Principles of Responsible Investing. January 2018

Transcription

1 Principles f Respnsible Investing January 2018

2 CONTENT I. INTRODUCTION... 3 II. INITIATIVES... 3 III. ENVIRONMENTAL SOCIAL GOVERNANCE (ESG) AT MANAGEMENT COMPANY LEVEL... 4 IV. ESG PROCESS AT INVESTMENT LEVEL... 6 V. CONTACTS

3 I. INTRODUCTION Access Capital Partners ( Access ) cmmitment t Scially Respnsible Investment (SRI) is deeply rted in its cnvictin that sustainable grwth cannt be achieved withut cnsidering the needs f custmers, emplyees, sharehlders, the envirnment and cmmunities in which its prtfli cmpanies perate. Since inceptin in 1999, Access' investment philsphy has favured lng-term grwth f investee cmpanies, acknwledging that Envirnmental, Scial and Gvernance (ESG) issues have an impact n the financial utlk f a cmpany and therefre n its value. Having started t frmalize its ESG prcesses in 2007, Access is cnvinced f the need t incrprate nn-financial aspects int its three activities (Buy-ut, Mezzanine & Private Debt and Infrastructure) while maintaining a high level f investment standards. Cmmitment t SRI / ESG Rigrus investment prcess VALUE CREATION Fcus n sustainable grwth Business ethics II. INITIATIVES Principles fr Respnsible Investment (PRI) Principles fr Respnsible Investment (UN-PRI) instituted by the United Natins. Access frmally cmmitted t the applicatin f the PRI in September As a signatry, Access must reprt annually t the UNPRI n its prgress n implementing the Envirnmental, Scial and Gvernance investment principles. Initiative Carbne 2020 (IC20) Access is aware f its respnsibility as a lng-term sharehlder in their prtfli cmpanies and therefre has decided t be a member f the Initiative Carbne 2020 (IC20) cntributing t the COP21 bjective f reducing glbal warming. IC20 aims at bringing abut respnsible and transparent management f the prtfli cmpanies and as f 2020, it will publish the direct and indirect carbn ftprint f its direct prtfli f cmpanies. Other initiatives Access participated in the fllwing initiatives: The Guide fr Limited Partners n Respnsible Investment in Private Equity, published by the PRI in 2009 Charte de l AFIC (Assciatin Française des Investisseurs en Capital) published in 2008, prmting ESG principles Walker Reprt 3

4 III. ENVIRONMENTAL SOCIAL GOVERNANCE (ESG) AT MANAGEMENT COMPANY LEVEL Access Cmmitment Access pays particular attentin t the respect f internatinal law n human rights, and t the applicatin f envirnmental, scial, and gvernance criteria t the management f its Eurpean private equity prtflis. Investment prfessinals at Access as well as the fund managers (GPs) they have selected must use their reasnable best effrts t incrprate ESG criteria t the management f their prtfli cmpanies, and t annually discuss prgress and results. Over the past years, Access has been very active in prmting awareness, acceptance and implementatin f the ESG principles within its GP cmmunity. a. Seat at advisry cmmittees By being systematically represented at the advisry cmmittees f the underlying funds, Access has the pprtunity t: Questin n hw the GP has integrated ESG issues int their investment decisins Ensure adequate gvernance structure is in place Encurage GPs t reprt n the applicatin f their wn ESG plicies b. GP meetings Every year, Access gathers its fund managers t exchange views n the current state f the market. On this ccasin, Access reiterates its cmmitment t UNPRI and encurages GPs t reprt n the applicatin f their wn ESG principles. Access is a respnsible firm In line with the ESG principles and practices Access applies t its investments, ensuring that the firm itself is managed in a respnsible manner is crucial. Access is highly cmmitted t respnsible business practices and gd crprate gvernance. As a firm, Access has taken the fllwing steps in the right directin: Increasing use f videcnferencing and cllabratin technlgy t reduce travel and carbn emissins Cntributin t the paper reductin and sustainable printing initiative thrugh: Prcesses that reduce the use f paper in general (sending and receiving dcuments electrnically, sharing printed cpies, etc.) Paper recycling Printing in black and white Use f recycled paper Turning ff cmputers when leaving the ffice at the end f the day Lcatin f Access ffices well cnnected with public transprt Cmmitting t calculate, manage and reduce greenhuse gas emissins fr Access 4

