Taaleri Bioindustry I is a closed-end private equity fund. The fund will invest in disruptive technologies and industrial scale bioeconomy plants in Finland and in Europe. The fund is open to new investors and is actively looking for new investment targets.

Taaleri Bioindustry I is a closed-end private equity fund established in 2021, with a ten-year term. The fund will invest in industrial-scale production facilities that can accelerate the scaling of bioindustry production. Products can be, for example, bio and recycled fibers, organic fertilizers, functional biomaterials and recycled materials to replace virgin products.

The fund is one of Finland's first private equity funds to be classified as dark green, i.e. funds under Article 9 of the EU’s Sustainable Finance Disclosure Regulation. The fund only makes sustainable investments in projects that, for example, contribute substantially to climate change mitigation. The fund also reports extensively on the sustainability impact of its investments.

The fund is open to new investors and it has a target size is 80 million euros. The fund is also to be sold to private investors through Taaleri's partner Aktia after the necessary regulatory approvals. The fund is actively looking for new investments in industrial scale bioindustry facilities in line with the strategy of the fund.

This financial product is labelled as an Article 9 product according to EU SFDR regulation (2019/2088) and has an objective of making sustainable investments. The “do no significant harm” principle applies to all investments underlying the financial product, as they take into account the EU criteria for environmentally sustainable economic activities.

Sustainability-related disclosures

Summary

Investments that are made do not cause any significant harm to any of the sustainability goals. This is ensured by a comprehensive due diligence assessment carried out prior to a investment decision. All target companies are committed to complying with the minimum safeguard criteria, and the implementation of these measures has been assessed before the investment decision is made.

The investments shall target to minimize the usage of fossil or non-renewable raw materials or energy sources. The investments contribute to the EU’s environmental objectives, particularly related to climate change mitigation and/or adaptation, circular economy, and pollution prevention and control, by funding solutions that for example, enhance the reuse of raw materials and products, reduce the demand of virgin raw materials, improve the recyclability of materials and/or products, replace the use of non-renewable raw materials, or reduce the amount of hazardous or contaminant chemicals.

The fund’s investment strategy is to make sustainable minority or majority investments in industrial scale proven technologies, production facility opportunities of biomaterials and -fuels, circular economy, and renewable energy (excluding wind and solar power) in Europe, primarily the Nordics with a preference on opportunities with international expansion situation and / or potential.

The fund’s investment objective is to make sustainable investments. All assets (100%) are allocated to sustainable investments with an environmental objective. The financial product aims to invest 60% of its assets in Taxonomy-aligned economic activities.

The fund’s sustainable investment objective, described in section c), will be monitored by collecting and reporting data on key performance indicators (KPIs) related to measuring the portfolio’s contribution to climate change mitigation and/or adaptation, circular economy, as well as pollution prevention and control. The portfolio’s performance related to these, and other sustainability -related indicators (e.g., principal adverse impact indicators) is monitored regularly and throughout the fund’s lifecycle.

The indicators that measure the fund's sustainable investment goals or characteristics have been determined based on the fund's strategy and goals. These sustainability indicators have been defined by evaluating which quantitative or qualitative quantities best describe the sustainability goals of the financial product or the impacted sustainability factors, and which indicators best describe the characteristics of the investments in the portfolio.

To ensure the availability of sustainability-related data, the reporting maturity of target companies has been assessed as part of the fund’s due diligence analyses and taken into account as part of the investment decision. In order to achieve the sustainable investment goal, used and monitored data are collected from the target companies quarterly. The target companies use lifecycle calculations assured by a third party as well as data related to their energy consumption, other production inputs, produced waste, and production volume, which are monitored as part of the company's invoicing and financial administration.

LCA calculations are often based on partial forecasts, and use multipliers and estimates, which is why they always involve a small amount of uncertainty or inaccuracy.

