Aqua-Spark Coöperatieve U.A. (“Aqua-Spark” or “the Fund”) classifies its investments as “dark green”, meaning that the Fund aims to invest in portfolio companies which have sustainability as its objective per article 9 SFDR.
Aqua-Spark has the following information available, as required under the SFDR regulation (EU/2019/2088) on:
Sustainability Risks (Article 3 SFDR)
A description of the integration of sustainability risks in our investment decision-making process as required under Article 3 SFDR (per December 2022) can be found here.
Statement on principal adverse impacts on investment decisions on sustainability factors (Article 4 SFDR)
Aqua-Spark does not consider the Principal Adverse Impacts (PAIs) in line with SFDR (Article 4). Since our investee companies are not required to publish this data, it is not possible at this moment to guarantee accurate and complete reporting to fulfill the requirements.
However, the (applicable) PAIs described in table 1, annex 1 are considered on a case-by-case basis. In the due diligence phase, together with our impact team, we do define the PAIs that could be material to the company and obtain data for these as part of the due diligence process. Since the majority of the companies we target are start-ups, data is often not readily available. We also consider other material adverse sustainability impacts of our (potential) portfolio companies as part of a general ESG-risk assessment in due diligence. Ad hoc monitoring of these risks is done throughout the year by the Board and Portfolio Manager and in a structured way annually. When adverse/negative impacts arise, Portfolio Managers engage with the investee companies on this and try to mitigate the impact.
In accordance with SFDR, once sufficient data is available, we will monitor the mandatory PAIs on an annual basis. We will continue engaging with our investee companies and monitor if they start to report this data. At that point Aqua-Spark will be able to start considering adverse impacts at entity level (article 4).
Sustainability risks & remuneration (Article 5 SFDR)
Information on how our remuneration policy is consistent with the integration of sustainability risks, as required under Article 5 SFDR (per 10 March 2021), can be found here.
Description of Sustainable Objectives & information on methodologies (Article 10 (1) (a)/(b) SFDR)
Information on the Investment Strategy of Aqua-Spark and how Aqua-Spark investments give substance to sustainable objectives or characteristics can be found here. Relevant information on monitoring of impact is described here as well.
Pre Contractual disclosures (Article 10 (1) (c) & Article 9 SFDR)
The pre-contractual disclosures (annex III) regarding Aqua-Spark Coöperatieve U.A. can be downloaded here.
Annual Report Disclosures (Article 10 (1) (d) & Article 11 SFDR)
The annual report disclosures (annex V) regarding Aqua-Spark Coöperatieve U.A. can be downloaded here.
Aqua-Spark’s mission is to transform the aquaculture industry toward being healthier, more sustainable and accessible, while generating competitive financial returns. Therefore, we (i) actively invest long-term capital in disruptive business models and sustainable farms to transform the entire aquaculture value chain into a sustainable food system that benefits all and generates investment returns and (ii) systematically target companies where social and/or environmental impact is integral to the product/service being created. However, as we are a minority shareholder in early-stage ventures, we cannot always rule out exemptions to our strategic objectives. Therefore, the fund’s target is to invest at least 90% of its net assets in sustainable investments.
To encourage wider industry adoption, the Aqua-Spark impact policy provides greater transparency, guided by principles, processes and practices integral to our core operations. We invest only in companies that do not cause significant harm to any environmental or social sustainable investment objective and that are in alignment with the 11 outcomes as described in the Aqua-Spark Impact Policy:
The above 11 outcomes are linked to the UN SDG criteria: SDG 2 (zero hunger), SDG 3 (good health and wellbeing), SDG 6 (clean water and sanitation), SDG 8 (decent work and economic growth), SDG 12 (responsible consumption and production), SDG 13 (climate action), SDG 14 (life below water), SDG 15 (life on land) and are reported annually in our Aqua-Spark Impact report. There is no reference benchmark available for aquaculture and therefore no reference benchmark has been designated.
If a potential portfolio company does not target any of the 11 impact outcomes or is found to cause significant harm to the environment or society, it is not eligible for our investment. Furthermore, Aqua-Spark weighs the principal negative impacts of investments on sustainability factors when making investment decisions (both when selecting investments and when managing them). With respect to table 1 of annex 1, we refer on a case-by-case basis. We believe that the unique outcomes related to our mission have strong alignment and substantially contribute to at least one of the six EU Taxonomy environmental objectives.