5 Diversity Access is an equal pprtunity emplyer and des nt discriminate against emplyees r applicants n the basis f age, gender, natinality, r any ther basis that is incnsistent with the guiding values within the law f labur. Crprate gvernance Access Capital Partners is cmmitted t meeting high standards f crprate gvernance. Access Capital Partners SA is registered and authrized as AIFM, and in full cmpliance with the Autrité des Marchés Financiers f France ( AMF ), under number AMF #GP With entities in varius jurisdictins, Access hld licenses, registratins and authrizatins frm a number f natinal financial regulatrs including the Financial Cnduct Authrity ( FCA ), the FIN-FSA in Finland, r the Securities and Exchange Cmmissin ( SEC ) f the United States f America. Access cmplies with its Cde f ethics drawing frm numerus industry initiatives (AFIC/AMF Cde f Cnduct, Invest Eurpe Cde f Cnduct, New Yrk Attrney General s Public Pensin Fund Refrm Cde f Cnduct, GFSC Cde f Cnduct, FCA Standards, etc.). Philanthrpy In 2014, Access became part f the MSF mvement (Médecins sans frntiers, Dctrs Withut Brders) t help deliver medical care where the need is greatest. Team Access aims t retain and attract talented prfessinals by ffering emplyee develpment and training. Key infrmatin 7 Funds f Funds in the ESG Scpe 5 Mandates in the ESG scpe Signatry f the UN-PRI Member f the AFIC ESG Cmmissin Initiatives IC20 TEEC Label 5

6 IV. ESG PROCESS AT INVESTMENT LEVEL Access verriding bjective is t identify and mnitr the mst relevant ESG issues, bth t reduce risk and create value. As part f its standard investment and mnitring prcesses, Access has develped a 3-step apprach which integrates ESG risks and pprtunities int its investment prcess. The ESG framewrk cvers due diligence, annual prtfli mnitring and investment analysis at exit. Access Scially Respnsible Investment ("SRI") prcess articulates arund the fllwing 3 steps: Pre- investment stage / Step 1: Fr each investment under due diligence, Access undertakes an Envirnmental, Scial and Gvernance assessment with a view t identifying ptential issues. Fr fund selectin: an SRI engagement questinnaire is sent t each fund manager under due diligence t find ut whether and hw ESG criteria are taken int cnsideratin when investing in private cmpanies r assets. Infrmal discussins with the fund management team are carried ut during nsite visits t further assess the degree f recgnitin f ESG issues thrugh the imprtance f nn-financial criteria when analysing a ptential acquisitin, the existence f respnsible investment plicies (sectr exclusins, audits, etc.), and the willingness t prvide ESG related disclsure during the life f the fund / during the hlding perid f the asset fr c-investments. Reviews include n-site visits, interviews with senir management and peratinal staff and examinatin f recrds, plicies, handbks n specific items (envirnmental plicies, gvernance, health and security fr emplyees, etc.). Whenever necessary, Access wuld cmmissin ESG-related specialists t carry ut independent reviews f ESG. Further, in the legal dcumentatin, Access seeks a written engagement frm the underlying fund manager t use reasnable best effrts t incrprate ESG criteria in the management f its prtfli cmpanies and t reprt annually n the ESG perfrmance and prgress in a prtfli cmpany and t prvide Access with an update if significant ESG issue arises in a prtfli asset. Fr direct and c-investments: when evaluating a c-investment/direct investment pprtunity, Access assesses the level f ESG integratin in the lead investr s due diligence / dcumentatin. Access als identifies, thrugh a specific Access ESG checklist and discussins with the management team, the ptential ESG issues brne by the target investment. Thrugh the ESG assessment, the Investment team highlights the main ESG risks and pprtunities, ntably by cnsidering climate change and sustainable develpment related issues. In the event f Access being an existing investr in a fund managed by the lead-spnsr (mst f the cases), Access wuld have already analysed hw ESG criteria are taken int cnsideratin when the fund manager is investing in private cmpanies. A summary f the ESG analysis pre-investment stage is inserted in the due diligence dcumentatin submitted t the Access Investment Cmmittee. Objectinable industry sectrs In rder t minimize ESG related risks due t certain sectr expsure r activities that run high reputatinal risk, Access and its GPs selected tend t avid certain industry sectrs seen as incmpatible with ESG values: Gambling Prductin f r trade in arms Tbacc r tbacc related prducts 6

