Sustainable finance disclosures

01 / Sustainability risk integration

Guidelines for integrating sustainability risk into investment processes.

RunwayFBU Fund Management AS, referred to here as RunwayFBU, considers sustainability risks to be a meaningful component of its investment risk management approach. In accordance with Article 3 of the Sustainable Finance Disclosure Regulation, RunwayFBU has developed internal guidelines for the identification and integration of sustainability risks. A sustainability risk is an environmental, social or governance event or condition that, if it occurs, could cause a material negative impact on the value of an investment.

These guidelines inform decision-making across the firm, and in particular in relation to Fund II, which is classified under SFDR Article 8.

A. Approach and scope

The internal guidelines are applied across the investment team to help ensure that relevant sustainability risks are considered throughout the investment lifecycle. They are updated regularly and embedded into working practices such as:

• Opportunity screening and risk flagging.
• Due diligence assessments.
• Investment decision-making.
• Portfolio monitoring.

These practices reflect a firm-wide commitment to responsible investment, while allowing flexibility to adapt to company size, stage and context.

B. Risk identification and relevance

Sustainability risks are identified qualitatively, based on factors such as:

• The sector in which a company operates, for example high emissions or environmental exposure.
• Stage of maturity and governance readiness.
• Geographic or regulatory exposure.
• Product-related or service-related externalities.

Risks judged to be material to financial outcomes, such as reputational risk, compliance cost or operational disruption, are prioritised for further evaluation and discussion.

C. Tools and sources

To assess these risks, RunwayFBU uses a mix of internal tools and external inputs:

• An internally developed ESG Survey for prospective and current portfolio companies.
• ESG frameworks such as SASB and GRI for materiality guidance. Startups cannot be expected to report through SASB or GRI before they meet RunwayFBU, so we use these frameworks internally: to frame ESG survey questions by industry, to benchmark materiality by sector, for example what to expect from a SaaS company against an industrial technology firm, and to build internal ESG checklists for diligence and monitoring.
• Publicly available data from companies, industry sources and media.
• Sector-specific insights from third-party legal, commercial or technical diligence, where applicable.

This information is synthesised by the investment team to inform both investment selection and post-investment engagement priorities.

D. Operational integration

Sustainability risk considerations are embedded into existing investment processes rather than treated as a standalone track. This includes:

• Qualitative ESG risk discussions in team meetings.
• ESG considerations included in investment memos for Fund II.
• Structured prompts in diligence checklists and pipeline tracking tools.

Not every investment presents the same level of ESG complexity, but all are evaluated against the same internal expectations for identifying material sustainability risks.

E. Internal competence and updates

RunwayFBU investment professionals receive periodic training and guidance on ESG integration and on regulatory developments related to the SFDR. Knowledge sharing within the team keeps relevant ESG insights current and incorporated into workflows. These internal guidelines are reviewed annually and may be adjusted as regulatory expectations evolve, or as ESG-related risks become more material across the portfolio.

02 / Principal adverse impacts

We do not currently consider principal adverse impacts at entity level.

RunwayFBU does not currently consider principal adverse impacts, or PAIs, of investment decisions on sustainability factors at entity level, in accordance with SFDR Article 4(1)(b). This decision reflects both the current internal capacity of the investment team and the nature and maturity of the companies we invest in.

Internal capacity constraints

As a lean organisation with a core investment team of five professionals, RunwayFBU operates with a resource model tailored to high-engagement, early-stage venture capital. Implementing full PAI disclosures would require:

• Collecting a broad set of quantitative sustainability data across multiple companies.
• Aggregating, validating and tracking that data to meet SFDR technical standards.
• Developing internal systems to assess and act on negative sustainability impacts.

At our current scale, that level of infrastructure and compliance would divert disproportionate time and attention away from core investment and portfolio support activities, without a meaningful improvement in sustainability outcomes.

Nature and scale of portfolio companies

RunwayFBU invests primarily in early-stage software and technology companies, which typically have low direct environmental footprints:

• Minimal Scope 1 and Scope 2 greenhouse gas emissions.
• No physical exposure to fossil fuels or high water usage.
• No significant supply chains involving deforestation or biodiversity impacts.

The size of our portfolio companies also makes formal PAI tracking impractical. In RunwayFBU Fund I AS, the predecessor fund, roughly half of portfolio companies have fewer than five employees, most generate less than NOK 2 million in annual revenue, and ESG reporting structures, and often even basic compliance systems, are still being built.

Fund II is expected to follow a similar investment strategy, targeting companies of comparable stage and profile. While technically separate, Fund I therefore serves as a valid proxy for evaluating the proportionality and feasibility of PAI disclosures in the context of Fund II.

