference calls, and market deep dives. An impact case is developed for every investment, and the Fund’s internally developed impact threshold (based on the Impact Scorecard, see below) must be met prior to any investment decision.

To ensure alignment with the Fund’s sustainability objectives and to fulfill this strategy, the following tools and frameworks are integrated into our due diligence process:

Our exclusion list (see below)

An impact- and ESG-focused questionnaire for founders

An Impact Scorecard, evaluating:

Founder intentionality

The interlock of the business model

Measurability of the positive impact

Impact logic and supporting evidence

Market size and potential for meaningful impact

Screening against mandatory Principal Adverse Impacts (PAIs)

Assessment of other key ESG and business risks

When we are the lead or co-lead investor, we include ESG clauses in our term sheets to enforce adherence to environmental and social standards. We are also working on an escalation process to address any ESG-related concerns that arise, ensuring timely and effective resolution.

We have chosen not to establish quantitative impact targets or thresholds, either at the startup level (e.g., only investing in startups with the potential to remove 100 Mt of CO2 annually by 2050) or at the fund level. This decision is based on our view that in-depth impact and climate modeling at the early stages we invest in is unlikely to produce meaningful or accurate results. Early-stage impact modeling relies on highly speculative assumptions with wide error margins, and early-stage ventures often pivot multiple times, making initial quantitative targets less relevant and reliable. Furthermore, considering that our investment strategy goes beyond direct decarbonization solutions, encompassing solutions where Life Cycle Assessments are more complex, has also contributed to this decision. However, while we do not set formal quantitative targets, we closely monitor and track each company’s non-financial KPIs that are defined at the time of investing.

Considering the early-stage nature of our investments, where team sizes are typically fewer than 10 at the time of investment, good governance assessments must be tailored to the company’s maturity. As such, we as early-stage investors specifically look for; 

Diversity within the founding team (both gender and ethnicity)

The founding team’s commitment to an inclusive hiring plan

Whether a remuneration policy is being developed

The presence of strong values and a code of conduct

Gender wage gap 

The openness of the founding team to adopt good governance practices from the outset

Governance is assessed according to these pillars (among others) during due diligence and is continuously evaluated as the startup grows. We also support our portfolio companies by providing workshops and policy development templates, and, when we have a board seat, actively foster D&I and good governance practices.

The Fund will deploy 100% of the capital raised to early-stage startups developing climate solutions and technologies in line with our investment strategy. The Fund Manager does not intend to allocate capital to companies outside this strategy or to businesses that do not provide a positive environmental contribution as outlined above. Therefore, a risk assessment and consideration of potential adverse impacts are included in every investment decision. 

That said, as early-stage investors, we are mindful of the “climate drift” risk, recognizing that founders may pivot multiple times in their pursuit of product-market fit. To mitigate this risk (when a company might scale without delivering the intended positive environmental impact) we place particular emphasis on assessing the intentionality of the founders (i.e., their motivation for starting the business) and the interlock of the business model (i.e., to what degree financial revenues are linked to defined environmental KPIs) during due diligence. The greater the intentionality and interlock, the lower the risk of climate drift as the company grows.

Prior to investment, all startups are expected to have a clearly defined environmental KPI aligned with the fund’s investment strategy as well as an idea of how to go about measuring this KPI over time:

Tonnes of GHG emissions reduced, avoided or removed (climate mitigation) 

Tonnes of waste eliminated or repurposed (circular economy) and associated emissions reductions (climate mitigation) 

Number of people reached or positively impacted (climate adaptation) 

Immediately after investing, a one-on-one onboarding workshop with the founders and the Satgana team is scheduled to discuss, among other topics, the most appropriate monitoring and measurement plan for the identified KPI, both in the short- and long-term. Where relevant, impact targets are also set tied to the financial forecasts.

Immediately after investing, a one-on-one onboarding workshop with the founders and the Satgana team is scheduled to discuss, among other topics, the most appropriate monitoring and measurement plan for the identified KPI, both in the short- and long-term. Where relevant, impact targets are also set tied to the financial forecasts.

All portfolio companies report on this KPI, along with other non-financial metrics (including the SFDR PAIs) every year in Q1 for the preceding financial year. If a startup is unable to monitor and measure its positive impact, or if an ESG risk is identified, immediate action is taken by scheduling a call and collaboratively developing an ESG and Impact roadmap to address the shortcomings. In addition, all startups are invited to quarterly workshops on impact and ESG topics to help strengthen their internal non-financial reporting and management capabilities.

Directing explicit attention to the PAIs laid out by the SFDR. The Fund collects PAI data from all portfolio companies using Apiday. In addition to the mandatory PAIs, we also request data on:

Environmental PAI: Breakdown of energy consumption by non-renewable sources

Social PAI: Number of days lost due to injuries, accidents, fatalities, or illness

Limitations to the methodologies include the challenges in accurately estimating the true unit impact of emerging climate technologies, especially those with indirect environmental benefits or contributions beyond direct emission reductions. Additionally, the inherent risk of failure among early-stage startups threatens the realization of the business’s positive impact potential, as the impact sought through capital investment depends on the successful scaling of the business model. The Impact Scorecard is a qualitative tool based on the investment team’s judgments and internally developed evidence points. While efforts are made to benchmark and objectify these evidence points, some degree of bias or uncertainty is likely unavoidable.

