Sustainability at Down2Earth Capital

At Down2Earth Capital, sustainability is an important element of our investment philosophy. In line with Article 6 of the SFDR, we assess and disclose how sustainability risks are integrated into our decision-making processes and their potential impact on investment returns. For the Down2Earth III Fund (D2E III), classified under Article 8, these risks are formally embedded within the investment strategy, demonstrating our commitment to responsible investing and sustainable value creation. While our other funds — Down2Earth I (D2E I), Down2Earth II (D2E II), Down2Earth Continuation Fund (D2E COFU), and Down2Earth Opportunities Fund (D2E OPFU) — do not formally integrate ESG factors, we have adopted ESG principles informally, in alignment with our broader operational philosophy.

The D2E III Fund actively contributes to environmental and social goals by investing in companies that align with broader global environmental objectives, including efficient resource use, climate change mitigation, energy transition, and more. The Fund encourages companies to integrate sustainability into their operations, striving to reduce their environmental impact through innovative solutions and emission reduction principles.

In addition to environmental characteristics, D2E III also places strong emphasis on promoting social characteristics. While the Fund is not tied to a specific sector, it aims to invest in companies that foster a supportive work environment, ensure fair labor practices, and enhance overall employee well-being. Furthermore, D2E III highlights the importance of robust corporate governance, ensuring that companies in the portfolio operate transparently, remain accountable to stakeholders, and uphold high ethical standards. By encouraging responsible management practices, the Fund seeks to create long-term social value for both employees and the broader community.

Through this approach, D2E III seeks to align with Article 8 but does not intend to classify its investments as “sustainable.” For clarification, according to Article 2.17 of the SFDR, a sustainable investment is an investment that contributes to an environmental or social objective, avoids harm to any such objectives, and adheres to good governance practices. Achieving this classification requires strict compliance with SFDR Articles 9 and 11, including sustainability reporting in accordance with Principal Adverse Impacts (PAIs).

Although D2E III does not aim for a formal designation as a “sustainable investment,” the Fund remains committed to investing in companies that adhere to key environmental and social values, ensuring a strong focus on sustainability in practice.

To promote transparency, D2E III publishes an annual ESG report, which analyzes and evaluates the progress and impact of our investments in relation to our sustainability goals.

The environmental PAIs that D2E III will consider include:

• Exposure to companies active in the fossil fuel sector: Exposure to companies active in the fossil fuel sector is measured in terms of the share of investment in companies active in the fossil fuel sector.
• Share on non-renewable energy consumption and production: Share of non-renewable energy consumption and non-renewable energy production of investee companies from non-renewable energy sources compared to renewable energy sources, expressed as a percentage of total energy sources.

The social PAIs that D2E III will consider include:

• Violations of UN Global Compact principles and Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises: Share of investments in investee companies that have been involved in violations of the UNGC principles or OECD Guidelines for Multinational Enterprises.
• Investments in companies without workplace accident prevention policies: Share of investments in investee companies without a workplace accident prevention policy.
• Rate of accidents: Rate of accidents in investee companies expressed as a weighted average.
• Number of days lost to injuries, accidents, fatalities or illness: Number of workdays lost to injuries, accidents, fatalities or illness of investee companies expressed as a weighted average.
• Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons): Share of investments in investee companies involved in the manufacture or selling of controversial weapons.

The Fund’s approach is based on the belief that long-term financial success is closely linked to promoting a sustainable and just society. This approach has already resulted in several impactful investments, where sustainability and social responsibility play a key role. Some examples:

• Accuramed provides tailored solutions for cardiac and pulmonary function testing and molecular diagnostics that improve people’s health and well-being. By delivering reliable products, the company improves access to medical treatments and strengthens healthcare institutions.
• De Roeve Industries offers comprehensive solutions in production automation and digitization, with the aim of improving the efficiency and performance of production environments. In this focus, sustainability is an intrinsic part of the working method, given the goal of more efficient use of resources and energy.
• Nestor, a staffing agency specialized in older profiles such as 60+ individuals and retirees, plays a crucial social role. It serves as a bridge between companies seeking flexible, experienced employees and 60+ individuals and retirees who still wish to work.
• Ensur, a consultancy firm specialized in insurance transformation and risk & compliance. Ensur plays a key role in sustainability within compliance by guiding companies in developing a sustainability strategy, establishing a strong leadership and governance structure, and integrating sustainability into core business activities.

• Cyclobility, a company engaged in the sale and leasing of bicycles, contributing to sustainable mobility by promoting an environmentally friendly alternative to traditional transportation.
• Golden care is focused on the production of environmentally friendly cleaning and protection products for outdoor furniture. Since 2024, the company has transitioned to PFAS-free products, contributing to a safer and more sustainable future for both people and the environment.
• Grandeco is a leading manufacturer of high-quality and sustainable wallcovering materials. The company strongly focuses on environmentally friendly production methods, emphasizing energy efficiency, waste reduction, and the use of recycled and renewable raw materials.
• Metes takes social responsibility seriously and is committed to various social initiatives. In the past, the company supported healthcare institutions and non-profit organizations by donating face masks during the COVID-19 pandemic.
• We invested in Contraload, a company that has introduced a new element to sustainability in the logistics sector with their pallets-as-a-service business model. The company aimed to operate fully circular by 2022, with a strong focus on the reuse and repair of pallets.
• Gudrun combats food waste by reusing ingredients that would otherwise be thrown away. In this way, it creates innovative and plant-based food products from residual streams from the food industry, contributing to a circular economy and more conscious food use.
• Within the transportation sector we invested in Move, which specializes in intermodal transport, where long-distance travel is done by train or boat, and only the short distances before and after the transport are done by truck. In this way, they help their customers reduce their ecological footprint and contribute to a more sustainable world.

In line with Article 4 of Regulation (EU) 2019/2088 (SFDR), D2E Capital does not take into account the adverse impacts of investment decisions on sustainability factors.

Although D2E Capital takes into account sustainability risks as a part of the investment process, such risks are not integrated in to D2E’s remuneration policy.