Forward-looking position

We continue to monitor regulatory expectations, market best practice and data availability. RunwayFBU may reconsider its position on PAIs as:

• Portfolio companies grow in size and reporting capacity.
• ESG frameworks for early-stage venture capital become more streamlined.
• Internal resources allow for meaningful implementation and oversight.

03 / Remuneration

Sustainability risk in the manager’s compensation scheme.

In accordance with Article 5 of the SFDR, RunwayFBU discloses how sustainability risks are considered in relation to its remuneration policy. Sustainability risks are integrated into our investment decision-making and monitoring processes, but they are not a separate component of staff remuneration.

As a lean early-stage investment manager, compensation is based primarily on the financial performance and operational results of the Fund. We consider this approach to be proportionate to the size, nature and complexity of our business.

A / Summary

An Article 8 fund promoting E/S characteristics.

RunwayFBU Fund II AS, referred to here as the Fund, promotes environmental and social characteristics in line with Article 8 of the SFDR. The Fund does not have sustainable investment as its objective, but environmental and social considerations are integrated throughout our investment process, from screening and due diligence to monitoring and engagement.

We assess portfolio companies against ESG indicators tailored for early-stage ventures, and support them in building scalable, responsible business practices.

B / No sustainable investment objective

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

C / Environmental or social characteristics

What the Fund promotes.

The Fund promotes characteristics such as:

• Responsible environmental practices covering energy use, waste, emissions, water and biodiversity.
• Inclusive and fair workplaces, including gender diversity in leadership and on boards, worker satisfaction and anti-harassment policies.
• Sound governance, including independent board members, ESG risk integration, GDPR compliance and whistleblowing frameworks.

These are measured through company-level and portfolio-level KPIs, set out in the ESG Survey, and are prerequisites for investment and ongoing support.

D / Investment strategy

Early-stage industrial technology, with binding ESG elements.

The Fund invests in early-stage technology companies transforming industrial sectors through digital, data-driven and AI-enabled solutions. Financial performance remains the investment objective, and ESG integration is part of our strategy for achieving it.

Exclusions apply to controversial weapons, nuclear treaty violations, coal, tobacco and pornography-related activities above defined thresholds. Investee companies must demonstrate or commit to good governance, and to respect for human rights and labour rights.

E / Proportion of investments

The Fund’s investments are expected to meet the binding ESG elements of our investment strategy. The Fund does not currently commit to a minimum share of sustainable investments under the EU Taxonomy. All investments are classified under #1B, Other E/S characteristics.

F / Monitoring

Annual survey, portfolio reviews, board oversight.

Environmental and social characteristics are monitored through an annual RunwayFBU ESG Survey, portfolio reviews and board-level oversight. Results are benchmarked against company-level and portfolio-level KPIs. Where deficiencies are identified, corrective action plans are agreed, progress is tracked, and in some cases follow-on funding is tied to ESG improvements.

G / Methodologies

We apply a structured ESG Survey aligned with SASB and GRI materiality guidance and with the Voluntary Sustainability Reporting Standard for non-listed SMEs, known as VSME. Indicators include quantitative metrics, for example energy use and gender balance, and qualitative measures, for example anti-harassment policy and board independence. These are assessed before investment and annually thereafter.

H / Data sources and processing

Data is primarily sourced directly from portfolio companies through the ESG Survey. We supplement this with public data, industry reports and third-party due diligence where needed. Data is collected, validated by the investment team, and aggregated for portfolio-level reporting.

Personal data processed in the course of this work is handled in line with our privacy policy.

I / Limitations to methodology and data

As an early-stage venture fund, many of our portfolio companies have limited resources and immature ESG systems. Data quality may vary, and certain quantitative indicators may not yet be available. To mitigate this, we emphasise proportionality, require minimum standards, and encourage companies to improve their reporting capacity over time.

J / Due diligence

All prospective investments must complete the ESG Survey as part of due diligence. Material risks are flagged in investment memos and considered by the Investment Committee. Where gaps are found, corrective action plans may be required before investment, or the opportunity may be declined. ESG risks are reassessed annually after investment.

K / Engagement policies

Active engagement, with consequences.

RunwayFBU actively engages portfolio companies on ESG topics through board participation, regular reviews and targeted support. We may:

• Require formal improvement plans.
• Tie follow-on funding to ESG progress.
• Escalate issues to the Investment Committee.
• In severe cases, recommend governance changes or withhold capital.

L / Designated reference benchmark

No specific index has been designated as a reference benchmark for measuring attainment of the environmental or social characteristics the Fund promotes. Progress is instead measured directly through company-level and portfolio-level KPIs, as defined in our ESG framework.