7 Testing n animals Endangered r prtected wildlife r wildlife prducts Prngraphy During the lifetime f the underlying fund investment/during the wnership f a cmpany/asset / Step 2: At Fund f funds level / Underlying fund ESG mnitring: An annual ESG questinnaire fr reprting n specific extra financial data fr each prtfli asset is sent t each lead investr / prtfli cmpany. The bjective is t mnitr the ESG imprvement n a yearly basis against ptential identified risks. By being systematically represented at the advisry cmmittees f the underlying funds, Access has the pprtunity t ask questins n hw the fund managers have integrated ESG issues int their investment decisins, ensure an adequate gvernance structure is in place, and encurage the fund managers t reprt n the applicatin f their wn ESG plicies. Whenever necessary, Access seeks mre infrmatin frm the GP: investment mem, envirnmental and scial / rganisatinal audits f the cmpany, adherence t cde f business principles. Further, an annual ESG questinnaire fr reprting n specific extra financial data fr each prtfli cmpany is sent t each underlying fund manager. The bjective is t assess the level f integratin f the ESG criteria within the prtfli cmpanies and mnitr the imprvement frm underlying cmpanies n a yearly basis. At direct and c-investment level / Direct c-investment ESG mnitring: When Access is an existing investr in the fund acting as the lead investr, Access receives annual ESG perfrmance infrmatin f the prtfli cmpany thrugh the annual ESG questinnaire Further, by being represented at the supervisry bard f the cmpany, either as a censr r an bserver, Access is well psitined t interact with the management team f the cmpany n ESG matters. If nt an existing investr, Access will cnduct a thrugh ESG assessment t identify and mnitr the mst relevant ESG issues, bth t reduce risk and create value. When necessary, external advisrs may be engaged t carry ut additinal ESG-related due diligence. At exit Step 3: When a divestment ccurs, Access prepares a reprt capturing the value added itself and its c-investrs regarding ESG practices during the hlding perid and the level f recgnitin f ESG aspects by the acquirer. An ESG questinnaire is sent t fund managers each time a prtfli cmpany is exited. The questinnaire aims at understanding the prgress made by prtfli cmpanies n ESG aspects during the hlding perid, and hw ESG aspects were valued by the acquirer. Additinally, there is a fllw up reprt fr direct investments t ensure an adequate applicatin f ESG practices. 7

8 The fllwing figure describes Access bjectives and tls at each step f the evaluatin f ESG issues at underlying funds and prtfli cmpanies level. Access 3-step ESG prcess Verify the sustainability value f the Manager / Fund befre making the investment decisin Imprve sustainability practices Transparent cmmunicatin t Investrs PRE COMMITMENT HOLDING PERIOD EXIT Envirnmental, Scial and Gvernance assessment with a view t identifying existing plicies in place, ptential issues and levers fr imprvements thrugh an ESG due diligence questinnaire Actively drive GP t adpt respnsible investment practices, thrugh SRI clause in legal dcumentatin Further assessment thrugh infrmal discussins during n-site visits Preliminary GP scring primary cmmitments Annual assessment f ESG perfrmance, imprvements and new initiatives taken at prtfli asset level Annual ESG survey t reprt n specific KPIs per prtfli cmpany GP scring n integratin at cmpany level - Revised annually Assess the value added by the GP regarding ESG issues during the hlding perid Evaluate the level f recgnitin f ESG by the acquirer Case studies: demnstratin f the degree f integratin at cmpany level Integratin f GP scring in the quarterly management reprts f the Fund f funds ESG Prtfli Mnitring A cmpany presenting an ESG risk enters Access watch list and discussin is autmatically engaged with the GP/lead investr. Capitalising n its psitin f meaningful investr (systematically requests and btains a bard seat fr its fund cmmitments), Access is able t influence GP s decisins, ntably by: Increasing cntrl Seeking infrmatin / disclsure f actins taken by the GP/lead investr Including the issue n the agenda f the Advisry Bard f the underlying fund Clsely mnitring the cmpany (ESG KPIs) Driving the GP t speed up the exit prcess if necessary Fr fund investments and direct investments Increased cntrl Cmpanies presenting an identified ESG risk Mnitred within Access watch list Discussin engaged with the GP Actively driving the GP t adpt risk mitigatin actin plan Speed up Exit prcess 8

