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Access Capital Partners

PRI reporting framework 2019

You are in Direct – Private Equity » Pre-investment (selection)

Pre-investment (selection)

PE 05. Incorporating ESG issues when selecting investments

05.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

05.2. Describe your organisation's approach to incorporating ESG issues in private equity investment selection.

For fund selection, Access’ ESG due diligence articulates around the following points:

Pre- investment stage / Step 1: For each investment under due diligence, Access undertakes an Environmental, Social and Governance assessment with a view to identifying potential issues.

For fund selection: an SRI engagement questionnaire is sent to each fund manager under due diligence to find out whether and how ESG criteria are taken into consideration when investing in private companies or assets. Informal discussions with the fund management team are carried out during onsite visits to further assess the degree of recognition of ESG issues through the importance of non-financial criteria when analysing a potential acquisition, the existence of responsible investment policies (sector exclusions, audits, etc.), and the willingness to provide ESG related disclosure during the life of the fund / during the holding period of the asset for co-investments. Reviews include on-site visits, interviews with senior management and operational staff and examination of records, policies, handbooks on specific items (environmental policies, governance, health and security for employees, etc.). Whenever necessary, Access would commission ESG-related specialists to carry out independent reviews of ESG.

Further, in the legal documentation, Access seeks a written engagement from the underlying fund manager to use reasonable best efforts to incorporate ESG criteria in the management of its portfolio companies and to report annually on the ESG performance and progress in a portfolio company and to provide Access with an update if significant ESG issue arises in a portfolio asset.

For direct and co-investments: when evaluating a co-investment/direct investment opportunity, Access assesses the level of ESG integration in the lead investor’s due diligence / documentation. Access also identifies, through a specific Access’ ESG checklist and discussions with the management team, the potential ESG issues borne by the target investment. Through the ESG’ assessment, the Investment team highlights the main ESG risks and opportunities, notably by considering climate change and sustainable development related issues. In the event of Access being an existing investor in a fund managed by the lead-sponsor (most of the cases), Access would have already analysed how ESG criteria are taken into consideration when the fund manager is investing in private companies.

A summary of the ESG analysis pre-investment stage is inserted in the due diligence documentation submitted to the Access Investment Committee. Each fund manager / co-lead investor is given a score reflecting the level of integration of ESG criteria and the companies’ actions and new initiatives with regards to ESG issues. Access recognises three levels for assessment:

Level 1: the fund manager / co-lead investor fully meets responsible investment principles
Level 2: the fund manager / co-lead investor essentially meets responsible investment principles
Level 3: the fund manager / co-lead investor barely meets responsible investment principles

 

 

05.3. Additional information. [Optional]

In order to minimize ESG related risks due to certain sector exposure or activities that run high reputational risk, Access and its GPs selected tend to avoid certain industry sectors seen as incompatible with ESG values:

  • Gambling
  • Production of or trade in arms
  • Tobacco or tobacco related products
  • Testing on animals
  • Endangered or protected wildlife or wildlife products
  • Pornography

PE 06. Types of ESG information considered in investment selection

06.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

06.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

Analyses of ESG risks & opportunities are embedded in the following document:

STEP 2: document consisting in a detailed presentation prepared by the Investment team and providing with a more advanced ESG assessment of value creation opportunities or risks for potential investments. The “step 2” documentation is used to support the Investment Committee in its final decision. Each investment memorandum includes a specific section dedicated to ESG information which covers the integration of ESG principles within the management company and its targeted investments, compliance to principles or initiatives. It also assesses which indicators are evaluated and how ESG is implemented in decision making, reporting and monitoring processes.

Legal documentation: written engagement from the underlying fund manager to use reasonable best efforts to incorporate ESG criteria in the management of its portfolio companies and to report annually on the ESG performance and progress in a portfolio company and to provide Access with an update if significant ESG issue arises in a portfolio asset.

 


PE 07. Encouraging improvements in investees (Private)


PE 08. ESG issues impact in selection process (Private)


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