Taaleri Wind Power Fund IV Ky is an alternative fund managed by Taaleri Private Equity Funds Ltd. The targeted size of the fund’s equity is €100 million.
The fund invests its assets in industrial-scale Finnish wind power projects. The intention is to make the investments in domestic projects in the construction phase, but the fund may also invest in plants already in production. The investments are made using both equity and debt financing.
The fund invests only in Finnish projects provided by Taaleri SolarWind II fund and on the same terms and conditions as Taaleri SolarWind II. Such projects include the 19 wind turbines project in Oltava producing approximately 90 MW and the 20 wind turbine project in Posio producing approximately 100 MW. The fund has also identified other potential investment targets.
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.
Renewable energy – a combination of economic and climatic targets
Energy production plays a key role in the fight against climate change. By switching to emission-free energy production alternatives, we can significantly reduce the carbon dioxide emissions caused by energy production.
The most significant growth opportunities are, for example, in wind power, which is both a renewable and emission-free energy production alternative. In many countries, the production of renewable energy is economically profitable even without state tariff systems. In Finland too, wind power is a competitive alternative on the market in comparison to other forms of energy, as production technologies have developed while production costs have been falling.
Taaleri’s profound expertise in the sector
This is Taaleri’s sixth private equity fund investing in renewable energy and the fourth investing in Finnish wind power. Taaleri’s first wind power fund was launched in Finland in 2010.
Taaleri has expertise in managing energy infrastructure projects throughout their life cycle. By participating in project identification, development, construction, financing, operation and decommissioning, Taaleri distinguishes itself from other, purely financial actors.
This fund is a financial product, labeled as an Article 9 product according to EU SFDR regulation (2019/2088). The fund’s investments do not cause any significant harm to any sustainability objectives defined in the EU Taxonomy (2020/852). This is ensured by a comprehensive internal and external due diligence assessment carried out prior to an 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 fund invests in renewable energy projects, which help mitigate climate change.
The fund’s strategy is to make sustainable investments according to EU SFDR (2019/2088) and EU Taxonomy (2020/852) Regulation. All invested assets (100%) are allocated to sustainable investments with an environmental objective. All (100%) of the fund investments are EU Taxonomy (EU) 2020/852 aligned. The focus of the investment strategy is onshore wind farms. The fund invests in Finland. The fund contributes to CO2 emission offsets or avoidance and, under the EU Taxonomy, and is aligned with the substantial contribution criteria of the climate change mitigation objective. The fund's strategy is to invest only in activities that make it possible to reduce or avoid CO2 emissions in accordance with Article 9, paragraph 3 of the SFDR regulation.
The fund’s sustainable investment objective, described in section: ”Sustainable investment objective of the financial product”, is monitored by collecting and reporting data on sustainability indicators related to measuring the investment’s contribution to the sustainability target of climate change mitigation. The fund investments’ 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 objective 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 objectives of the financial product or the impacted sustainability factors, and which indicators best describe the characteristics of the investments in the fund. To ensure the availability of sustainability-related data, the reporting maturity of target companies is assessed as part of the fund’s due diligence analyses and considered as part of the investment decision. To achieve the sustainable investment objective, used and monitored data are collected from the investment targets quarterly and reported annually.
Investments’ lifecycle emission 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 realised and that the fund nor its investments do not cause significant harm to the environment, society, or 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. Thus, the used sustainability indicators and investment targets fulfil the minimum standards common for EU climate transition benchmarks and EU Paris-aligned benchmarks and minimum standards for EU Paris-aligned benchmarks as defined in the (EU) 2020/1818 regulation. Target companies commit to setting and implementing science-based emission reduction plans to achieve net zero emissions by 2030.
No significant harm to the sustainable investment objective
For sustainable investments that are classified as sustainable investments according to SFDR (EU) 2019/2088, the prevention of significant harm to the environmental or social objectives is ensured by a comprehensive internal and external due diligence assessment carried out before the investment decision. The assessment considers 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 under the EU Taxonomy 2020/852, the investees are required to fulfill the requirements set out in the technical screening 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 annually. The additional indicators in Tables 2 and 3 have been selected using a materiality analysis of the investment target. The information is 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. In addition, some of the financial products´ operations might be subject to the need for a permit, which can include further environmental assesments.
All investments meet at least good governance requirements 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 safeguards amending the Taxonomy regulation (EU/2020/852 Article 18 and (EU) 2019/2088 Article 2 subsection 17. Thus, investees are required to comply with the OECD Guidelines for Multinational Enterprises, ILO, 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 objective is to make sustainable investments and contribute to climate change mitigation by constructing renewable energy facilities. The fund will therefore contribute to a significant CO2 emission offset or avoidance and, under the EU Taxonomy, a substantial contribution to the environmental objective: climate change mitigation. The fund only invests in activities that make it possible to reduce or avoid CO2 emissions in accordance with Article 9, paragraph 3 of the SFDR regulation.
The fund’s investment strategy is to target control investments in utility-scale development and construction projects. The focus of the investment strategy is onshore wind farms. The fund invests in Finland. The fund is restricted from making investment decisions in any other geographies or technologies.
