WAD Capital Fund I SFDR website disclosures
07/11/2025
Sustainability related disclosures at entity level
WAD Capital seeks to promote environmental and social characteristics by investing in local succession-driven SMEs. These businesses are vital to the Western European economy, providing employment and essential services. Our mission is to preserve and grow these companies while embedding ESG principles into their operations—creating long-term value for investors and society.
WAD Capital does not have sustainable investment as its primary objective and does not commit to EU Taxonomy-aligned investments. However, ESG considerations are integrated throughout the investment process as a lever for operational excellence and sustainable growth.
Why This Matters
“By embedding ESG principles into succession-driven investments, WAD Capital creates resilient businesses that contribute to local economies, environmental stewardship, and social well-being—while delivering strong returns for investors.”
Integration of sustainability risk in the investment policy
WAD Capital integrates sustainability risks as a core principle of its investment philosophy. We believe that addressing environmental, social, and governance (ESG) factors strengthens long-term value creation and reduces potential risks. Our focus on succession-driven SMEs naturally involves promoting responsible business practices, from energy efficiency and circular economy opportunities to fair labor conditions and strong governance. By embedding ESG expectations into our investment approach, we aim to ensure that companies are resilient, adaptable, and aligned with sustainable growth.
Managing sustainability risks is an ongoing commitment throughout the investment cycle. We work closely with portfolio companies to identify ESG challenges and opportunities, encourage transparent reporting, and support improvements in areas such as workplace safety, diversity, and environmental impact. This proactive engagement helps mitigate risks while fostering operational excellence and ethical standards—making sustainability not just a safeguard, but a driver of competitive advantage and long-term success.
Principal adverse impact of investment decisions on sustainability factors
WAD Capital does not currently consider Principal Adverse Impacts (PAIs) of investment decisions on sustainability factors in accordance with Article 4 of SFDR (Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector). This is due to the nature of our portfolio companies: small and medium-sized enterprises often lack the detailed data required for PAI reporting, making full compliance impractical at this stage.
However, we remain committed to addressing potential negative impacts. While formal PAI reporting is not implemented, ESG risk and impact analysis is integrated into our due diligence and monitoring processes. This ensures that sustainability risks are identified and mitigated through engagement and contractual expectations, even without comprehensive PAI disclosures.
Integration of sustainability risk in the remuneration policy
WAD Capital does not have an obligation to have a formal remuneration policy in accordance with article 40 and following of the Belgian law of 19 April 2014 on alternative entities for collective investments and their managers. As such, ESG criteria are not part of the remuneration policy of the staff WAD Capital.
Sustainability-related disclosures at Product level
Summary
WAD Capital Seed 1 and WAD Capital Invest Fund 1 (also WAD Capital or the Fund) is a Fund built around entrepreneurial leadership, designed to support the next generation of business owners in acquiring and growing SMEs across Europe. The Fund focuses on succession-driven investments in small-cap companies, particularly but not limited to Business Services, Energy Transition companies and Healthcare services.
With a strong emphasis on management transition, WAD Capital bridges the gap between retiring SME owners and ambitious mid-career executives ready to lead. The investment region spans a 300 km radius around Belgium, home to over a million SMEs. The impact of the Fund lies in preserving and enhancing these businesses, which are vital to local employment and economic resilience. This investment strategy addresses directly a pressing social challenge in the SME landscape. Indeed, 2 many small and medium-sized enterprises across Europe are led by aging owners without clear succession plans. These businesses are often deeply embedded in their local economies, providing stable employment and essential services.
The Fund is a financial product that promotes environmental and/or social characteristics but does not have as its objective sustainable investment and does not invest in sustainable investments. No reference benchmark has been designated for the purpose of attaining the environmental and/or social characteristics promoted by the Fund.
Investment objective
The Fund aims to deliver sustainable growth and attractive returns by supporting the next generation of entrepreneurs. We invest in SMEs facing succession challenges and help them transition to strong, future-ready leadership. Through active ownership and strategic guidance, we foster operational excellence, governance, and resilience—ensuring these companies thrive in a changing world.
Our approach addresses a pressing social challenge: many SMEs are led by aging owners without succession plans. By bridging this gap, we secure jobs, strengthen communities, and support inclusive growth.
The Fund is considered an Article 8-type product under the SFDR, meaning that the Fund promotes, amongst other characteristics, environmental or social characteristics, but does not have sustainable investments as its objective.
Environmental or social characteristics of the financial product
The Fund promotes environmental and social characteristics that are deeply embedded in its investment philosophy. The Fund focuses on sectors that are essential for local economies such as business services, healthcare, and energy transition. These companies often face challenges related to aging ownership and lack of succession planning, which can threaten jobs and community stability. By investing in these businesses, WAD Capital ensures continuity, preserves employment, and strengthens regional economic resilience.
From an environmental perspective, the Fund encourages practices that reduce energy consumption, improve resource efficiency, and support the transition to low-carbon business models. Opportunities include implementing circular economy principles, reducing pollution through innovation, and adopting cleaner technologies.
From a social perspective, the Fund promotes fair labor practices, workplace safety, diversity in leadership, and structured HR policies. It also supports continuous employee training and development, recognizing human capital as a driver of long-term success.
These efforts align with several UN Sustainable Development Goals, including SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure), SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), SDG 15 (Life on Land), SDG 3 (Good Health and Well-being), SDG 5 (Gender Equality), and SDG 8 (Decent Work and Economic Growth).
Investment strategy
WAD Capital embeds sustainability into every stage of its investment process. Our approach ensures that ESG factors are not an afterthought but a key driver of long-term value creation.
