Introduction
IPR.VC has the mission to enable ambitious content creation, production and distribution companies to reach commercial success with their film, TV and other entertainment intellectual properties. Growing content industry will also bring employment and welfare to society. Our ESG policy aims at fostering our industry’s contribution to society and mitigating sustainability-related financial risks.
Scope
At IPR.VC, we are committed to Environmental, Social and Governance responsibility in our own operations and in our network. The scope of this policy covers our own activities and those of our investment targets.
In our strategic decision making, our daily activities and in our investment decisions, we take ESG aspects into account. Special attention is paid to two UN Sustainable Development Goals which we promote in IPR.VC Fund III Ky. They are
- Gender Equality and
- Climate Action
IPR.VC strives to be an employer where diversity, equity and inclusion are respected.
Legal and regulatory requirements
As a registered Alternative Investment Fund Manager (AIFM) we are supervised by Finnish Financial Supervisory Authority (Fin-FSA). We comply to their regulations as well as the Finnish Act on Alternative Investment Fund Managers and other relevant legislation.
We comply with Sustainable Finance Disclosure Regulation (SFDR). IPR.VC Fund II Ky discloses sustainability information as defined in Article 6 and IPR.VC Fund III Ky disclosed information as defined in Article 8 of SFDR. We are member of Finnish Venture Capital Association (FVCA) and comply to their code of conduct.
We co-operate on an on-going basis with industry organizations to develop sustainability policies in the content industries. We are also member in Finland’s Sustainable Investment Forum Finsif.
Definitions
Sustainability risk is an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
IPR.VC’s investment portfolio may comprise of asset-backed investments (“Project Investments”) and equity investments in companies. Project Investments can be divided into development, production and acquisition projects. These are typically created with strategic alliances with operators over a series of assets.
Each type of project investments carries its own sustainability risk profile.
| Type of investment | Key activities | Typical sustainability risks |
|---|---|---|
| Project/development | Writing and planning | Minimal risks in the actual development work Development may have an impact on environmental and social risks in the upcoming production phase as development sets requirements on how production is organised |
| Project/production | Production Execution: filming, post-production, delivery | Environmental risks can add costs (reduced resource efficiency) or cause significant costs in case of causing material negative environmental impact Health-related risks may lead to hiatuses or at worst abortion of the project, causing extra costs Social-related issues such as harassment incidents may lead to delays or additional costs and at worst to reducing of project’s market value |
| Project/acquisition | Rights acquisition | Failures to comply with sustainability practices that have occurred before rights acquisition can cause reputational risks affecting sales income |
| Strategic alliance partnership (covering several projects) | All of the above | Project-related risks as described above Environmental, social and governance risks depending on the alliance partner’s strategy and operations |
| Corporate equity | Long-term ownership of a company | Environmental, social and governance risks depending on the company’s strategy and operations |
The risks affecting target asset may also indirectly carry adverse reputational risks for IPR.VC.
Sustainability factors
Sustainability factors are environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.
Key environmental sustainability factors are in the areas of logistics, power supply, catering and waste management. Deciding the film shooting location is the most important decision affecting the environmental footprint of a film project.
Key social sustainability factors are within areas of workforce diversity, inclusivity, equality and avoidance of harassment; and working conditions and agreements of employees, including freelancers.
Key governance-related factors are anti-corruption and anti-bribery. Productions must not engage in any corruption or bribery towards public or private entities in any dealings, directly or indirectly, in respect of the project.
Failing to address these sustainability factors would lead to adverse sustainability impact in the projects financed.
ESG integration during investment process and ESG reporting
As a part of our investment process, we always assess and require that the potential investment target complies with this sustainability policy. Sustainability compliance will be assessed as a part of investment due diligence process. Commitment to the sustainability policy is also included in the representations and warranties provisions in the relevant agreements.
IPR.VC has created a tailored sustainability analysis framework, which applies to the subsectors of the media and entertainment industry it invests in. The framework is based on Invest Europe recommendations and is complemented with content industry specific questions.
There are three versions of the framework:
- Full version/projects, to be applied to production projects;
- Light version, to be applied to development and acquired projects; and
- Full version/companies, to be applied to company investments and strategic alliances.
The table below summarises use of the different framework versions and reporting frequency.
| Type of investment | Key activities | Relative level of adverse sustainability impact risk of investment | ESG at investment phase | Reporting frequency |
|---|---|---|---|---|
| Project / developent | Writing and planning | Low | Light framework | n/a |
| Project / production | Production Execution: filming, post-production, delivery | Medium | Full framework (project) | One-time reporting once project is ready |
| Project/acquisition | Rights acquisition | Low | Light framework | n/a |
| Strategic partnership (covering several projects) | All of the above | Medium | Full framework (company) | Annual reporting |
| Corporate equity | Long-term ownership of a company | High | Full framework (company) | Annual reporting until exit |
For project investments involving production we require final sustainability report after production is completed, including KPI’s for Gender Equality and Climate Action. In addition, we do a yearly ESG survey among our strategic alliances.
For corporate equity investments require annual reporting according to the framework template. We provide our fund investors a consolidated portfolio sustainability report once a year.
Governance
We have appointed a responsible board member, who is in charge for the ESG policy and its implementation. ESG policy is approved by the board of IPR.VC Management Oy.