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PRI reporting framework 2017

You are in Direct - Infrastructure » Pre-investment (selection)

Pre-investment (selection)

INF 08. Incorporating ESG issues when selecting investments

08.1. Indicate if your organisation typically incorporates ESG issues when selecting infrastructure investments.

08.2. Describe your organisation's approach to incorporating ESG issues in infrastructure investment selection.

Ardian is committed to integrating ESG in all of its investments activities, while taking into account their specificities in order to ensure an appropriate and effective approach. With the support of the CSR team, each investment team is ultimately responsible for implementing this policy during the different phases of the investment process. Pre-due diligence phase: Preliminary screening ensures that the investment team avoids investing in sectors which are explicitly listed as being banned by Ardian's CSR Charter.  

Due diligence

The investment team systematically carries out an ESG analysis while taking into account the fund's (or mandate's) strategy as well as the specificities of each opportunity, with the support of the CSR team and ESG consultants when necessary.

 For direct investments in Infrastructure (majority shareholder or significant minority): due diligence is based on the establishment of a dialogue with the management team and onsite visits of the company, in order to identify and assess key ESG issues and understand how they are taken into account by the management team. Depending on the industry sector and initial discussions with management, the investment team may decide to hire an external consultant to carry out environmental, social or ESG audits.

 When Ardian is a minority shareholder: The investment team carries out the ESG analysis in two phases. First of all, the investment team evaluates the lead sponsor according to ESG criteria. Secondly, the investment team assesses the business itself based on: 1) the buyers and vendors due diligence packages, 2) dialogue with the management of the company and / or the lead sponsor, depending on the configuration of the transaction

Investment decision

A summary of the ESG analysis is then included in every investment memorandum submitted to the Investment Committee who is ultimately responsible for the investment recommendation. Depending on whether material ESG risks are identified in the due diligence phase, a corrective action plan can be included in a post-acquisition plan.

INF 09. ESG advice and research when selecting investments

09.1. Indicate whether your organisation typically uses ESG advice and research sourced internally and/or externally when incorporating ESG issues into the infrastructure investment selection process.

          Investment team
          CSR team
          Compliance & Risk team
          ESG consultants

09.2. Additional information.

INF 10. Examples of ESG issues in investment selection process

10.1. Indicate which E, S and/or G issues are typically considered by your organisation in the investment selection process and list up to three typical examples per issue.

ESG issues

List up to three typical examples of environmental issues

          Water and Energy consumption practices/policy
          Waste management practices/policies
          Pollution risks

List up to three typical examples of social issues

          Health and Security (absenteeism, accident rate, ratio of women in staff and at executive positions, disabled people, etc.).
          Training and career development
          Alignment of interests and compensation practices/policy (incentives, profit sharing schemes, etc.).

List up to three typical examples of governance issues

          Anti-bribery practices and policy
          Presence of Compensation and Audit Committees and of transparent management compensation policies
          Community and stakeholder engagement

10.2. Additional information. [Optional]

INF 11. Types of ESG information considered in investment selection

11.1. Indicate what type of ESG information your organisation typically considers during your infrastructure investment selection process.

11.2. Additional information.

INF 12. ESG issues impact in selection process

12.1. Indicate if ESG issues impacted your infrastructure investment selection processes during the reporting year.

12.2. Indicate how ESG issues impacted your infrastructure investment deal structuring processes during the reporting year.

12.3. Additional information.

During deal structuring, Ardian seeks to establish conditions that will improve management of ESG-related issues. Some of the most relevant ESG-related recommendations stressed during due diligence are put into practice through shareholders' agreements, control schemes and asset management packages. They may address governance structure's adjustments to secure avoidance of potential conflict of interests, or any other material ESG risk or opportunity identified during due diligence. Ardian always favours the establishment of a dual governance model with a Board of Directors and a Supervisory Board in which qualified external members seat, as well as the creation of Remuneration and Audit Committees in a bid to boost transparency policies. ESG-related considerations may also refer to compensation policy, to the quality of health and security management systems, or to the strengthening of security processes to circumvent pollution risks.