Pre-Investment Screening: ESG analysis is part of our due diligence. We assess environmental aspects like energy use and emissions, social factors such as health and safety and diversity, and governance elements including transparency and leadership. Findings are documented and integrated into investment notes and agreements to set clear expectations.
Post-Investment Follow-Up: After investment, we actively engage with companies to improve ESG performance. This includes annual reporting, tailored KPIs, and board-level involvement. We also provide guidance and share best practices to help businesses strengthen governance and adopt sustainable practices.
Exit Considerations: ESG progress is factored into exit decisions. Companies that embed sustainability principles are better positioned for market attractiveness and long-term success, benefiting both investors and stakeholders.
Proportion of investments
The Fund intends all investments to be categorized as aligned with environmental or social characteristics or as “Other.”
Aligned with E/S characteristics: Most investments will fall under category #1B (Other E/S characteristics), meaning they promote environmental or social characteristics but do not qualify as sustainable investments under SFDR.
Other investments: A limited portion may be classified as #2 Other. These investments do not directly promote E/S characteristics but will still undergo ESG screening to identify and mitigate risks. Sustainable investments: The Fund does not commit to sustainable investments under the EU Taxonomy. Minimum percentage of Taxonomy-aligned investments: 0%.
This allocation reflects the Fund’s focus on SMEs where ESG integration is a journey rather than an immediate compliance exercise. However, even companies in the “Other” category are subject to ESG expectations and monitoring.
Monitoring of environmental or social characteristics
Monitoring is not a one-time exercise, but a continuous process embedded in our active ownership model:
Annual ESG Reporting: Each portfolio company is required to report annually on ESG performance, covering metrics such as energy consumption, waste management, carbon emissions, workplace safety, and diversity.
KPI Tracking: KPIs are tailored to each company’s sector and ESG risk profile. For example, energy transition companies may report on renewable energy share, while healthcare businesses focus on patient safety and data privacy.
Board-Level Engagement: Our board positions allow us to raise ESG-related questions and ensure accountability.
Proactive Dialogue: We encourage companies to adopt best practices and share knowledge across the portfolio.
This structured monitoring ensures that ESG principles are not only implemented but continuously improved.
Methodologies
Our ESG integration is guided by robust methodologies:
CAREPROFIT Model: A proprietary framework combining ethical responsibility with financial performance. It emphasizes purpose-driven operations, measurable returns, and intangible assets like human capital.
ESG Screening: Conducted during due diligence to identify risks and opportunities across environmental, social, and governance dimensions.
KPI-Based Monitoring: ESG KPIs are set post-investment and reviewed annually, ensuring progress is tracked and reported transparently.
This approach ensures that ESG is not a compliance checkbox but a driver of long-term value creation.
Data sources and processing
The Fund relies on multiple sources to ensure data accuracy and completeness:
Company Disclosures: ESG questionnaires and annual reports form the backbone of our data collection.
Public Information: Industry benchmarks and regulatory data provide context and comparability, if relevant, and available. However, these data remain limited on SME-level.
Third-Party Providers: When available, we use external ESG data to validate and complement internal assessments.
Internal Analysis: Our investment team conducts qualitative reviews and risk assessments, supported by board-level insights.
Limitations to methodologies and data
While we strive for rigor, certain limitations exist:
SME Data Gaps: Smaller companies often lack comprehensive ESG reporting frameworks.
Reliance on Self-Reported Data: This may introduce bias or inconsistencies.
Evolving Standards: ESG metrics are not uniform across sectors, requiring flexibility in our approach.
Despite these challenges, we apply best-effort principles and engage actively with portfolio companies to improve data quality over time.
Due diligence
ESG due diligence is embedded in our investment process:
Environmental: Assessment of energy use, emissions, waste management, and circular economy potential.
Social: Review of HR policies, health & safety practices, diversity, and supply chain awareness.
Governance: Evaluation of leadership structure, transparency, cybersecurity, and compliance.
Findings are documented and integrated into investment notes and shareholder agreements, with specific ESG expectations outlined.
Engagement policies
WAD Capital’s engagement policy is built on active ownership and close collaboration with portfolio companies. Our approach goes beyond financial investment—we take an active role in shaping governance, sustainability practices, and leadership development to ensure long-term resilience and value creation:
Active Board Participation: The Fund secures board positions in each portfolio company, enabling direct influence over strategic decisions and ESG priorities. This involvement ensures that sustainability expectations are embedded in governance structures from the outset.
Role of the CEO: A distinctive feature of our model is the appointment of new CEOs in succession-driven SMEs. These leaders are carefully selected and supported by WAD Capital to drive operational excellence and integrate ESG principles into daily business practices. CEOs are expected to set annual goals related to environmental impact, ethics, and adaptability, while governance structures such as ethics committees and advisory boards reinforce transparency and accountability.
Continuous ESG Engagement: Post-investment, we require annual ESG reporting and establish tailored KPIs to monitor progress. Our engagement includes proactive dialogue, knowledge sharing, and access to specialized expertise. We provide training opportunities and connect companies with strategic partners to accelerate ESG improvements. This hands-on approach ensures that sustainability is not only monitored but actively advanced throughout the investment cycle.
Exit Considerations: ESG achievements are factored into exit strategies, as companies with strong sustainability credentials are more attractive to buyers and better positioned for long-term success.
Index as a reference
No index or benchmark is designated for measuring environmental or social characteristics. The Fund does not intend to make sustainable investments as defined by SFDR or the EU Taxonomy.