However, these estimates describe in enough detail the magnitude and scale of sustainability impacts, and thus sufficiently describe the attainment of the investment objective and do not hamper the attainment of these objectives.

To ensure that the target companies fulfill the criteria for sustainable investments, they undergo thorough ESG-, technical-, financial-, commercial-, tax-, and legal -due diligence assessments. In addition, investees are required to commit to reporting financial information and to develop and put in place appropriate processes for managing and documenting good governance practices.

The engagement policies concerning the fund and its investees, aim to ensure that the fund's sustainable investment objective is realized and that the fund nor its investments do not cause significant harm to society and employees, and that the activities do not violate human- or workers’ rights, nor participate in corruption and bribery. We regularly monitor and audit our own operations and those of our investment targets.

No reference benchmark is designated for the purpose of attaining the sustainable investment objective of the financial product as investees are likely to vary by their economic activity and therefore no single benchmark is applicable. Target companies commit to setting and implementing emission reduction plans to achieve net zero emissions by 2050.

No significant harm to the sustainable investment objective

For sustainable investments that are classified as sustainable investments according to (EU) 2020/852, and/or (EU) 2019/2088, the prevention of significant harm to the environmental objectives defined in Article 17 of Regulation (EU) 2020/852 is ensured by a comprehensive due diligence assessment carried out before the investment decision. The assessment takes into account the entire life cycle of the investment and ensures that the investment does not cause significant harm to any sustainable investment objective related to the environment or society. Furthermore, to ensure that the investments’ economic activities do not cause significant harm to the environmental objectives the investees are required to fulfill the requirements set out in the technical evaluation criteria, (Article 19 of Regulation (EU) 2020/852) if applicable.

The fund considers Principal Adverse Impacts (PAI) indicators presented in Table 1, Table 2 Table 3 (2022/1288, Annex I) and reports them biannually. The information will be disclosed under Article 11(2) of Regulation (EU) 2019/2088 in a periodic report as referred to in Article 25(6) of Directive 2014/65/EU. These indicators have been selected using a materiality analysis of the investment target.

All investments meet at least the minimum social safeguards of the EU SFDR (2019/2088) regulation. In addition, active measures are required to eventually fully align with the suggested technical criteria of the minimum social safeguards amending the Taxonomy regulation (EU/2020/852 Article 18 and (EU) 2019/20 Article 2 subsection 17. Thus, investees are required to comply with the OECD Guidelines for Multinational Enterprises, UN Global Compact, and the UN Guiding Principles on Human Rights. Alignment with these principles will be reported.

Sustainable investment objective of the financial product

The fund’s investment objective is to make sustainable investments. The investments shall target to minimize the usage of fossil or non-renewable raw materials or energy sources. The investments contribute to the EU’s environmental objectives, particularly related to climate change mitigation and/or adaptation, circular economy, and pollution prevention and control, by funding solutions that for example, enhance the reuse of raw materials and products, reduce the demand of virgin raw materials, improve the recyclability of materials and/or products, replace the use of non-renewable raw materials, or reduce the amount of hazardous or contaminant chemicals.

Taaleri Bioindustry aims to address the challenges caused by climate change and to create a basis for sustainable economic development by developing, financing, constructing, operating, and maintaining scalable industrial phase bioindustry production facilities using renewable natural resources or reusable raw-materials as their feedstock.

The fund is committed to making investments that have a positive impact on the environment through the transition to a sustainable and circular bioeconomy-based production of goods and renewable energy. Taaleri Bioindustry continuously seeks opportunities to decrease the dependence on fossil fuels and virgin raw materials and to speed up the shift to a sustainable and circular bioeconomy by enabling disruptive technologies to go to market.

Investment strategy

The fund’s investment strategy is to make minority or majority control investments in industrial scale proven technologies, production facility opportunities of biomaterials and -fuels, circular economy, and renewable energy (excluding wind and solar power) in Europe, primarily the Nordics with a preference on opportunities with international expansion situation and / or potential. The fund’s investment objective is to acquire a portfolio of investments that the AIF manager believes can achieve an internal rate of return greater than 15%, net of fees and expenses. There can be no assurance that the fund will achieve such returns or objectives.