To ensure the fund investments follow good governance practices, investments undergo careful financial, tax, and legal due diligence assessment. In addition, the fund required investments to commit to reporting financial information and to develop and put in place appropriate processes for managing and documenting good governance practices (e.g. Code of Conduct, including policies on anti-corruption and bribery, fair competition, tax, remuneration, as well as Human Rights as well and Laborers’ rights). In addition, the investments are assessed by different policies and regulations. Taaleri Energia has a grievance policy and publicly available grievance mechanism in place. The fund measures and reports equality among board members and employees, and (tax) payments to local communities.
Proportion of investments
The fund only makes sustainable investments. All invested assets (100%) are allocated to sustainable investments with an environmental objective. The financial product aims to invest 100% of its assets in Taxonomy-aligned economic activities. This objective is to be achieved by the end of the fund’s lifetime. The fund does not have differences within the direct or other types of exposures, related to SFDR regulation, when considering the fund manager and investee entities.
Monitoring of sustainable investment objective
The fund’s sustainable investment objective, described in section c), is monitored by collecting and reporting data on sustainability indicators related to measuring the fund investments’ contribution to climate change mitigation. These sustainability indicators show how the investments are aligned with the fund’s sustainability objective.
The investments’ performance related to the objective is measured by sustainability indicators. Sustainability indicators and principle adverse impact indicators measure the positive and negative impacts of investment decisions on sustainability factors are 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. Taaleri Energia has the right to perform audits. Taaleri Energia has developed an environmental and social management system and plans, which ensure the realization of the sustainable investment goal. In addition, investment targets’ abilities to fulfill the SFDR and EU Taxonomy reporting requirements are carefully reviewed, to ensure that the fund complies with all regulatory requirements.
The fund’s sustainability indicators used to measure the attainment of the investment objective and good governance practices are listed below:
Taaleri Energia calculates the emissions offset (CO2e) of its investments with the European Investment Bank’s (“EIB’s”) methodology. Gaia Consulting Oy has audited the Manager’s methodology and calculations.
The indicators that measure the fund's sustainable investment objective or characteristics have been determined based on the fund's investment and sustainability strategy. These sustainability indicators have been defined by evaluating which quantitative or qualitative quantities best describe the sustainability objectives 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 annually, the investment targets’ reporting abilities and availability of data have been considered. Data collected from the investment targets is used to report the indicators, which may be partly calculated, verified, and/or modeleded by a third party.
Data sources and processing
To ensure the availability of sustainability-related data, the reporting maturity of investments has been assessed as part of the fund’s due diligence analyses and considered as part of the investment decision. In order to achieve the sustainable investment objective, used and monitored data are collected from the investment targets quarterly.
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 is 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. Investment target-specific information is treated confidentially and reported indicators are disclosed as aggregate figures.
Limitations to methodologies and data
The fund investments’ indirect lifecycle emission calculations (Scope 3) 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.
To ensure that the investment targets fulfill the criteria for sustainable investments, they undergo careful ESG, technical, financial, commercial, tax, and legal due diligence assessments. In addition, investees are committed to reporting financial and sustainability-related information and to developing, maintaining, and putting 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, for internal and external stakeholders, are put in place to ensure stakeholders’ needs and concerns are accounted for. Our ESG due diligence process follows the OECD and UNGP’s recommendations for due diligence assessment processes and includes a double materiality analysis and a sustainability risk analysis, which are regularly carried out by utilizing sustainability risk tools and material request lists, and data analysis. To support the materiality analysis, the assessment considers 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.
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, the monitored and reported indicators measuring the principal adverse impacts of the investments are managed 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 Plc Sustainability Risk Policy
- Taaleri Energia Partner Code of Conduct – Business Ethics
- Taaleri Energia ESG Policy – Principles of Responsible Investment
- Taaleri Energia Stakeholder Engagement Policy
- Taaleri Energia Material Climate Change Impacts Assessment
- Taaleri Private Equity Funds Ltd Sustainable Investment Policy
Attainment of sustainable investment objective
No reference benchmark is designated for the purpose of attaining the sustainable investment objective of the fund, so therefore no single benchmark is applicable. However, the Manager has decided to follow the Paris Agreement and engages all of its investments in the Net Zero Asset Managers Initiative (“NZAM"). Taaleri Energia has a target to be net zero by 2030 with its scope 1 and 2 emissions. Scope 3 emissions are monitored and reported via SFDR RTS annex I table 1. The used methodology is Science Based Target initiative ("SBTi) for Financial Institutions, and the target progress will be reported via UNPRI reporting. The SBTi is a sector-specific, clearly defined path to reduce emissions in line with science and the Paris Agreement goals. In addition, the Manager monitors and reports investments’ relative emissions under the EIB Carbon Footprint Methodologies The relative emissions concern investments emissions from a typical year of operation and reflect the GHG savings achieved by the investment, also referred to as an environmental impact or CO2 emissions offset. The Manager will use the calculation method defined by the EIB: energy generated country-specific emission factor for electricity combined margin. The Manager will report investments performance annually and use the unit CO2e .
The used measures, identified above, fulfil the minimum standards common for EU climate transition benchmarks and EU Paris-aligned benchmarks and minimum standards for EU Paris-aligned benchmarks as defined in (EU) 2020/1818 regulation. Scope 3 emissions, carbon intensity and carbon footprint are measured and reported according to (EU) 2022/1288 annex I table 1.
Taaleri Principal Adverse Impacts Statement
Sustainability -related disclosures in periodic reporting:
Sustainability -related disclosures 1.1.2022-31.12.2022