Improving. Always. For the planet we share

Loudspring Impact Report 2018

IMPACT 2018

At Loudspring we care deeply about not only growing successful businesses that

will go on to become great companies, but growing companies that maximize their

positive environmental impacts and save as many natural resources as possible.

In fact, this is our primary purpose.

Loudspring

Contents

1Introduction

2Integrating the Sustainable Development Goals and Biodiversity

3Impact Results for 2018

Who are we?

Loudspring is an investment group focused on saving natural resources. We manage a portfolio of Nordic growth companies that are making a big environmental impact globally. We believe that as our entrepreneurial teams are contributing to solving some of the biggest challenges our planet faces, this translates into a unique opportunity for growing profitable businesses.

Loudspring companies are active in five global industries — food, fashion, energy, manufacturing and real estate. Their potential to achieve a significant impact in these industries is what drew us to them in the first place.

In 2016, we started to estimate what impact our portfolio had achieved in the real world, in terms of carbon emissions and water savings. We continued that work in 2017, and now in 2018, while also improving upon our methodologies along the way.

We base our calculations on the real effect of the past year, meaning that we look at the impact of actually sold goods and services. No projections, only actual savings. We also take into account the negative impact of the operations of each firm, to calculate the net effect.

1. INTRODUCTION

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Eagle FiltersInlet air filtration technology for natural gas fired gas turbine plants and generates monetary savings through increased plant output (about 3% improvement for each category) and increased efficiency (less fuel needed) and reduced CO2 emissions.

Swap.comOnline secondhand consignment platform that brings industrial scale to secondhand clothing sales and reduces the need to produce new clothes.

ResQ ClubDigital food app that lets restaurants upload and customers buy meals that would otherwise go to waste.

Sofi FiltrationEfficient recirculating of waste water, reducing the need for freshwater.

EnersizeOptimisation software that reduces energy used in compressed air systems for industry.

NuukaSoftware platform to optimise and reduce energy use in buildings, as well as improve indoor air quality and productivity.

The Loudspring Companies

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Like previous impact reports, the impact assessment for 2018 mainly estimates how much water and greenhouse gas (GHG) emissions were saved or ‘avoided’ through the operations of our portfolio companies. We apply a definition of ‘avoided emissions’ close to that of the Mission Innovation (MI) Framework (which itself is derived from the Greenhouse Gas Protocol). The MI Framework defines ‘avoided emissions’ as: “reductions in emissions caused indirectly by a product. This is where a product provides the same or similar function as existing products in the marketplace, but with significantly less GHG emissions”. This means that we actually look at emissions from a Scope 3 perspective, rather than 1 or 2, which is most common among companies.

You can refer to our previously released methodology for more details on how we actually went about the calculations, but in general the difference between the carbon emissions our portfolio’s sold products or services is compared to that of the ‘business as usual’ case, which results in an avoided emissions estimate. The same goes for water savings.

Note: to get an accurate estimate of the net savings we try to include all Loudspring emissions from operations (this includes items such as office heating, electricity, travel, energy use in production of hardware or in factory processes). The savings from our portfolio dwarf our emissions greatly, and those savings are indeed scalable.

New for this year is that we have done a preliminary analysis of how Loudspring and our portfolio companies impact the UN Sustainable Development Goals (SDGs). We have also started considering our biodiversity impacts. These two new aspects were included for good reasons:

1. The UN Sustainable Development Goals have become the main platform for where different sectors communicate about sustainability (which is a very good thing for the planet and a conversation we want to be a part of); and

2. Biodiversity is an area of concern for us as a company that we feel it is not getting the attention it deserves in the mainstream. We decided that we wanted to help elevate biodiversity concerns from now onwards.

Warm thanks to Matt de la Houssaye of Global Green, who has supported and helped guide us in the assumptions, data sources and information underlying this analysis. Measuring and accounting for impact is not straightforward and his year we looked at data from around the world regarding the impact of textiles, food waste, and similarly large industries. It is not an easy task, and Matt has been of great help. Also, a huge thanks to David Helsing, a consultant who has helped develop the methodology and compiled the data from Loudspring and our portfolio companies for this report.

The Loudspring Method

How to Measure Greenhouse Gas Emissions

THE THREE SCOPES OF MEASURING EMISSIONS

Scope 1 These are emissions that the company can control directly. For example, all the transports made for the company’s products or personnel, or any emissions from producing items. This scope includes fuel burnt for electricity at the premises of the company.

