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Swen Capital Partners

PRI reporting framework 2018

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

01.3. Indicate if the investment policy covers any of the following

01.3a CC. Describe how your products or investment strategy might be affected by the transition to a lower-carbon economy.

Risks related to climate change are separated in two categories: physical risks and transition risks.

  • Physical risks that come about from climate change include increased temperatures, the reduction of water resources, extreme weather events, rising sea levels (etc.) These risks are separated into sub-categories: exposure to trend risk (temperature and water level), exposure to extreme events, and resilience in the face of risks.
  • Transition risks that arise as a result of the transition to a low-carbon economy (mixed energy, evolution in regulations and technologies, evolution in the preferences of consumers, tensions in supply chains, etc.).

The asset classes in which SWEN CP invests in are exposed to physical and transition risks to varying degrees. Some underlying companies, like infrastructure assets, are likely to contribute to climate change while others can bring concrete solutions. This is particularly the case in infrastructure, where the financing of new cleaner energy and transport facilities is a major lever for contributing to the energy transition.

01.3b CC. Describe how climate-related risks and opportunities are factored into your investment strategies or products.

As the assets in the portfolio are inherently illiquid (the average holding period is between 5 and 15 years in private equity and infrastructure), the reduction of risks linked to the climate can take only two complementary forms:

  • Asset management companies committing to be vigilant about the climate issues pertaining to each asset in their portfolio, and, even improve their climate performance during the detention period.
  • Investing in new "virtuous" funds or assets that, year after year, reduce the average level of risk in the SWEN CP portfolio. This axis is divided into two complementary investment strategies:
    • Each new fund of funds managed by SWEN CP will allocate a fraction of its resources to "green" assets, i.e. specialized investments in the financing of solutions for the ecological transition. The target strategic allocation will be decided before each fundraising period and will be presented to investors in all fundraising documents.
    • Asset management companies will be required to exclude coal through side letters, more specifically:
      • Coal-powered plants.

      • Coal mines for thermal purposes (electricity production).

      • For diversified assets, they may only be eligible if they meet the following criteria:

        • Electricity generating stations and heat networks: coal accounts for less than 30% of the total energy production, or the electricity or heat emission factor is less than 500 gCO2e / kWh (average of emission factor of global electricity production).

        • Conglomerates: the turnover of coal-related activities (extraction, processing, etc.) is less than 20% of the total turnover of the asset.

Finally, since 2017 SWEN Capital Partners is supported in the implementation of its Climate Strategy by an independent climate expert. The latter is solicited on an ad-hoc basis, depending on the materiality level of climate-related risks and opportunities of any given investment opportunity, to provide SWEN CP with specific highlights.

01.4. Describe your organisation’s investment principles and overall investment strategy, and how they consider ESG factors and real economy impact.

SWEN CP is convinced that adopting a responsible approach in its investments is likely to create more value for all the stakeholders: the company, its employees, its shareholders and the civil society.

SWEN CP undertakes, in its investments, to be a responsible player in the long-term financing of the economy and includes environmental, social and governance (ESG) criteria in its investment analysis and monitoring processes.

SWEN CP’s investment principles and values are reflected in its investment strategies. Thus, SWEN CP has firstly elaborated and implemented its responsible investment policy then, more recently enforced its climate strategy into its whole investment process (after having conducting a carbon-footprint assessment of its funds). Moreover, impact investing is also strongly promoted. For each fund managed by SWEN Capital Partners a specific asset allocation is targeted for sustainable investments which have positive social and environmental impacts. For each fund managed by SWEN Capital Parnters, a specific amount is allocated to sustainable investments (impact investing). These sustainable investments have a positive social and/or environmental impacts.

SWEN Capital Partners’ responsible investment policy will be updated in 2018 taking into account Sustainable Development Goals.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]


SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL/Attachment

02.3. Indicate if your organisation’s investment principles, and overall investment strategy is publicly available

02.4. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

SWEN CP has formalised a specific policy regarding the prevention and management of potential conflicts of interest, in compliance with applicable laws. This policy has been set up by the Compliance and Internal Control Officer. The latter is responsible for overseeing its implementation and the respect of the rules and procedures enacted in it.

Regarding conflicts of interest prevention, employees are committed to comply with SWEN CP’s code of ethics and are subject to compliance rules regarding transparency (personal transactions, external mandates, gifts received, etc.). SWEN CP’s code of ethics refers directly to the ethical guidelines of professional associations (France Invest, AFG, Invest Europe). Moreover, before any new investment, each member of the investment team is required to fill in a questionnaire assessing potential conflicts of interest. 

Each co-investment must be in compliance with SWEN CP's co-investment Charter. The later rules the distribution of invesment among the different investment vehicles (with overlaping investment strategies) managed by SWEN CP. The co-investment Charter is frequently reviewed.

Finally, the company has established a risk mapping in order to identify potential conflicts of interest situations. It is reviewed annually.

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios

04.1. Indicate if your organisation has a process for identifying and managing incidents that occur within portfolio companies.

04.2. Describe your process on managing incidents

          In 2016, SWEN CP has defined and rolled out a monitoring process of ESG incidents. This process formalizes, consolidates and deepens existing practices. It has been set up in a way that covers each step of investment (due diligence, monitoring, reporting), each investment strategy (co-investment, primary and secondary activities) and for a majority of the asset under management (selected according to the level of materiality). 

The monitoring of ESG incidents is conducted by the SWEN CP’s ESG team with the support of classic monitoring tools (Google Alerts, press review, etc.) and using a database to assess the risk exposure of individuals as well as organisations (Worldcheck). It also benefits from the expertise and resources of OFI AM’ SRI Team which follows-up, on behalf of SWEN CP, a specific listing of underlying assets. Moreover, during the pre-investment process (due diligence), an ESG background checking is also carried out to identify any incident affecting the asset managers (or lead GP), the underlying portfolio assets invested by the target fund (or the co-investment) and their key executives. SWEN CP has also defined a specific pool of portfolio companies (based on their weighting in portfolios) to perform an ongoing monitoring (daily check). Depending on the level of severity of each incident, procedures have been set up. They range from emails to our investment team to meetings with investment managers (lead investor side) to better understand the causes of the incident, how it has been managed and the measures implemented to prevent a new occurrence. In the case of a particularly incident that could impact their reputation, SWEN CP’s clients will be warned as soon as possible. In other cases they will be informed through quarterly “ESG incident” reporting (gradually implemented in the course of 2017). Thus, the monitoring of ESG incidents is an efficient mean to engage a dialogue with our General Partners on ESG topics and a good way to keep them up to date about the recent improvements of our Responsible Investment policy. 

Finally, we report quarterly to our clients on ESG incidents. These reporting are made for every fund of funds managed by SWEN CP and send to our clients. They highlight ESG incidents with a significant level of severity in order to provide our clients with context and explanations from a public source (mostly press articles) and from the relevant General Partners which have an access to the management the concerned company.
        

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