The Shared Values Manifesto (“SVM”) and the Aqua-Spark Impact Policy set out the minimum standards for employee relations, remuneration, taxes and other corporate governance topics that potential portfolio companies must meet and which are aligned with the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights and the labor standards as stated by the International Labor Organization.
To reach the sustainable objectives of the Fund and identify the sustainability risks, the investment process is defined in different stages:
There are several internal and external controls for the due diligence phase; (i) always 2 Investment Managers are involved in the due diligence; (ii) close cooperation with the legal team, the impact team and other Aqua-Spark team members, (iii) presentations are given to the broader new deals team and (iv) summary of the outcome of the due diligence phase is presented to the investment committee (external) for approval and where needed, external consultants will be involved.
Post closing, the portfolio monitoring process is designed in such a way that the sustainable investment objectives (/impact KPIs) are monitored on a regular basis. After closing of the transaction, onboarding and setting up for reporting are done.
Impact KPIs as well as the adverse/negative impacts are monitored and the management structures, employee relations, remuneration of staff and tax compliance are reviewed and assessed. Monitoring of impact KPIs is done on a quarterly basis. Main source is the information received from the investee companies every quarter. Since most of the investee companies are very early-stage, data is not always available. Limited resources are another limitation. Hence board meetings of the investee companies (with at least one Aqua-Spark Board member present) are an important second source. The collected data are compared with set targets and shared with the Aqua-Spark Management team and quarterly investment reports are shared with investors. If an investee company is structurally underperforming, Portfolio Managers are the first contact point to engage with the portfolio company to remediate the issue or assess whether divestment is required.
Aqua-Spark heeft als missie om de aquacultuur om te vormen tot een gezondere, duurzamere, toegankelijke en rendabele sector. Daarom richten we ons op een aantal pijlers:
We kunnen echter niet uitsluiten dat er uitzonderingen zijn op onze strategische doelstellingen, omdat we vaak minderheidsaandeelhouder zijn in startende ondernemingen. Daarom is het doel van het fonds om ten minste 90% van het belegbare vermogen duurzaam te investeren.
Om een bredere acceptatie door de sector aan te moedigen, biedt het Aqua-Spark impact beleid meer transparantie, geleid door principes, processen en praktijken die integraal deel uitmaken van onze kernactiviteiten. We beleggen alleen in bedrijven die geen ernstige afbreuk doen aan het duurzame milieu en/of sociale doelstellingen en die in lijn zijn met de 11 beoogde resultaten zoals beschreven in het Aqua-Spark impact beleid. Ook nieuwe investeringen worden op voorhand hieraan getoetst.
De 11 beoogde resultaten zijn:
Deze 11 beoogde impact resultaten zijn gekoppeld aan de SDG-criteria van de VN: SDG 2 (geen honger), 3 (goede gezondheid en welzijn), 6 (schoon water en sanitaire voorzieningen), 8 (fatsoenlijk werk en economische groei), 12 (verantwoorde consumptie en productie), 13 (klimaatactie), 14 (leven onder water), 15 (leven op het land) worden jaarlijks gerapporteerd in ons Aqua-Spark Impact Rapport. Er is geen referentie benchmark beschikbaar voor aquacultuur en daarom is er geen referentie benchmark aangewezen.
Als een (potentieel) portfolio bedrijf zich niet richt op minimaal 1 van de 11 beoogde resultaten of als blijkt dat het bedrijf ernstige afbreuk doet aan het milieu of de samenleving, komt het niet (langer) in aanmerking voor (her)investering. Bovendien weegt Aqua-Spark de belangrijkste ongunstige effecten van investeringen op duurzaamheidsfactoren mee, bij het nemen van investeringsbeslissingen (zowel bij het selecteren van investeringen als bij het beheer ervan). Enkele relevante PAIs in tabel 1 van bijlage 1, worden in acht genomen. Wij zijn van mening dat de unieke resultaten met betrekking tot onze missie sterk overeenkomen en substantieel bijdragen aan ten minste één van de zes milieudoelstellingen van de EU Taxonomie.
Het Shared Values Manifesto (“SVM”) en het Aqua-Spark Impact Beleid zetten de minimale standaarden uiteen voor werknemersrelaties, beloning, belastingen en andere onderwerpen op het gebied van corporate governance waaraan (potentiële) portefeuillebedrijven moeten voldoen en die in lijn zijn met de OESO-richtlijnen voor Multinationale Ondernemingen, de UN Guiding Principles on Business and Human Rights en de arbeidsnormen zoals vastgelegd door de International Labor Organization.