Scope 2 The emissions caused by the company through the use of electricity. This is not controllable in the same way, as the company does not decide what fuels to use for electricity generation.

Scope 3 So-called “other indirect GHG emissions”, including upstreams and downstreams emissions. “Upstream emissions” means the emissions caused by other companies or people in order to extract the natural resources (including for the electricity generation in Scope 2) used by the company. “Downstream emissions” means the emissions the products or services of the company causes when the consumers use them, or when they are disposed of. For example in the case of Toyota the emissions a consumer would cause by driving a Toyota for personal use, would be part of Toyota’s scope 3 emissions, as well as the emissions that happen when that car is recycled.

2. SUSTAINABILITY

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We believe that the SDGs offer a great platform for the world to face the myriad sustainability challenges we have. It also gives a common language and an opportunity for different actors to talk about the issues. We look forward to joining this discussion, and to kick this off, we have made an initial mapping of where we and our companies impact the most.

The SDGs are very broad, and we could be said to impact all of them in one way or another, but here we focus on the most important ones for us as a portfolio.

First and foremost, Loudspring as a company impacts SDG 8, Decent Work and Economic Growth, the most. We do this through investing and growing companies, (or in UN lingo: support “productive activities, decent job creation, entrepreneurship, creativity and innovation”). We are also supporting technologi-cal upgrading and innovation, which are important parts of SDG 8.

Three other goals that are very important for us directly relate to this impact report: SDG 13 (Climate Action), SDG 6 (Clean Water and Sanitation), and SDG 14 (Life in Water). Through our activities, we reduce harmful GHG emissions (SDG 13), and we reduce freshwater use (through reduced electricity use) and water pollution (through reduced pesticide use and actual water filtration) (SDGs 6 and 14).

Other strong connections to the SDGs can be found in SDG 12, which addresses responsible consumption and production. All of our companies contribute to achieving sustainable and efficient use of natural resources. Also, ResQ Club works hard to reduce food waste, which is part of SDG 12. Both ResQ Club and Swap.com help reducing waste generation through prevention and reuse.

Nuuka, Enersize, and Sofi Filtration all help contribute to SDG 7 (Affordable and Clean Energy) through their energy efficiency solutions that help reduce reliance on polluting energy sources. They also impact SDG 9 (Industry, Innovation, Infrastructure) by providing top of the line solutions to existing industries, helping them retrofit for cleaner production.

Finally, Nuuka and Sofi Filtration contribute clearly to SDG 3 (Good Health and Wellbeing). Nuuka contributes to SDG 3 by providing a solution that helps monitor the air quality in buildings, and Sofi Filtration through filtering water. Sofi Filtration’s solution has been shown to be able to filter microplastics as well, something that will surely be in high demand in the future.

All in all, Loudspring and our companies contribute widely to the SDGs, but rest assured, this mapping was just a first step. Our hope is to use the SDGs as inspiration to further develop our goods and services; the journey is starting now.

Loudspring and the Sustainable Development Goals

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Understanding our impact on biodiversity is an extremely complex task. GHG emissions and water savings are relatively straightforward and easy to under-stand. But how we might impact biodiversity includes a chain of reactions that are almost impossible for us to foresee, let alone quantify. As an example, we invite you all to watch this inspiring short clip on how the reintroduction of wolves has brought about change in Yellowstone National Park, which really shows how complex nature and biodiversity are: watch here.

First, throwing a glance to the negative impact we might have on biodiversity, the most obvious is that the construction of buildings and factories in relation to our operations might displace habitats and impact precious species. We think this is not a big issue at the moment, as we mostly operate from already existing buildings. Other than this, some operations require manufacturing, such as Eagle Filters’ products and Sofi Filtration’s filters, which might result in some local air and water emissions that might be damaging to local wildlife.

Also, the procurement of materials for producing those filters might include ma-terials that can harm local wildlife where the material is extracted. We currently do not have enough information to properly assess the actual impacts on wildlife from these activities.

However, we do believe that our portfolio contributes more to increasing biodi-versity, rather than not. Why? Because we contribute to slowing global warming, which threatens wildlife everywhere. In addition, two of our companies – Swap.com and ResQ Club - contribute to reducing the need for producing clothing fibres and food.