9 Access plicy in case f the absence f ESG criteria in their investment guidelines When selecting a fund manager, Access pays attentin t the GP/lead investr experience and willingness t integrate envirnmental, scial and gvernance cnsideratins int investment decisin making and prtfli management. Each fund manager/fund under due diligence is prvided with a statement explaining Access' cmmitment t the Principles fr Respnsible Investment and systematically receives a specific Scially Respnsible Investment questinnaire. The questinnaire purpse is t find ut whether, and hw, the GP takes ESG criteria int accunt in the decisins related t their investments in private cmpanies. Inadequate respnses d nt necessarily result in a decisin nt t invest since the fund manager will in any case agree t recgnize, thrugh a side letter, the Access' cmmitment t the PRI Principles and use reasnable best effrts t incrprate ESG criteria t the management f the fund. There is n abslute threshld, and Access believes it s mre abut the trajectry the GP is n rather than the prcess already in place. Since 2008, Access has never cmmitted t a fund managed by a GP wh had frmally refused t engage with the ESG issue. In terms f c-investments, Access will directly review and analyse due-diligence prcesses t ensure the ESG criteria is taken int cnsideratin when investing in cmpanies. Amng Access universe f relevant fund managers, thse shwing n interest in ESG issues are nw the exceptin. Access and its GPs selected by Access tend t avid certain industry sectrs seen as incmpatible with ESG values: Gambling Prductin f r trade in arms Tbacc r tbacc related prducts Testing n animals Endangered r prtected wildlife r wildlife prducts Prngraphy 9

10 The fllwing table shws an verview f Access ESG prtfli perfrmance based n fund managers input: Overview f Access prtfli ACCESS GP ESG COMMITMENT 2016 ESG COMPANY PERFORMANCE INTEGRATION 98% f GPs Integrate ESG criteria int their investment analysis and decisin-making prcesses 98% ENVIRONMENT 50% have frmalized an envirnmental plicy vs. 49% in % have perfrmed a carbn ftprint vs.15% in % have implemented actins beynd the regulatin t reduce the envirnmental ftprint vs. 42% in 2015 REPORTING 100% f GPs reprt annually t Access via Questinnaire 65% f Access GPs have vluntarily disclsed a dedicated ESG reprt 100% 65% SOCIAL 82% have established a safety r health plan beynd any legal requirement vs. 80% in % have benefited frm a reductin f absenteeism / incident vs. 41% in % have set-up a prfit sharing system vs. 60% in 2015 HEADCOUNT: +7% in 2016 vs. +6% in 2015 GOVERNANCE 45% have implemented an ethical cde cvering bribery, human rights and mney laundering vs. 40% in

11 V. CONTACT Agnès Nahum Managing Partner Philippe Pggili Managing Partner philippe.pggili@accesscp.cm Cécile Crissant Partner Investr Relatins & Cmmunicatin ccrissant@accesscp.cm PARIS 121, avenue des Champs-Elysées Paris - France BRUSSELS IT Tw er Avenue Luise 480 Brussels 1050 Belgium LONDON Central Curt 25 Suthamptn Buildings Lndn WC2A 1AL - United Kingdm HELSINKI Bulvardi 14 A Helsinki Finland LUXEMBOURG Bulevard d Avranches L-1160 Luxemburg MUNICH Ludw ig-ganghfer-straße 6 D Grünw ald Germany 11