Om de duurzame doelstellingen van het fonds te bereiken en de duurzaamheidsrisico’s te identificeren, definiëren we het investeringsproces van Aqua-Spark in verschillende fases:
Er zijn verschillende interne en externe controles voor de due diligence-fase, o.a. (i) goedkeuring van investeringen door een externe investeringscommissie en (ii) het inhuren van externe consultants voor specifieke gebieden van het onderzoek. Ook wordt er (iii) altijd door twee investment managers aan het onderzoek en de investeringsaanvraag gewerkt en (iv) is er een nauwe samenwerking met het Aqua-Spark legal- en impact team.
Nadat een investering is gedaan, start de monitoring fase; de onboarding vindt plaats en de rapportage wordt opgezet. Naast de financiële KPI’s worden ook de impact KPI’s gemonitord. Zowel de impact KPI’s als de (potentiële) negatieve/schadelijke effecten worden gemonitord, maar ook managementstructuren, werknemersrelaties, beloning van personeel en naleving van belastingwetgeving.
De impact KPI’s worden elk kwartaal gemeten en geanalyseerd. De informatie hiervoor wordt aangeleverd door de portefeuillebedrijven. Aangezien de meeste bedrijven in onze portefeuille zich in een “start-up” fase bevinden, zijn er niet altijd gegevens beschikbaar. Ook zijn vaak de resources niet aanwezig in de kleine start-up teams om deze data te verzamelen. Om die reden is het voor Aqua-Spark belangrijk om bij haar portefeuille bedrijven een plek in het bestuur te hebben (“Board Member vereiste”). Niet alleen kan op die manier invloed worden uitgeoefend op het bedrijf, ook zijn de bestuursvergaderingen een belangrijke alternatieve bron van informatie.
Als een bedrijf waarin is geïnvesteerd, structureel ondermaats presteert, zijn de portfolio managers het eerste aanspreekpunt om met het bedrijf in kwestie in gesprek te gaan om het probleem te verhelpen of om te beoordelen of desinvestering nodig is. Daarnaast zal ook de Aqua-Spark Board Member erop toezien dat de afgesproken KPIs worden behaald en indien bijsturing of aanpassingen nodig zijn, dit tijdig aankaarten.
The Aqua-Spark impact policy has been created to support our mission of transforming aquaculture into healthier, more sustainable, and accessible production that generates comparable returns. To encourage wider industry adoption, the policy will provide greater transparency, guided by principles, processes and practices integral to our core operations.
Every (new) investment is assessed on its alignment with the 11 outcomes as described in the Aqua-Spark Impact Policy:
In addition, for every new investment we check if they do not do significant harm to other (of the 11) outcomes or other environmental or social values. If a potential portfolio company does not target any of the 11 outcomes or is found to cause significant harm to the environment or society, it is not eligible for investment. Furthermore, Aqua-Spark weighs the principal negative impacts of investments on sustainability factors when making investment decisions (both when selecting investments and when managing them). With respect to table 1 of annex 1, we refer on a case-by-case basis.
The Shared Values Manifesto (“SVM”) and the Aqua-Spark Impact Policy set out the minimum standards for employee relations, remuneration, taxes and other corporate governance topics that potential portfolio companies must meet in order to be eligible for investment and which are aligned with the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights and the labor standards as stated by the International Labor Organization, including paying all employees, including contract employees, a living wage. In addition, Aqua-Spark and Portfolio companies will not discriminate on gender, race, sexual preference or religion and will not take part in any practices regarding child labour or slavery.
To achieve our mission, we actively invest long-term capital in disruptive business models and sustainable farms to transform the entire aquaculture value chain into a sustainable food system that benefits all and generates investment returns.
Aqua-Sparks 11 outcomes (we refer to the previous paragraph), as set out in the Impact Policy, are linked to the UN SDG criteria: SDG 2, 3, 6, 8, 12, 13, 14, 15 and are reported annually in our Aqua-Spark Impact report. We believe that the unique outcomes related to our mission have strong alignment and substantially contribute to at least one of the six EU Taxonomy environmental objectives, which is shown in the below mapping overview based on some examples that are not exhaustive:
There are also several sustainable Aqua-Spark outcomes that do not directly align with the six objectives, albeit there will probably be some indirect effects:
We believe these outcomes are sustainable in and of themselves and will not significantly harm one of the 6 EU Taxonomy environmental objectives (as explained in the next paragraph as well).