Agricultural production usually consists of monocultures (fields of only one crop type), which reduces habitat area for other species and uses pesticides (which can threaten other species as well, especially insect populations). It also uses a lot of fertilizer (and in the case of meat production leads to a lot of manure) which causes eutrophication of lakes and seas. Eutrophication unfortunately kills off fish and other marine animals as algae blooms become more intense. Agriculture is important, but we should aim to use as little land as possible and do as little harm as possible too. Through ResQ Club and Swap.com we help to lower the amount of fertilizer and pesticide used, although we do not have the means to estimate this impact yet.

Loudspring and Biodiversity

3. IMPACT RESULTS

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For every five items you buy at Swap.com, you buy four fewer new items.

Swap.com

Savings

Individual Company Impact

Swap.com helps prolong the lifetime of clothes by giving them a new owner – and therefore typically replacing the need to produce a new item. This is important, because huge amounts of energy (which equates to various amounts of carbon emissions depending on geography), water and pesticides are required to pro-duce and treat the cotton and other materials that make up our clothes.

In our impact assessment, we consider how much clothing Swap.com has sold during the year. We assume that it is all cotton, as we do not know the exact composition of the clothes, and cotton has the most recorded attempts at quanti-fying the impact. In total, we assessed five studies on carbon footprint, and three on water footprint. We estimate one kg of clothing to require 29.4 kg of CO2e, and 20 971 L of water.

We also adjust the savings due to a ‘replacement factor’. Consumers who buy a piece of secondhand clothing do not necessarily skip buying a new item all of the time (which would be a 1:1 replacement rate). We have set the replacement rate at 80%, consulting the available literature and customer data, meaning that for every five items you buy at Swap.com, you buy four fewer new items.

As you can see, the estimated carbon impact is lower for 2018 compared to 2017, while the water impact has increased, due to more refined factors in the calculations.

Savings 2018 2017 2016

CO2 emissions (ton) 21 651 29 711 53 470

Water (m3) 14 453 178 12 594 306 9 334 632

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Water is precious and Sofi Filtration is making sure we use it efficiently.

Eagle Filters’ technology increases efficiency by up to 3%.

Sofi Filtration

Eagle Filters

Savings

Savings

The positive environmental impact of Sofi Filtration is probably the easiest one to understand: their self-cleaning filters clean water to such a level that water can be reused for industrial applications, and that same amount of new water does not have to be taken from our lakes and rivers. Therefore, the amount of water they process is basically translated into the same amount of water savings.

Since this year, we have started to look at Sofi Filtration’s carbon footprint as well, which is currently negative as their regular solution does not save energy, and they still have to use electricity to work and produce the filters. However, Sofi Filtration has started deploying a new use of their project in two pilot projects, where they help industrial customers increase energy efficiency, by cleaning hot industrial waste water, reusing it while it is hot, which reduces the need for warming water.

Water is precious and Sofi Filtration is making sure we use it efficiently.

Eagle Filters’ clean the intake air in natural gas power plants, making the gen-erator blades cleaner, and thereby increasing their efficiency. This means less gas is needed to produce the same amount of electricity. Burning natural gas to produce electricity results in carbon emissions, and by reducing the amount of fuel we need for this, we reduce how much fuel we need to burn. Eagle Filters’ technology increases efficiency by up to 3%, and in our calculations, we use a 1% efficiency increase, which means that the actual savings might be even higher. As running a gas generator consumes water for cooling, reducing how much fuel the generator has to burn also reduces the water consumption.

Another interesting aspect of Eagle Filters’ solution is that since they reduce the CO2 emissions of power plants, the power plants may not need to buy as many carbon credits to cover their emissions in certain markets. This can lead to additional financial gains for power plants.

Savings 2018 2017 2016

CO2 emissions (ton) -6 – –

Water (m3) 436 992 437 000 253 000

Savings 2018 2017 2016

CO2 emissions (ton) 118 785 121 510 97 854

Water (m3) 288 674 149 563 –

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Buildings are responsible for about a third of global energy use every year.

About a third of all food produced every year disappears as food waste.

Nuuka Solutions

ResQ Club

Savings

Savings

Buildings are responsible for about a third of global energy use every year. Residential and office buildings, shopping centers - most buildings we use daily – require electricity for appliances, lighting, heating/cooling, and ventilation. Nuuka makes buildings more comfortable and at the same time more energy efficient, helping building owners and manager reduce inefficiencies and lower energy use.