The fund’s strategy is to make sustainable investments and finance, support and expedite the transition from the usage of fossil fuels and virgin raw materials into the development and production of resource-efficient and sustainable biobased fuels and materials as well as other bioindustry related renewable energy solutions (other than wind and solar).

Proportion of investments

The fund will only make sustainable investments. All assets (100%) are allocated to sustainable investments with an environmental objective. The financial product aims to invest 60% of its assets in Taxonomy-aligned economic activities. This objective is to be achieved by the end of the fund’s lifetime. The actualization of this objective is in part subject to the development of the regulatory criteria of the EU Taxonomy.

Monitoring of sustainable investment objective

The fund’s sustainable investment objective, described in section c), will be monitored by collecting and reporting data on key performance indicators (KPIs) related to measuring the portfolio’s contribution to climate change mitigation and/or adaptation, circular economy, as well as pollution prevention and control. These KPIs will show how the investments enhance the reuse of raw materials and products, the demand for virgin raw materials, improve the recyclability of materials and/or products, and consider diversity and good governance practices. The portfolio’s performance related to these, and other sustainability-related indicators (e.g., principal adverse impact indicators) is monitored regularly and throughout the fund’s lifecycle. The fund manager continuously works in close collaboration with the investees to ensure that their sustainability work aligns with applicable sustainability criteria and supports the development of operations through active ownership. The fund manager has the right to perform audits.

The indicators used to measure the attainment of the investment objective and good governance practices are listed below:

  • Carbon handprint (GHG emissions of product replaced, tCO2e - LCA calculations verified by a third party)
  • Revenue from products that are reusable, recyclable and/or compostable (reported as EUR and
  • Percentage of total revenue)
  • Percentage of raw materials from: (1) recycled content, (2) renewable sources, (3) renewable and recycled content (reported as metric tons and percentage of total raw materials)
  • Amount of purchased energy consumed from renewable sources (reported as MWh and percentage of total energy consumption)
  • Number of days lost to injuries, accidents, fatalities, or illness (PAI, Table 3 of Annex I)
  • Lack of grievance/complaints handling mechanism related to employee matters (PAI, Table 3 of Annex I)
  • Lack of a supplier code of conduct (PAI, Table 3 of Annex I);
  • Lack of a human rights policy (PAI, Table 3 of Annex I);
  • Lack of due diligence (PAI, Table 3 of Annex I);
  • New hires
  • Employee gender diversity

Methodologies

The indicators that measure the fund's sustainable investment goals or characteristics have been determined based on the fund's strategy and goals. These sustainability indicators have been defined by evaluating which quantitative or qualitative quantities best describe the sustainability goals of the financial product or the impacted sustainability factors, and which indicators best describe the characteristics of the investments in the portfolio.

In addition, when choosing the indicators to be reported biannually, the target companies reporting abilities and availability of data has been taken into account. Data collected from the target companies is used to report the indicators, which may be partly calculated, verified, and/or modeled by a third party.

Data sources and processing

To ensure the availability of sustainability-related data, the reporting maturity of target companies has been assessed as part of the fund’s due diligence analyses and taken into account as part of the investment decision. In order to achieve the sustainable investment goal, used and monitored data are collected from the target companies quarterly.

The target companies use lifecycle calculations assured by a third party. In addition, the target companies utilize data related to their energy consumption, other production inputs, produced waste, and production volume, which are easily monitored as part of the company's invoicing and financial administration. Modeled data and estimations used in taxonomy aligned investments, comply with the standards defined in the EU technical screening criteria, to reduce error margins. The calculated greenhouse gas emissions and emission reduction are assured by a third party. Target companies use LCA calculations produced by a third party when producing quarterly emission calculation figures.

