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Access Capital Partners

PRI reporting framework 2019

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

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Access Capital Partners’ (“Access”) commitment to Socially Responsible Investment (SRI) is deeply rooted in its conviction that sustainable growth cannot be achieved without considering the needs of customers, employees, shareholders, the environment and communities in which its portfolio companies operate. Since inception in 1999, Access' investment philosophy has favoured long-term growth of investee companies, acknowledging that Environmental, Social and Governance (ESG) issues have an impact on the financial outlook of a company and therefore on its value. Having started to formalize its ESG processes in 2007, Access has incorporated non-financial criteria into its three activities while maintaining a high level of investment standards.

Access’ overriding objective is to identify and monitor the most relevant ESG risks and opportunities, both to reduce risk and create value. As part of its standard investment and monitoring processes, Access’ ESG framework covers the three asset classes: small and mid-market buy-out, infrastructure and mezzanine & private debt. A tailored ESG framework has been developed for each of the fund of funds activity and direct/co-investment activity.

 Access is mindful of the financial sector’s role in raising awareness among decision-makers in the real economy about the challenges of climate change. 

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]

Access has developped a tailored ESG framework for each of the fund of funds activity and direct/co-investment activity. The a 3-step approach which integrates ESG risks and opportunities into its investment process covers due diligence, annual portfolio monitoring and investment analysis at exit. Access’ Socially Responsible Investment ("SRI") process articulates around the following 3 steps:

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.

Objectionable industry sectors

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: production of or trade in firearms or ammunition, direct coal production, tobacco-related products, pornography and prostitution, gambling, alcohol marketing and distribution.

During the lifetime of the underlying fund investment/during the ownership of a company/asset / Step 2:

At Fund of funds level / Underlying fund ESG monitoring: An annual ESG questionnaire for reporting on 30 specific extra financial data for each portfolio asset is sent to each lead investor / portfolio company through Access’ dedicated ESG web-based platform. The objective is to monitor the ESG improvement on a yearly basis against potential identified risks. By being systematically represented at the advisory committees of the underlying funds, Access has the opportunity to ask questions on how the fund managers have integrated ESG issues into their investment decisions, ensure an adequate governance structure is in place, and encourage the fund managers to report on the application of their own ESG policies. Whenever necessary, Access seeks more information from the GP: investment memo, environmental and social / organisational audits of the company, adherence to code of business principles. The objective is to assess the level of integration of the ESG criteria within the portfolio companies and monitor the improvement from underlying companies on a yearly basis.

At direct and co-investment level / Direct co-investment ESG monitoring: When Access is an existing investor in the fund acting as the lead investor, Access receives annual ESG performance information of the portfolio company through the annual ESG questionnaire Further, by being represented at the supervisory board of the company, either as a censor or an observer, Access is well positioned to interact with the management team of the company on ESG matters. If not an existing investor, Access will conduct a thorough ESG assessment to identify and monitor the most relevant ESG issues, both to reduce risk and create value. When necessary, external advisors may be engaged to carry out additional ESG-related due diligence.

For direct and co-investment in infrastructure: Access constantly monitor the ESG performance of its portfolio companies as part of the risk management process. ESG issues are specifically itemized for discussion. Access applies the concept of materiality when determining which ESG issues to address in its infrastructure portfolio. The materiality of ESG issues in the portfolio is assessed based on Access’ ESG materiality assessment framework, a sector-focused approach which enable the team to remain pragmatic and ensure that ESG efforts are aligned with what matters the most to the business and stakeholders.  

At exit – Step 3:

When a divestment occurs, Access prepares a report capturing the value added itself and its co-investors regarding ESG practices during the holding period and the level of recognition of ESG aspects by the acquirer. An ESG questionnaire is sent to fund managers each time a portfolio company is exited. The questionnaire aims at understanding the progress made by portfolio companies on ESG aspects during the holding period, and how ESG aspects were valued by the acquirer. Additionally, there is a follow up report for direct investments to ensure an adequate application of ESG practices.