To achieve our mission, we actively invest long-term capital in disruptive business models and sustainable farms to transform the entire aquaculture value chain into a sustainable food system that benefits all and generate investment returns.
Our investment process is defined in different stages to attain the sustainable objectives of the Fund:
We have developed an initial impact screening to assess the fit with our portfolio and the potential impact, including the (potential) negative/ adverse impacts and ESG risks. Our impact screening is based on the Impact Management Project framework which is in detail described in our Impact Policy.
In this phase we will perform a more in-depth assessment of both the investment and impact hypothesis on eligible companies. During this advanced impact assessment, the company’s impact pathway will be mapped to our outcomes in detail, including prioritization and negative impacts.
We use our Impact and ESG due diligence tool with specific questions and references based on our requirements. From this due diligence, specific risks are identified, including mitigants, that should also be connected to impact actions to resolve any risks or other omissions. The site visit is arguably the most important element of the due diligence process. The site visit normally takes between 3 and 5 days, whereby two members of the deal execution team of Aqua-Spark will be on site and cover all essential topics of due diligence in separate sessions, amongst others Impact & ESG, production, governance, including management structures and HR matters, e.g. working conditions, remuneration of staff. Usually an (external) consultant joins for two days. After due diligence we hone the impact pathway and together with the investee company determine an impact action plan and formulate impact KPIs. An extensive investment report is presented to our external Investment Committee, consisting out of Aquaculture & investments experts and professionals, for approval.
When the transaction has been closed, there are several steps to take to ensure a smooth transition to the portfolio management team. This includes identifying a board member and portfolio manager for the new portfolio company, organizing transfer sessions and where relevant discussing transition topics, amongst others the main KPIs (financial and impact) and main risks to be monitored. Lastly, an onboarding meeting will be organized. Overarching goals of the onboarding meetings are i) to get the company acquainted with Aqua-Spark’s team, ii) to get the company embedded into Aqua-Spark’s monitoring and iii) to support structure and to start unlocking our wider ecosystem. Main goals, targets, KPIs are discussed as well as ways to reach those goals. Together with Aqua Spark’s Impact team, the impact outcomes, Impact KPIs, ESG checklist and impact action plan will be aligned. Also, both prior and during the onboarding meeting(s), a plan for implementing policies, procedures and other governance infrastructure topics will be defined, to make sure we can provide adequate and proactive support on that level.
To achieve our mission, our investments systematically target companies where social and/or environmental impact is integral to the product/service being created. All the companies we invest in, must have sustainability ‘in their DNA’, i.e. being an integral part of their company and operations. However, as we are a minority shareholder in early-stage ventures, we cannot always rule out exemptions to our strategic objectives. Therefore, the fund’s target is to invest at least 90% of its net assets in sustainable investments. We expect that the investments of the fund will be sustainable investments that contribute to (at least) one of the six EU Taxonomy environmental objectives and further described in the Aqua Spark Impact policy.
Except the investments in the Blue Revolution Fund, all the current investments are direct investments.
After closing of the transaction, we will onboard our new portfolio member. Onboarding involves meeting the portfolio management team; detailing the impact pathway, the impact action plan and (where applicable yet) KPIs as well as ensuring the investee companies adhering to good governance practise, the OECD guidelines and the UN Guiding Principles on Business and Human Rights.
Most of our portfolio companies in the early stage are pre-revenue or deliver limited revenue. In these instances, no material impact can be reported yet. However, we endeavor to assess their impact potential by ensuring that measuring impact is adopted early on, that includes creating a five-year forecast, where possible.
We assess our investments against the Aqua-Spark Shared Value Manifesto and SDG’s and applicable adverse impact on sustainability factors.
Monitoring of KPIs is done on a quarterly basis. Portfolio Managers and the dedicated Aqua-Spark Board members collect and input these data in our models and review the performance on the financial metrics and impact KPI’s. Portfolio managers prepare updates of the performance of the investee (one-pager) to share with the C-Suite and this will be also shared, as part of the investor report, with the investors in the Fund. If an investee company is structurally underperforming on (either the financial metrics, or) the impact KPI’s, Portfolio Managers are the first contact point to engage with the portfolio company on this. Also, in case that an investee company would negatively impact the SDG´s, PMs would engage with the portfolio company to remediate the issue or assess whether divestment is required. In Board Meetings the impact KPIs and adverse impacts will be discussed as well.
