Frøya Ventures AS (“Frøya“) is the manager of the alternative investment fund Frøya Ventures Fund I AS (the “Fund“). It is Frøya’s assessment that the Fund promotes environmental and social characteristics and that companies in which investments will be made follow good governance practices within the meaning of Article 8 of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (the “SFDR“). Therefore, Frøya is required to include a sustainability-related product disclosure section on its website, pursuant to Article 10 SFDR. The below paragraphs provide the information required.

Summary

The Fund promotes both environmental and social characteristics, but does not have as its objective sustainable investment.

At least 80% of the Fund’s investments will be within the themes healthcare innovations to improve lives of future generations, innovative technologies to enable more efficient solution to key societal challenges at scale or resource efficiency through products and solutions that advance circular economy, contributing to one or more of the United Nations’ Sustainable Development Goals (the “SDGs“). Furthermore, the Fund aims to accelerate gender equality by investing only in companies that either have a female founder, have a female in a key management role and/or is willing to implement gender equality measures beyond what is required by applicable law.

All investee companies of the Fund must follow good governance practices, and Frøya, both as part of the investment process and by way of ongoing engagement, will assess the investee companies’ governance practices in relation to matters such as management structures, employee relations, remuneration of staff and tax compliance. Potential and existing investee companies will be rated on the elements listed above using the following scale, with labels as applicable to each governance element assessed: (i) Immature/Low/Weaknesses, (ii) Medium/Satisfactorily and (iii) Mature/High/Excellent.

All Fund’s investments will be aligned with some or all of the promoted environmental and social characteristics. Measurement of the Fund’s characteristics and sustainability indicators is internally monitored by Frøya and its board. At this stage, Frøya has not adopted external mechanisms for these purposes. In order to carry out the measurements described in the section above, Frøya gathers information on the companies that are considered for investment. To measure developments within portfolio companies, Frøya applies its own framework for developing KPIs and milestones for each company.

The data used to attain each of the environmental or social characteristics promoted by the Fund is collected from potential and existing portfolio companies. The data is processed by way of review by Frøya’s team members. Some data points may be estimated where such estimations are necessary and appropriate, and there is no maximum proportion of data that may be estimated. The data collected may be flawed or incomplete due to, e.g., limited access, dishonesty or withholding of information among management or staff at the companies assessed or insufficient knowledge and/or experience in relation to the data collected among team members in Frøya and/or the companies. Estimations are by definition a limited source of data.

Frøya applies a due diligence process in its management activities that shall ensure that investment decisions are carried out in a manner that enables Frøya to comply with the investment objectives and investment strategy of the Fund, including attaining the environmental and social characteristics promoted by the Fund as described above.

Frøya has set out principles and guidelines for the active engagement of the Fund with the companies in which the Fund invests in a separate policy (the “Engagement Policy“). The Engagement Policy sets out the primary objectives, key areas and content of Frøya’s engagement activities in relation to the Fund’s investments.

No sustainable investment objective

This financial product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

The Fund promotes both social and environmental characteristics. Frøya has chosen investment themes Frøya finds inherently attractive and that are aligned with Frøya’s purpose and capabilities. These themes are chosen on the basis of the SDGs and with the aim to enable Frøya to deliver on its mission statement: “We deliver value to our investors from impact-driven investments accelerating gender equality and changing the world for the better”. Frøya believes that gender equality in start-up investments will reduce risk and contribute to better results for the investors.

First, the Fund promotes the social and environmental characteristic of making at least 80% of its investments within one of the following three investment themes contributing to one or more SDGs:

• Healthcare innovations to improve lives of future generations, in response to, for example, one or more of the followingSDGs:

• SDG 1 (End poverty in all its form everywhere),
• SDG 3 (Ensure healthy lives and promote well-being for all at all ages),
• SDG 5 (Achieve gender equality and empower all women and girls), or
• SDG 10 (Reduce inequality within and among countries).
• Innovative technologies to enable more efficient solution to key societal challenges at scale, in response to, for example, one or more of the following SDGs:

• SDG 8 (Promote sustained inclusive and sustainable economic growth, full and productive employment and decent work for all),
• SDG 9 (Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation),
• SDG 11 (Make cities and human settlements inclusive, safe, resilient and sustainable), or
• SDG 12 (Ensure sustainable consumption and production patterns).
• Resource efficiency through products and solutions that advance circular economy, in response to primarily one or more of the following SDGs:

• SDG 9 (Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation),
• SDG 11 (Make cities and human settlements inclusive, safe, resilient and sustainable),
• SDG 12 (Ensure sustainable consumption and production patterns), or
• SDG 13 (Take urgent action to combat climate change and its impacts).

