RESPONSIBLE INVESTING

Mission

3one4 Capital Advisors LLP (“Firm” or “3one4 Capital”) is committed to building generational companies that are sustainable value-accreting businesses. The Firm prioritizes the Principles of Responsible Investing in early-stage venture, across the funds that it manages, to help create socially responsible companies that are mindful of their impact and intentionally inclusive in their growth.

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ESG in Focus

The Firm’s ESG emphasis spans multiple dimensions of its operations, with a commitment to creating an early-stage venture ecosystem that integrates ESG into its ethos. The Firm’s focus on the application of ESG is stated below:

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Commitment to Responsible Investing

Consistent with the fiduciary responsibilities that the Firm has to its investors and stakeholders, the Firm commits to adhere to the following responsible investing frameworks on a good faith basis.

Investment Process

The Firm shall strive to be a Responsible Investor and commit to incorporating the lens of Environmental, Social and Corporate Governance (ESG) across all stages its investment process, analysis, evaluation, monitoring and decision making. The Firm will maintain an actively-curated negative list of sectors, geographies (as per sanctions lists and government notifications) and business models that do not comply with established ESG principles. The Firm actively prioritizes the alignment of values and PRI through its portfolio construction routines of the funds that it manages.

Limited Partner Alignment

The Firm shall strive to work with Limited Partners who share a similar ethos as the Firm to help further the role of ESG in investing.

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Stakeholder Engagement

The Firm shall strive to work with stakeholders who share a similar practices and ethos as the Firm on Responsible Investing and ESG. The Firm is committed to help set standards in the investment industry by endorsing disclosure norms, supporting egalitarian economic rights amongst all shareholders, promoting founder-friendly control norms, and reducing barriers to capital flows.

Portfolio Engagement and Voting

The Firm shall strive to be an active owner and incorporate ESG and Responsible Investing as stakeholders in our portfolio companies and to exercise one’s voting rights in a manner to ensure accountability and transparency to the stakeholders. The Firm is amongst the most deeply involved venture capital organizations in regulatory upgradation as India becomes a destination for investments from global allocators. The Firm and its General Partners are active contributors to industry bodies and departmental consultation councils.

ESG and PRI Education

The Firm shall strive to educate founders, portfolio company teams, and the wider ecosystem on ESG and their responsibility to all stakeholders across the value chain. The Firm shall also work closely with interested Limited Partners in actively improving the acceptance and implementation of ESG across its portfolio companies.

Collaboration and Promotion

The Firm shall seek to collaborate with other like-minded investors and stakeholders to highlight the need for Responsible Investing and ESG in early-stage investing at various forums.

ESG Officer

The Firm has appointed a senior member of its team as the “ESG Officer”. The ESG Officer reports to the General Managing Partners at the Firm regarding ESG priorities on a regular basis.

Governance Standards

By ensuring strict governance norms from its entry round in every portfolio company, the Firm installs institutional frameworks for compliance, governance, accountability, transparency, and disclosures across the portfolio.

Review and Reporting

The Firm shall strive to review this Policy and associated frameworks on a periodic basis and make changes consistent with the principles enumerated herein, as well as to maintain reports and manuals commensurate to the Policy.

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Framework for Integration of ESG across the Portfolio Construction and Management Process

Pre-Investment

The Firm conducts regular training sessions for the investments team to ensure that they are equipped with adequate information for reviewing any potential investments. Any potential portfolio company that graduates through the investment screening process will be evaluated from an ESG perspective basis:

·       Stage

·       Sector

·       Scale

·       Business model

·       Existing practises

·       Intent

Basis the above, the investments team along with the ESG Officer, GBIC team and PMF team discuss the findings and subsequent scope of work. This may be done internally by the above teams or placed with a competent professional for evaluation and diligence. A basic checklist to understand the potential portfolio company and its business model will be shared as part of the first order diligence.

Prior to Deal Closure

Prior to the deal closure, the Firm’s evaluation of the ESG preparedness of the potential portfolio company will be documented and suitable changes to the investment documentation, including matters and policies that need to be completed prior to and subsequent to financial closure and investments will be created. The Manager will share base policies and playbooks, as well as the monitoring and reporting framework with the potential portfolio company.

Portfolio Management and Monitoring

The teams shall monitor the adherence to the policies and playbook pursuant to financial closure and investment. Basis discussions with the pods, the Firm shall work with the portfolio company to build upon and enhance the framework adopted by the portfolio company. Any changes to the business model, pivots, etc will be discussed, understood and studied as per the Responsible Investing policy.

Signatory of the PRI

3one4 Capital is the first approved Venture Capital signatory of the Principles for Responsible Investment (PRI) from India. The Firm is the fifth approved signatory from the country.

The United Nations-supported Principles of Responsible Investing (PRI) is the world’s leading proponent of responsible investing. Since its launch in 2006, it has now become amongst the largest networks of global signatories that are aligned to PRI’s mission of creating an economically efficient, sustainable global financial system for long-term value creation and benefit the environment and society as a whole.

3one4 Capital is committed to supporting the international network of signatories in incorporating and improving the environmental, social and governance (ESG) factors into investment and ownership decisions. By being dedicated to enhancing returns and managing risks through responsible investment principles, 3one4 Capital is also more equipped to remain engaged in the ecosystem and policy development of ESG in India.

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