Aqua-Spark uses the Impact Assessment Tool as a tool to manage its impact. The Impact policy sets out 11 outcomes which are linked to the following UN SDGs: 2,3,6,8,12,13,14 & 15. A mapping overview of the 11 outcomes and these SDGs is shown under: “Sustainable investment objective of the financial product”.
Reporting of the outcomes is done on an annual basis in the Aqua-Spark impact report.
Impact management is about actively steering the means to optimize positive impact and minimize negative impact.
For the selected outcomes, where possible, smart impact KPIs are set. For this, where possible, a 5-year plan and forecast are the starting point. The impact KPI outcomes of the 5-year plan are the basis of the annual budgets and annual impact targets, which investee companies report on every quarter on the agreed KPIs. Furthermore, we use qualitative and quantitative data analyses on the data acquired by the portfolio companies. Also reporting on adverse impact, where applicable is done on an annual basis.
Main source is the information received from the investee companies. Portfolio companies will deliver data related to the impact KPIs on a quarterly basis.
Second source is in the board meeting of the investments. Every investment company has at least one Aqua-Spark Board member. Impact KPIs and good company practices, etc. are topics of discussion. In case of adverse news (public source), the Aqua-Spark board member will immediately engage with the management/founders of the investee company.
The collected data will be processed by the Portfolio managers in our models and KPIs are analyzed. Reporting to the C-suite is done every quarter and the update of the performance is shared with investors in the quarterly investor reports.
The stage of the lifecycle in which our portfolio companies are in, is something we consider as limitation to data collection. Most of our portfolio companies are in a very early-stage, with sometimes unproven technology, which means that data is not always available, and estimates need to be made. Also, the investee companies are not required to publish this data.
Another limitation are the limited resources start-up companies have. Often the start-ups Aqua-Spark invests in, have only a very small start-up team focused on setting up the business, which in this stage relates often to further development and testing of technology, pilot production and funding attraction. Hence, there is very limited resource available for reporting.
See step 3 under Investment strategy; there are certain controls for the due diligence phase.
Since Aqua-Spark wants to make impact, it is engaged with the sustainability investment objectives it selects (the 11 impact outcomes) and it invests in companies that are aligned in this engagement. In the pre-investment phase, ESG and impact is part of the DD and part of the discussions with management. And in the onboarding phase again ESG and impact are discussed, KPIs are set as well as ways to reach these KPIs in order to make the required impact.
Our team of portfolio managers is supporting our portfolio companies to help them to succeed in achieving their impact pathway. There are several key areas where we believe we can make a difference, for instance with: i) strategic direction setting by bringing valuable industry insights; ii) introducing best practices; iii) providing access to partnerships and ecosystem; iv) fostering synergies in the portfolio; v) supporting with key person management.
Furthermore, Aqua-Spark has in all the portfolio companies at least one board seat.
There is not a reference benchmark available for aquaculture and therefore no reference benchmark has been designated.
Sustainability risks are an integrated part of Aqua-Spark’s investment decision-making process. Sustainability risk means an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment, as in article 2 (22) SFDR;
Potential environmental, social and governance risks that our investments are exposed to are evaluated. This includes climate change adaptation risks such as potential exposure to acute physical climate change risks such as extreme weather events. Before deal closing the investment team performs due diligence (see above), which includes validating both impact outcomes and ESG criteria that cover questions related to adverse impacts. In the due diligence phase, specific risks and mitigants are identified (including sustainability risks) and discussed with the company. Important sustainability risks are specified in the investment proposals and monitoring of these risks is done on an annual basis. Where necessary and possible, we encourage portfolio companies to mitigate these risks.
Integrating sustainability risk into our investment process does not assure the mitigation of any or all sustainability risk. Any deterioration in the financial profile of an underlying investment affected by a Sustainability Risk may have a corresponding negative impact on the Net Asset Value and/or performance of the Fund.
Remuneration at Aqua-Spark aims at effective risk management. It takes into account careful and diligent decision making and lacks any form of incentives for its employees in excessive risk taking for both business and sustainability. Remuneration is also aligned with the long-term interest of the entity.
Aqua-Sparks remuneration is based on a fixed monthly salary and benefits for all employees and a participation the carried interest of the fund, which is based on pro rata salary of the total salary pool in any given year. These incentive schemes should drive behavior and decision making that is aligned with the genuine interests of investors and is grounded in sustainability principles.
Aqua-Spark’s remuneration policy and salary house are reviewed at least yearly by its Supervisory Board to comply with the values and mission of the entity and the laws and legislation of its jurisdiction.