Processes related to the collection of indicators are constantly being developed and, if necessary, third-party expertise and external data sources can be used for quantitative and qualitative analysis, mapping, and monitoring of sustainability effects. Reliable and science-based assessments can be used temporarily as part of sustainability impact assessment to supplement missing data. The proportion of estimated data will be reported as part of the periodic reviews according to the SFDR regulation. The calculation methods specified in the technical regulatory instructions supplementing the SFDR regulation (2022/1288) are used in the calculation of PAI indicators. Target company-specific information is treated confidentially, and reported indicators are disclosed as aggregate figures.

Limitations to methodologies and data

LCA calculations are often based on partial forecasts and use multipliers and estimates, which is why they always involve a small amount of uncertainty or inaccuracy. In addition, it is possible that, despite best efforts, it is not possible to accurately report or distinguish exact figures for e.g. generated waste, with regard to the economic activity invested in from the overall economic activities of the target company. In such cases, the reported figures may be based on estimates that are proportional to the scope of the activity invested in and the share of the overall economic activity of the target company. However, these estimates describe in enough detail the magnitude and scale of sustainability impacts, and thus sufficiently describe the attainment of the investment objective and do not hamper the attainment of these objectives.

Due diligence

To ensure that the target companies fulfill the criteria for sustainable investments, they undergo careful ESG-, technical-, financial-, commercial-, tax-, and legal -due diligence assessments. In addition, investees are required to commit to reporting financial information and to develop and put in place appropriate processes for managing and documenting good governance practices (e.g. codes of conduct, including policies on anti-corruption and bribery, fair competition, tax, remuneration, as well as human rights and laborers’ rights. Suitable grievance mechanisms are required to be put in place to ensure stakeholders needs and concerns are accounted for.

Our ESG due diligence process follows the UN Guiding Principles and OECD's recommendations for due diligence assessment processes and includes a double materiality analysis and a sustainability risk analysis, which are carried out by utilizing sustainability risk tools and material request lists, interviews, and data analysis. To support the materiality analysis, the assessment takes into account universal sustainability themes. The findings of the due diligence report are presented and evaluated by the investment committee and are taken into account as part of investment decision-making.

Engagement policies

The engagement policies concerning the fund and its investees, aim to ensure that the fund's sustainable investment objective is realized and that the fund nor its investments do not cause significant harm to society and employees, and that the activities do not violate human- or workers’ rights, nor participate in corruption and bribery. We regularly monitor and audit our own operations and those of our investment targets. If principal adverse impacts described in table 1 of Annex 1 of EU 2022/1288 are observed, operating instructions and principles will be changed to prevent, correct, and mitigate these effects. In addition, we will report and monitor the indicators measuring the principal adverse impacts of the investments and manage these impacts through the continuous development of our guiding principles.

The engagement policies the fund and its investment targets are committed to following are:

  • Taaleri Code of Conduct
  • Taaleri Sustainability Policy
  • Taaleri Bioindustry Code of Conduct
  • Taaleri Bioindustry ESG Principles

Attainment of sustainable investment objective

No reference benchmark is designated for the purpose of attaining the sustainable investment objective of the financial product as investees are likely to vary by their economic activity and therefore no single benchmark is applicable. The target companies are required to regularly report and monitor their scope 1, 2, and 3 GHG emissions and conduct emission reduction plans to achieve net zero emissions by 2050. Emission reduction targets are to be aligned with the Paris Agreement and follow the methodology of science-based targets.

Bioindustry I Pre-contractual Disclosure

Statement on principal adverse impacts of investment decisions on sustainability factors

Portfolio Managers

Tero Saarno

Tero Saarno

Managing Director, Bioindustry
Helsinki
+358 50 373 1923
Pasi Tyyvi

Pasi Tyyvi

Investment Director
Helsinki
+358 41 541 6555