ESG Policy Naxicap Partners Partners Last updated: 7 September, 2018

Transcription

1 ESG POLICY

2 ESG Plicy Naxicap Partners Partners Last updated: 7 September, 2018 A. Purpse The purpse f this plicy is t define Naxicap Partners Partners (hereby Naxicap Partners) apprach t integrating the cnsideratin f envirnmental, scial, and gvernance (ESG) risks and pprtunities int its investment prcess. Naxicap Partners cmmits t cnsider material 1 ESG issues in the curse f its due diligence prcess and in the mnitring f its prtfli investments seeking t maximize the ecnmic and scial returns n investments. The signature f the PRI (Principles fr Respnsible Investment), in January 2016, mre deeply marks Naxicap Partners s cmmitment t mnitr and encurage respnsible actins f the cmpanies in which it invests. In rder t cntribute t the COP21 bjective f limiting glbal warming t tw degrees Celsius, Naxicap Partners signed the IC20 (Initiative Climat 2020) in Octber As a signatry f IC20, Naxicap Partners aims at reducing the greenhuse gas emissins f its investments and seek t disclse the direct and indirect carbn ftprint f its recent investments as f As presented in its ESG Charter, Naxicap Partners s cmmitments fr a respnsible investment are as fllwing: i. We undertake t make investments cmpliant with ur values ii. We undertake t examine ESG criteria befre investing in a cmpany iii. We undertake t supprt and mnitr ur prtfli s ESG initiatives frm investment t exit iv. We undertake t reprt ur ESG actins transparently t ur LPs v. We undertake t ffer ur assciates the best pssible wrk envirnment vi. We undertake t be law cmpliant, internally well cntrlled and t limit ur risks vii. We undertake t prmte respnsible behavir within ur prfessin viii. We undertake t supprt initiatives related t ecnmic prgress, ur expertise r ur values Naxicap Partners will seek t update the plicy regularly, as apprpriate. B. Scpe This plicy applies t prtfli cmpanies in which the ttal amunt invested by investment vehicles under management f Naxicap Partners is superir t r equals 5m. Hwever, fr cmpanies nt cvered in the scpe as described abve, and in instances where Naxicap Partners cnsiders it apprpriate, reasnable effrts are made t encurage its prtfli cmpanies t cnsider relevant ESG-related principles. C. Implementatin and versight respnsibilities A dedicated ESG team The ESG team is respnsible fr facilitating the implementatin f the plicy and fr maintaining and updating the plicy t ensure its cntinued relevance in additin t respnding t any inquiries frm Naxicap Partners s investrs. 1 Fr the purpse f this plicy, Naxicap Partners defines material ESG issues as thse issues determined t substantially affect, r have the ptential t substantially affect, the financial cnditin r perating perfrmance f an rganizatin, as well as their ability, r the ptential ability, t create envirnmental and scial value fr itself and its stakehlders. 2

3 Angèle Faugier, Partner and Managing Directr at Naxicap Partners, supprted the develpment f Naxicap Partners s ESG apprach and cnstituted a dedicated ESG team in The team is tday cmpsed f three ther members: - ne member fully dedicated t ESG, hlding a master degree in sustainable develpment frm HEC Paris, - ne Investr Relatins Directr with 13 years f experience within investment management, - ne Investr Relatins Officer wh has had extensive training in the field f ESG. Investment Managers Naxicap Partners s investment managers are respnsible fr ensuring that the cnsideratin f ESG issues is integrated int the investment prcess and thrughut the investment cycle by mnitring the ESG radmap f the prtfli cmpany. Middle Office The Middle Office is respnsible fr cntrlling the accuracy f the implementatin f the measures described in this plicy thrughut the investment cycle. D. Naxicap Partners s apprach t cnsideratin and management f ESG issues in its investment prcess Naxicap Partners has adpted a set f prcedures aiming t integrate the cnsideratin f ESG issues thrughut the investment cycle as well as develping best ESG practices within the management cmpany. Pre-investment: In rder t ensure the integratin f ESG cnsideratins in the pre-investment stage, Naxicap Partners cmmits t: Exclude certain industries and activities frm its investment range: As Naxicap Partners s cntributin t a mre respnsible investment industry, its first cmmitment is t invest in activities in line with its values and t encurage, beynd the regulatry framewrk, ethical behavir. Naxicap Partners has decided nt t invest in: illegal ecnmic activities: any prductin, trade r ther activity nt permitted by law r regulatins prductin f r trade in tbacc manufacture f r trade in weapns and ammunitin f any kind prngraphic activities and prstitutin casins, betting enterprises and equivalent The mst recent funds f Naxicap Partners include these criteria in their By-laws. Certain funds als exclude any activities allwing illegal access t electrnic data netwrks r the dwnlading f electrnic data. Take ESG issues int cnsideratin during the Investment Cmmittee: All investment memrandums include a pre-investment ESG analysis. The pre-analysis highlights the main ESG risks, pprtunities and recmmendatins and is cnsidered when making an investment decisin. The ESG analyses are cnducted based n bth financial and extra-financial data. Our investment teams have access t specific sectr reprts, annual reprts, studies frm industry experts as well as a general guide created by Naxicap Partners s ESG team cvering the main material issues f each sectr. Undertake ESG due diligences: ESG due diligences are mandatry pre-investment. The due diligences, carried ut by external auditrs, deliver a mre thrugh understanding f the main ESG challenges and areas f imprvement aiming t define the radmap fr the cming years. The auditrs cnduct 3