Our investment decisions are guided by rigorous due diligence across two core frameworks: a commercial assessment and an impact assessment.

Venture Case Assessment: We evaluate the commercial viability of each startup by analyzing key success factors. These include the strength of the founding team, the business model, the size and characteristics of the market, traction to date, the technology and innovation, strategic alignment, and potential risks.

Impact Assessment: We assess the startup's capacity for meaningful impact by examining the founder's intentionality, the integration of impact into the business model, the measurability of environmental KPIs, the logic of its impact thesis, and market context.

A startup must meet our minimum impact threshold to be considered for investment. We are committed to continuously improving our due diligence frameworks by adhering to best market practices and building upon our own learnings.

A startup must meet our minimum impact threshold to be considered for investment. We are committed to continuously improving our due diligence frameworks by adhering to best market practices and building upon our own learnings.

In accordance with SFDR Article 9 requirements, the fund provides its LPs with an annual Periodic Report detailing the sustainability performance of its portfolio, including both positive contributions and principal adverse impacts.

The fund actively engages with investee companies to encourage and support improvements in their sustainability practices. Engagement activities include:

Onboarding workshops with all new founders to introduce SFDR regulations, clearly distinguish between ESG and impact topics, define the monitoring plan for the environmental KPI, and discuss how Satgana can best support their impact journey

Organizing quarterly workshops on key impact and ESG topics, including lifecycle assessments, theory of change, policy development, carbon accounting, double materiality assessments, and more

Partnering with ClimatePoint and utilizing their LCA Wizard to help startups define their unit impact and identify environmental hotspots

Providing policy templates through Apiday

Collecting non-financial data annually (including but not limited to the PAIs), and scheduling immediate calls to set up improvement plans when reporting challenges or ESG risks are identified.

Fostering close relationships with founders to serve as their trusted impact and ESG partner.

Taking an active role in representing environmental, social, and governance considerations when holding board seats, including policy creation and inclusive hiring plans.

While the Fund may participate in processes and policy creation, portfolio companies are ultimately responsible for actively owning their ESG and corporate responsibility matters and implementing them in ways that best drive value creation within the company.

Satgana invests in early-stage climate technologies and solutions that deliver net-positive environmental impact and support the achievement of Paris Agreement targets. While our early-stage portfolio companies may not yet have the resources or operational maturity for full compliance with internationally recognized standards at the time of investment, we ensure that all investments align with core principles of responsible investing, good governance, climate action, and environmental justice as outlined in global sustainability frameworks.

Satgana maintains a remuneration policy that is overseen by a Compensation Committee with oversight from the Board of Directors. The policies are structured so as to promote appropriate and effective risk management, and to avoid the encouragement of excessive risk-taking, including that of sustainability risks. In addition, the Compensation Committee is charged with ensuring good governance practices and upholding an impeccable record on human rights and relevant social issues (as it pertains to compensation) at all levels of the firm.

No reference benchmark has been designated to attain the sustainable investment objective

The fund strictly excludes investments in:

Production of or trade in weapons or ammunitions;

Gambling, casinos and equivalent enterprises.

Businesses or project involving nuclear power generation and coal-fired power generation

Production or trade in alcoholic beverages (excluding beer and wine);

Production or trade in tobacco.

Production, distribution and/or promotion of adult entertainment products or pornography, including but not limited to videos, magazines, audio recordings or website.

More generally any target that does not fit the criteria entailed in the Investment Objectives;

New constructions of electric and thermal coal-fired power plants and modernization of such.

Operating and decommissioned stations with or without long-term carbon capture and storag.

Nuclear projects.

Hydro-electric projects with a capacity above 20 MW.

Biofuel projects (biodiesel and ethanol), certain biomass and organic waste projects (e.g. from production of palm oil) unless it can be demonstrated that these projects meet the aspects of sustainable development after a detailed study and that they apply robust environmental and social safeguards (e.g. no threat to food security, to deforestation, forest degradation, wetland drainage through an indirect land use change).

Industrial gas projects (HFC, N2O, PFC, SF6) only if they are related to carbon market activities. Oil production entailing major local pollution problems.

Certain types of mining activities in which waste handling involves special risk.

Unlawful logging and other particularly damaging logging.

Unlawful fishing and other particularly damaging fishing activities;

Dam projects which may cause serious environmental damage;

Projects and activities with severe and irreversible consequences for particularly valuable and/or protected areas;

Mining and power companies that derive more than 30% of income from thermal coal or base more than 30% of their operations on thermal coal;

Companies that have more than 30% of income from oil exploration or base more than 30% of their operations on oil exploration.

For more information about our sustainability-related disclosures, please contact:

Email: [email protected]