Disclosure pursuant to Regulation (EU) 2019/2088 (SFDR)

At the level of corporate governance, the managing directors of KfW Capital monitor and promote the sustainability strategy as well as internal and external communication in order to embed ESG in all processes.

At the operational level, sustainability is integrated into the processes and structures of KfW Capital by means of the following setup:

Sustainability Management is responsible for the implementation and further development of the sustainability strategy, processes and documentation. It also reviews the adequacy of criteria, processes and sustainability expertise on a regular basis. ESG criteria are evaluated by Sustainability Management as part of every fund review. In addition, KfW Capital's Sustainability Officer holds a permanent seat on the Investment Committee and thereby ensures that the sustainability criteria are taken into account in the investments.

Alongside Sustainability Management, Investment Management and Risk Management are also involved in the review of the ESG criteria and are responsible for ensuring that these topics are appropriately taken into account at the level of the fund management. Risk Management additionally oversees the general risk strategy and prepares a risk-oriented ESG scoring for every investment.

Within the investment process, KfW Capital applies the following criteria as part of its due diligence in order to take sustainability risks into account. These criteria apply to its own investments, to investments made in its function as financial portfolio manager and to its function as investment adviser:

• Negative screening and minimum criteria: KfW Capital applies an exclusion list of activities and sectors. This exclusion list is an extended version of the exclusion list of KfW Bankengruppe. KfW Capital also requires VC funds to have a qualified sustainability policy (or an equivalent) in place and to meet the disclosure requirements of the SFDR. Compliance with these requirements is documented as part of the ESG due diligence.
• ESG management capabilities: KfW Capital's ESG due diligence focuses on the ESG management capabilities of VC funds, i.e. on whether VC funds have a sufficient ESG strategy in place and manage the corresponding processes properly. As part of the ESG due diligence, VC funds are required to complete a standardised questionnaire. In addition to a review of all available sustainability-related documents, the results of the ESG due diligence questionnaire are validated in a personal meeting and documented in writing.
• ESG heat map: The ESG heatmap enables KfW Capital and the VC funds to identify and assess material ESG criteria for the respective investment strategy.
• Action plan: Where a VC fund does not yet meet all requirements at the time of the due diligence, conditions are imposed which have to be met either before signing or shortly afterwards.

KfW Capital monitors and controls sustainability risks in respect of its own investments as well as investments made by KfW Capital in its function as financial portfolio manager as follows:

In addition to regular and needs-based dialogue, the agreed conditions and their implementation are tracked in particular once the contract has been concluded. ESG data are collected across the portfolio once a year, covering the level of the fund management, the level of the VC fund and the level of the portfolio companies. The findings from this reporting are used for internal monitoring and also feed into the annual update of the ESG risk profile.

The monitoring and control of sustainability risks in respect of investments made as a result of an investment recommendation by KfW Capital in its function as investment adviser is the responsibility of the capital management company.

Article 4 SFDR provides a framework for creating transparency regarding the adverse sustainability impacts of investment decisions at entity level. This applies to KfW Capital both in its capacity as a financial market participant and in its capacity as a financial adviser.

• No consideration of adverse impacts of investment decisions on sustainability factors
  Market participants have to disclose transparently on a “comply or explain” basis whether they consider the principal adverse impacts (“PAI”) of their investment decisions on sustainability factors at entity level. As a financial market participant, KfW Capital has decided, on the basis of a careful assessment, not to consider PAI at present (Article 4(1)(b) SFDR) and sets out the reasons for this under number 3 below. KfW Capital will review this decision regularly, at least once a year.
• No consideration of adverse impacts on sustainability factors in investment advice
  On a “comply or explain” basis, financial advisers have to disclose transparently whether they consider the principal adverse impacts (“PAI”) of investment decisions on sustainability factors in their advice. In its capacity as a financial adviser (investment advice), KfW Capital has decided, on the basis of a careful assessment, not to consider PAI in its investment advice at present (Article 4(5)(b) SFDR) and sets out the reasons for this under number 3 below. KfW Capital will review this decision regularly, at least once a year.
• Reasons for not considering PAI as a financial market participant and financial adviser
  KfW Capital has carefully examined the requirements of the PAI regime under Article 4 SFDR and the RTS (the “PAI regime”) and supports the policy objectives of the PAI regime to improve transparency for clients, investors and the market.
  Nevertheless, KfW Capital currently does not consider it possible to comply with all reporting requirements of the PAI regime, either as a financial market participant or as a financial adviser. In the venture capital asset class in particular, the availability and quality of data for the PAI indicators set out in Annex I, Table 1 of the RTS remain low. This is also reflected in concrete terms in the annual ESG data collections carried out with VC funds and their portfolio companies, in the course of which a complete and reliable collection of the mandatory PAI indicators is regularly not possible.
  KfW Capital continuously monitors further developments and will review this decision again, both as a financial market participant and as a financial adviser, in 2027 at the latest on the basis of the data available at that time.