4 interviews with the management teams and have, in additin t their wn internal surces, access t relevant dcuments prvided directly by the target cmpany. The ESG due diligence as well as the ESG analysis presented in the investment memrandums bth cvers central ESG issues cnsidered material t the specific target cmpany, as evaluated by the auditr. The main areas f analysis are: Crprate Gvernance and Risk Management Business ethics HR strategy & Career management Health & Safety Envirnmental management system & GHG emissins Respnsible prcurement Service quality & Custmer satisfactin Cmmunity invlvement The due diligences cver an in-depth analysis f each ESG theme, including their level f materiality fr the cmpany, their strategic imprtance in relatin t the sectr, a summary f the cmpany's perfrmance, relevant KPI s and ther key perfrmance elements as cnsidered material by the auditr. The methdlgy used is a wide-spread service ffered t several management cmpanies in the PE-industry when assessing a target cmpany n ESG issues in the pre-investment stage. Integrate an ESG clause in the Sharehlders Agreement: An ESG clause is systematically included in the Sharehlders Agreement. When signing the Sharehlders Agreement, cmpanies cmmit t implement a detailed actin plan, t infrm Naxicap Partners regularly n their actins and t annually reprt n ESG data. During investment: In rder t prperly manage and mnitr the ptential ESG risks and pprtunities f its investments, Naxicap Partners cmmits t: Mnitr the prgress f its prtfli cmpanies: Naxicap Partners requires its prtfli cmpanies t answer annually a set f c.120 questins related t their ESG actins and engagements with stakehlders (clients, suppliers, and lcal cmmunities). T cllect this data, Naxicap Partners has implemented an nline reprting tl - Reprting 21 - available t every prtfli cmpany. As a General investr, the 120 indicatrs cver a wide area f central ESG issues applicable t all sectrs and activities. These indicatrs derive frm cnslidated recmmendatins and studies by industry experts such as the PRI, the ESG Cmmissin f France Invest, external cnsultants as well as industry peers. Naxicap Partners has develped its wn detailed in-huse ESG scring methdlgy, based n the cmpanies answers t the annual questinnaire. The ESG scring enables an accurate and detailed mnitring f the prtfli cmpanies perfrmance n material envirnmental, scial and gvernance issues including their interactin and impact n stakehlders. The materiality weights Naxicap Partners applies t the different sectrs, are based n Naxicap Partners`s interpretatin f the publicly available materiality framewrk f the Sustainability Accunting Standards Bard (SASB). The SASB materiality tl is cnsidered as an accurate benchmark within the industry. Naxicap Partners has als develped its wn in-huse benchmark database t certain key indicatrs based n publicly available infrmatin. Naxicap Partners encurages cllabratin with the cmpany management t identify the material ESG issues and t supprt the develpment f its ESG radmap. The radmap is apprved at least nce a year during a Supervisry Bard, as defined in the Sharehlders 4

