ESG Guidelines

ESG Guidelines and Exclusion Criteria of BridgeTower Capital

ESG Guidelines

Bridgetower Capital is a global company focusing on digital assets. Bridgetower Capital sees itself as a corporate that bears a social responsibility in its business activities, especially as an employer, but also as an investor. Bridgetower Capital wants to strengthen its positive influence on society and the environment in the long term and minimize negative effects. As a company, Bridgetower Capital wants to make its contribution to solving social problems and thus contribute to the preservation of a world worth living in for present and future generations. With its sustainable investment strategy, Bridgetower Capital pursues several goals: negative effects on society and the environment are reduced, the investment risks for Bridgetower Capital's clients are mitigated, and Bridgetower Capital’s clients are supported in the implementation of their own sustainability strategies. The sustainable investment strategy of Bridgetower Capital consists of two complementary elements:

• Bridgetower Capital works with ESG exclusion criteria. The objective is to exclude those business activities that would expose the company and our clients to unacceptable business practices. These criteria are largely based on relevant international standards.

• Environmental, social and governance factors (ESG criteria) are integrated into the investment processes. As part of the due diligence process, the influence of such criteria on the investment risk is assessed. By taking ESG criteria into account, Bridgetower Capital also reduces the probability that the investments, and thus the funds of its clients, will lead to negative effects on the environment and society.

Bridgetower Capital wants that its business partners apply adequate standards in their business activities. For this reason, Bridgetower Capital requires that business partners obtained the necessary permits and comply with the relevant environmental and local labour laws. In addition, business partners should respect fundamental human rights. 
In the following appendices, specific ESG exclusion criteria are defined for each business area and extended assessment requirements are listed, which are to be fulfilled in each specific situation. The exclusion criteria and possible extended assessment requirements are to be checked during the investment analysis and therefore form part of the investment process prior to the investment decision. Correct application and interpretation of the criteria is checked and confirmed by the Investment Committee. In the absence of a clear interpretation of the criteria, the Investment Committee also makes a final decision on the specific circumstances.

1. ESG exclusion criteria for fund investments and direct investments

1.1 Exclusion

In principle, Bridgetower Capital does not invest in funds or companies that are directly or indirectly involved in the following industries or activities:

• Production and processing of fur

• Military support services

• Sex business and pornography

• Tobacco cultivation and tobacco products

• Production of weapons and ammunition (including components) as well as their trade and maintenance

• Animal experiments

• Deforestation of primary forests

• Dark web related content and business

• Cyber warfare, malware and other activities related to cyber crime

• Electronic espionage

• Surveillance systems in violation of international law and human rights

• Data collection obtained in violation of international law and human rights

1.2 Extended Due Diligence

For funds and companies involved in one of the following business activities, whether directly or indirectly, an extended due diligence is required:

• Alcohol and products containing alcohol

• Hemp cultivation and processing for medical purposes

• Gambling

• Animal trade and transport, slaughterhouses

• Waste and recycled materials

• Aquaculture and fishing

• Forestry

• Gas, coal and oil

• Wood, wood products, cardboard, and paper

• Mining and metals

• Monocultures (including biofuels, palm oil and soya)

• Financial businesses with questionable AML protection, prone to be used for money laundering

• Lending, credit or fintech businesses with a potential of over-indebting their users/clients, if not falling under local financial sector regulation

1.3 ESG Questions form Part of the Due Diligence

As part of the investment due diligence, questions are to be asked about risks and opportunities that may arise from sustainability issues. The answers are recorded in the due diligence questionnaire. Focus lays on ESG risks that could have a negative effect on investment performance or reputation, such as risks from controversial business practices or bad governance.

A summary of the relevant ESG risks and the result of the ESG exclusion criteria check is to be integrated into the "Investment Recommendation (IR)" and is therefore visible to the Investment Committee.

1.4 Investment contracts may be amended by ESG relevant information obligations

If relevant, reporting obligations or information requirements covering specific ESG issues may be integrated into the investment agreements. This to allow Bridgetower Capital to monitor specific ESG risks within the outstanding investment portfolio.

2. ESG exclusion criteria for blockchain infrastructure services

1.1 Exclusion

In principle, Bridgetower Capital does not operate blockchain infrastructure / staking services / running validator nodes for protocols or applications related to the following industries:

• Military support services

• Sex business and pornography

• Tobacco cultivation and tobacco products

• Production of weapons and ammunition (including components) as well as their trade and maintenance

• Animal experiments

• Deforestation of primary forest

• Dark web related content

• Cyber warfare, malware and other activities related to cyber crime

• Electronic espionage

• Surveillance systems in violation of international law and human rights

• Data collection obtained in violation of international law and human rights

1.2 Extended Due Diligence

For protocols or applications supporting one of the following business activities, an extended due diligence is required:

• Supply chain applications in general

• Alcohol and products containing alcohol drug cultivation, distribution and processing for medical purposes

• Gambling

• Gas, coal and oil based energy production dependent businesses and business applications (e.g. crypto mining)

• Automated electronic data collection

• Surveillance systems (e.g. for medical purpose, tracking apps, etc.)

• Financial and other businesses with questionable AML protection or KYC standards, prone to be used for money laundering or criminal activities