Second, the Fund promotes the social characteristic of aiming to accelerate gender equality. Specifically, the Fund seeks to create a balanced gender composition of management and boards of its portfolio companies, and work towards equality of pay between genders in those companies. To this effect, Frøya will only invest in companies that either have a female founder, have a female in a key management role and/or is willing to implement gender equality measures beyond what is required by applicable law.

Investment strategy

The investment strategy used to meet the environmental or social characteristics promoted by the Fund

To meet the environmental and social characteristic of aiming to contributing to advancement and improvement within the investment themes chosen by Frøya for the Fund, the Fund will invest in companies with activities within one or more of those themes and that contribute to one or more of the SDGs, specifically the ones listed above in respect to each theme.

To help meet the social characteristic of aiming to help accelerate gender equality and empower women, the Fund will invest only in companies that either have a female founder, have a female in a key management role and/or is willing to implement gender equality policies.

The policy to assess good governance practices of the investee companies

All investee companies of the Fund must follow good governance practices, and Frøya, both as part of the investment process and by way of ongoing engagement, will assess the investee companies’ governance practices in relation to matters such as management structures, employee relations, remuneration of staff and tax compliance.

To that end, Frøya will as a minimum assess the following elements both prior to investment in a company and regularly throughout the holding period of any investment in a company:

1. Board composition and structure: Key elements to assess are the independence and diversity of the board of directors, as well as the board’s size, composition, and structure.
2. Founder ownership and control: Key elements to assess are the extent of founder ownership and control, including the percentage of equity held by the founders, and the rights and responsibilities granted to them. This can impact decision-making and the company’s overall strategy.
3. Management team: Key elements to assess are the background, experience, and track record of the management team in order to determine their ability to execute the company’s strategy and ensure compliant business activity. Strategic competence and/or mindset is of utmost importance.
4. Shareholder rights: Key elements to assess are shareholder rights and protections, including voting rights, information rights, and the ability to nominate and elect board members.
5. Disclosure and transparency: Key elements to assess are the company’s disclosure practices and the level of transparency toward shareholders. This includes financial reporting, operational metrics, and other key performance indicators.
6. Legal and regulatory compliance: Key elements to assess are the level of relevant knowledge within the company, its culture and its ability to ensure that the start-up is compliant with all relevant laws and regulations, including those related to securities, labour, and intellectual property.
7. Risk management: Key elements to assess are the company’s risk management practices, including conducted risk assessments, its culture, general knowledge and approach to cybersecurity, data privacy, and other operational risks.
8. Governance structure and policies: A key element to assess is what formalities are in place for ensuring good governance.

Potential and existing investee companies will be rated on the elements listed above using the following scale, with labels as applicable to the element: (i) Immature/Low/Weaknesses, (ii) Medium/Satisfactorily and (iii) Mature/High/Excellent.

Proportion of investments

Frøya will apply the strategy set out above in relation to all the Fund’s potential and completed investments. Accordingly, 100 % of the investments of the Fund will be aligned with some or all of the promoted environmental and social characteristics.

The Fund does not commit to make a minimum proportion of sustainable investments as defined in the SFDR and/or environmentally sustainable economic activities as defined in the EU Taxonomy Regulation.

Monitoring of environmental or social characteristics

Frøya measures the attainment of the environmental or social characteristics promoted by the Fund by monitoring the number of investments that:

(i)                have a female founder,

(ii)               have a female in a key management role,

(iii)              implement or improve existing gender equality measures pursuant to Frøya’s instruction to do so, and/or

(iv)              can demonstrate contribution to one or more SDGs within the Fund’s investments themes.