5 Agreement. The cmpanies have t present their prgress and realized actins, especially n hw they act n factrs regarded as being f high imprtance as evaluated by the auditr. Undertake transparency and accuntability in its reprting t investrs: The nline reprting tl serves t answer the inquiries f Naxicap Partners s investrs and t prvide them with detailed ESG reprts and reviews thrughut the investment cycle. Naxicap Partners prvides its investrs with detailed ESG reprts by funds in additin t an annual ESG reprt, publicly available n Naxicap Partners s web site: Partners.fr. In case f particular ESG incidents, reprting meetings with LP's are arranged t disclse the incidents and the apprpriate ESG radmap. The incidents, as the case may be, are described in the annual reprt f the funds r when necessary. Exit: The divestment prcess f Naxicap Partners includes: Undertaking ESG Vendr Due Diligence: ESG vendr due diligences are cnducted fr all investments where a financial vendr due diligence has been undertaken. The ESG vendr due diligence highlights the key ESG issues identified and managed thrughut the perid f wnership in rder t limit risks and t create value. Acting transparently twards ptential new buyers: Where apprpriate, Naxicap Partners undertakes t infrm buyers n relevant ESG issues enabling them t make infrmed decisins befre acquiring r engaging in the target cmpany. E. Incrpratin f climate criteria int the investment prcess As a signatry f the IC20, Naxicap Partners systematically factrs climate risks int its investment prcess, as defined by the scpe f its ESG plicy. Mre specifically, Naxicap Partners is cmmitted t: Recgnizing that climate change will have effects n the ecnmy which represent risks and pprtunities fr businesses Jining frces t cntribute, at their level, t the bjective f COP21 f limiting glbal warming t tw degrees Cntribute t reduce the greenhuse gas emissins f their prtfli cmpanies and ensuring sustainability f perfrmance Thrugh the initiative, Naxicap Partners is als cmmitted t disclse the Scpe 1, 2 and 3 emissins f its prtfli cmpanies with a high carbn materiality within A detailed climate analysis is integrated int the investment memrandums and fllws a methdlgy elabrated by PWC. The methdlgy, shared between all IC20 signatriies, prvides a snapsht f the target cmpany's current psitin with regards t significant climate issues facing its sectr and activity, and is used t evaluate the materiality f the cmpany with regards t relevant climate issues. It aims t establish the answers t the fllwing questins: Is the cmpany affected by carbn regulatins? Have any f its clients (public sectr, large grups, etc.) already frmulated expectatins in terms f carbn strategy? Is any part f the value chain lcated in cuntries r znes with a high climate risk? Are any f its cmmercial partners (suppliers, subcntractrs, distributrs, etc.) affected by carbn regulatins? Has the cmpany r its industrial sectr recently been invlved in a carbn-related cntrversy? 5

6 Are the cmpany's market cnditins sensitive t climate and energy issues (dependence, cmpetitin, technlgical challenges, etc.)? Has the cmpany cnducted a vluntary carbn ftprint assessment (Scpes 1, 2 and 3)? Is the cmpany planning an IPO? The analysis als identifies areas f imprvements and cncrete actins t be implemented by the cmpany, whether it is t capitalize n pprtunities related t the transitin twards a lw carbn ecnmy r t limit expsure t significant climate risks. The analysis is verified by an external auditr. Depending n the results f the pre-investment climate analysis and the cmpany's expsure t physical and transitinal climate risks and pprtunities, actins t be implemented are identified. This wrk is integrated int the cmpany s ESG radmap and may cver fllwing tpics, depending n the materiality: carbn ftprint assessment, carbn reductin measures, implementatin f KPIs, capitalizing n ptential pprtunities,.. Naxicap Partners seeks t see actins taken fr reduced GHG emissins and apprves the radmap in the Supervisry Bard, as defined in the Sharehlders Agreement. Naxicap Partners mnitrs the prtfli cmpanies expsure and adaptatin strategies t the physical and transitinal climate risks identified in the pre-investment climate analysis thrugh relevant indicatrs via its nline ESG reprting tl. These indicatrs are presented annually in Naxicap Partners s ESG reprt. F. Respnsibilities within the management cmpany In additin t the cnsideratin f ESG issues in the investment prcess as described in Sectin D and E, Naxicap Partners als undertakes t act as a respnsible management cmpany internally and seeks t: Maintain its peratinal excellence & risk reductin: Naxicap Partners fcuses n having an efficient internal cntrl, a strng cmpliance and a gd risk management department. The Risk & Cmpliance and the Middle Office departments are added-value in-huse expertise functins f Naxicap Partners in which it has invested heavily. Beynd cmplying with legal prvisins and mitigating peratinal risks, Naxicap Partners s prcesses have the intentin t prvide a safe and high level f transparency t investrs fr all transactins. Offer its emplyees the best pssible wrk envirnment: Naxicap Partners acknwledges that investing in its emplyees is essential. Prviding them with the best wrking cnditins and a psitive and dynamic wrking envirnment is ne f the key pririties f the management cmpany. Naxicap Partners ffers equal wrking cnditins and prvides its emplyees with training and tutring prgrams t supprt them in their career develpment. Limit its envirnmental ftprint: The management cmpany undertakes t adpt mre envirnment-friendly slutins internally t limit its impact n the envirnment. Naxicap Partners will reprt annually and publicly n its envirnmental ftprint as a management cmpany and implement necessary actins t reduce its impact. Execute its duties as a respnsible investr: Naxicap Partners undertakes t respect and adpt its respnsibilities as a signatry f the PRI (Principles fr Respnsible Investment) in additin t ther frmal cmmitments signed by the management cmpany. Naxicap Partners will seek t participate in wrkshps and cnferences t increase public awareness abut respnsible investing and t demnstrate the benefits f gd practices fr cmpanies and fr the investment industry. 6