Producing electricity in Finland, where the majority of their customers are, still requires burning some fossil fuels which emit carbon, and water to cool the power plants. Nuuka estimates how much electricity their product is saving, and we recalculate this into environmental impact.

Food is one of the most climate-intense industries we have. It takes a lot of energy and water to produce food and unfortunately, regardless of whether it is meat or vegetables, much of that food rots or is thrown in the bin. About a third of all food produced every year disappears as food waste. ResQ Club sells food that would otherwise be thrown away by restaurants at reduced prices, which reduces food waste in restaurants, which in the end means that much less food needs to be produced.

There are many estimates on the carbon and water footprint of food. We have tried to rely on estimates used by governments in order to get as accurate a picture as possible. ResQ is now present in Finland, Sweden, Germany, and the Netherlands, so we have used separate numbers for all those countries. We also have to use estimates on how large the portions are and what they actually contain, since all meals are different, and that kind of detailed information is not available.

Savings 2018 2017 2016

CO2 emissions (ton) 885 654 909

Water (m3) 3 976 5 935 –

Savings 2018 2017 2016

CO2 emissions (ton) 1 148 618 500

Water (m3) 546 647 525 749 –

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Compressed air uses a lot of electricity, and Enersize reduces this demand by up to 30%.

Enersize

Savings

Enersize’s solution produces electricity savings in industrial processes by improv-ing the efficiency of their compressed air systems. Compressed air uses a lot of electricity, and Enersize reduces this demand by up to 30%. As was the case for Nuuka, reducing electricity consumption reduces the amount of fuel that needs to be burnt and water that is used to cool power plants.

This year, we have based the calculations on the savings that are covered by the electricity savings contracts with Enersize’s customers. This means that savings which are now a part of normal operations (i.e. the contract has run out), are not covered by the calculations, and the real number is most definitely higher than our calculation. Enersize mainly operates in China, where electricity is “dirt-ier” than in Europe, and thus the reductions are even more important. We have also added the savings produced by Enersize’s newest acquisition: LEAQS, and we look forward to see what impact this will have over the long run.

Savings 2018 2017 2016

CO2 emissions (ton) 4 520 5 477 5 057

Water (m3) 3 547 14 430 –

Portfolio Impact

Total Impact Results for 2018

Generally speaking, it is great that we can reduce our impact on the environment. But reducing our impact does not only benefit the environment, it also leads to new opportunities. New markets and incentive schemes based on reduced nega-tive impact, such as carbon footprint, impact on biodiversity, and water waste are materializing; our companies are at the forefront to benefit from this.

As we said above, since we tried to improve our estimation methods as much as possible and include as many variables as possible, the estimated numbers have not grown by that much, while the actual positive impact has most certainly grown a lot.

Savings 2018 2017 2016

CO2 emissions (ton) 146 948 157 969 157 773

Water (m3) 15 731 156 13 726 983 9 587 000

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Our Impact in the Real World

We are happy with the impact of our companies this year, but we will continue to do our best to grow our companies’ revenues even further this as it is the best way to have a positive impact on our planet.

We are in one way proud to say that we are one of the only (if not the only) company of our kind that presents this kind of data for our portfolio companies, but on the other hand we would prefer to not be alone in this endeavor. We are therefore happy to share our complete methodology with anyone who so desires to gain insights from it and use it for their own company or fund.

• The CO2 savings from the Loudspring portfolio are the same as 251 451 return flights from Helsinki to Phuket in Thailand, a popular destination for Finnish tourists.

• Thinking in terms of business trips between Stockholm and Helsinki, our CO2 savings as a portfolio amount to a whopping 1 138 247 return flights.

• Or, this CO2 impact is about the same as one third of Volvo’s scope 1 and 2 emissions of 2018.

• The Loudspring portfolio CO2 savings impact for 2018 is equal to the emissions of 100 128 cars in Sweden during a year.

• The water savings are equal to 6 292 Olympic-sized swimming pools, or the same amount of water as is used by 122 441 Swedish households in a year.

• For each EUR of revenue some 8 kg of CO2 equivalents was not emitted and approximately 0.8 m3 of water was not drawn from rivers and lakes.

Numbers don’t mean much without context. The following are some relatable comparisons of our portfolio impacts for 2018:

Loudspring