The Fund’s measurement of the indicators is internally monitored by Frøya and its board. At this stage, Frøya has not adopted external mechanisms for the purposes of monitoring the environmental and social characteristics and the sustainability indicators used to measure the attainment of these characteristics.

Methodologies for environmental or social characteristics

In order to carry out the measurements described in the section above, Frøya gathers information on the companies that are considered for investment through diligent review of the companies’ activities, interviews with managers and, where accessible, review of the companies’ internal ESG, and in particular gender-related, policies where such policies exists. In order to measure developments in the portfolio companies’ gender composition and/or reported contribution to one or more of the SDGs, Frøya initially upon investment conducts a gap analysis of each portfolio company. Based on the analysis, Frøya develops KPIs pursuant to which the company’s performance is measured. Milestones are set for each KPI, and Frøya requires the portfolio companies to report monthly on their performance on these milestones. The performance is tracked with the use of as traffic light system.

Data sources and processing

The data used to attain each of the environmental or social characteristics promoted by the Fund is collected from potential and existing portfolio companies. In order to ensure data quality, Frøya’s team members make sure they understand the data and ask the data provider for clarifications and/or confirmations if needed. The data is processed by way of review by Frøya’s team members. Some data points may be estimated where such estimations are necessary and appropriate, and there is no maximum proportion of data that may be estimated.

Limitations to methodologies and data

The methodologies described in the sections above rely on data collection from portfolio companies, in the form of both documents and interviews. Such information may be flawed or incomplete due to, e.g., limited access to data, dishonesty or withholding of information among management or staff at the companies assessed or insufficient knowledge and/or experience in relation to the data collected among team members in Frøya and/or the companies. Estimations are by definition a limited source of data.

Accordingly, the actual contribution to one or more of the SDGs may differ from the contribution estimated on the basis of the methodologies applied and data collected.

The attainment of the Fund’s social characteristics pertaining to gender equality are more easily measured and monitored, and Frøya therefore deems the limitations described above to have only potentially minor effects on the measurement and attainment of the characteristics.

Due diligence

Frøya applies a due diligence process in its management activities that shall ensure that investment decisions are carried out in a manner that enables Frøya to comply with the investment objectives and investment strategy of the Fund, including attaining the environmental and social characteristics promoted by the Fund as described above. The process comprises an initial screening and an investment deep-dive.

The aim of the screening process is to identify potential investments that align with Frøya’s ambition to accelerate gender equality and change the world for the better. If the potential investment neither fits within the investment themes selected for the Fund nor is deemed appropriate to include in the 20% of the portfolio that does not need to comply with these themes, the investment will be out of scope and the process terminated as soon as possible.

In the investment deep-dive process, Frøya assesses whether the potential investment fits into sub-themes selected by the investment team to the relevant investment theme. It shall be ensured that that expected financial return of the investment meets the objectives of the Fund. Frøya also identifies and measures the downside risk associated with the investment and assesses the quality of the management team in the potential portfolio company.

Given positive conclusion, an investment memo will be made and the investment decision can be made. Frøya will seek to incorporate obligations for the portfolio companies to adhere to the selected investment themes and sub-themes in its investment agreements.

Engagement policies

Frøya has set out principles and guidelines for the active engagement of the Fund with the companies in which the Fund invests in a separate policy (the “Engagement Policy“). The primary objectives of Frøya’s engagement activities in relation to the Fund’s investments are as follows:

• To promote long-term value creation: Frøya engages with investee companies to foster sustainable growth, improved performance, and long-term shareholder value.
• To promote environmental, social, and governance (“ESG“) considerations: Besides primarily focusing on promotion of the selected investment themes for the Fund, Frøya shall encourage the investee companies to integrate ESG factors into their business strategies, operations, and risk management practices.
• To promote risk mitigation: Frøya addresses potential risks and controversies by engaging with investee companies on matters such as governance, corporate ethics, and compliance.
• To shareholder rights: Frøya seeks to promote and protect the rights and interests of the Fund’s investors through active participation in shareholder meetings and voting activities.

The Engagement Policy sets put in further detail the key areas and process for engagement.

The Engagement Policy is subject to regular review to ensure its effectiveness.

Date	Version	Amendment
[•] 2023	1.0	Original publication