01.6. Additional information [Optional].

          
        
I confirm I have read and understood the Accountability tab for SG 01 I confirm I have read and understood the Accountability tab for SG 01

SG 01 CC. Climate risk (Not Applicable)


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.

02.3. Additional information [Optional].

In a quest of constant improvement, Access underwent a thorough review of its ESG process alongside two ESG specialists. In order to meet the best ESG standards, Access has adapted its in-house ESG methodology using henceforth a common set of indicators at fund manager's level and 30 specific extra financial indicators to monitor ESG issues at portfolio company level. Besides, for its infrastructure activity, Access has tailored the ESG analysis by adopting sector-focused indicators for its invetsments.

To do so, the firm refers to the following principles:

  • The Guide for Limited Partners on Responsible Investment in Private Equity published by the PRI in June 2009
  • “Charte de France Invest” promoting ESG principles published in 2008
  • The ESG Disclosure Framework for Private Equity published by Invest Europe in 2013
  • Recommendations to facilitate the dialogue between GPs and LPs (common set of ESG KPIs to the management company and its portfolio companies) published by the ESG Commission of France invest in 2017
  • Walker Report
  • ILPA

In addition, the ESG team serves in the following committees:

  • The Initiative Carbone 2020 (IC20): the first long-term approach allowing private equity investors to manage and reduce the greenhouse gas emissions of their portfolio companies. IC20 is the first collective commitment by the French private equity industry in favour of the responsible and transparent management of greenhouse gas emissions by the companies of which they are shareholders. The IC20 signatories have pledged to take action to contribute to the COP21 objective of limiting global warming.
  • The ESG Commission organized by the French Private Equity Industry Association (France Invest). The ESG Commission aims at sharing with other GPs insights and evolutions with regards to ESG related issues and the production of its annual ESG reportThe ESG workshop dedicated to share best practices in order to improve communication between GPs and LPs
  • The ESG workshop dedicated to the production of the annual ESG report of France Invest

An ESG reporting for each collective Access’ Funds and some mandates (funds of funds and direct/co-investment funds) is sent on an annual basis to Access’ investors. Based on the data collected, Access analyses the answers by using its own in-house methodology. 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

The ESG reports include the assessment at fund managers and portfolio companies’ levels as well as the evolution of ESG performance. A consolidated scoring is attributed to each fund of funds / mandates.

Access’ ESG process covers 10 funds of funds and 8 dedicated mandates.

 

 


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.

Access has developed a conflict of interest policy set forth in its manual of procedures and requiring each member of the team to comply with. The objective of this procedure is to: document the definition and scope of conflicts of interest, identify situations that may yield a conflict of interest and formalize control points covering the potential risks in order to prevent them from materializing, and to solve them when they do materialize.​ Whenever a new fund is closed, an Advisory Committee, consisting of representatives of the main investors designated by Access, is appointed. The Advisory Committee is consulted by Access as often as necessary on potential and actual conflicts of interest, which Access identifies, and on any other matters as provided for by the By-Laws or determined by Access. Access’ funds Advisory committees meet twice a year. Access systematically provides full transparency to its investors as to all mandates or funds it manages. Whenever a new mandate/client is signed, or a new fund is closed, Access determines the parameters for fund allocations. In any case, Access keeps the advisory committee members and clients of its funds and mandates informed of all investments Access makes and of the allocation process.

03.3. Additional information. [Optional]

Governance structure to address other conflicts of interests

1) Potential conflict: Investments carried out by Access Capital Partners, their Directors, advisors and employees.

Procedure: Acess does not invest for its own account in Acess Group funds - nor does it invest in any other funds aside from money market funds - beyond minimal capital contributions by Access Group as founder partner of certain LPs. In addition, the Code of Ethics provides that Access Directors and employees are prohibited from investing for their own account into any:

  • of the underlying funds,
  • companies in Access fund’s portfolio
  • listed companies mentioned on the firm’s weekly Overview e-mail, or
  • other private equity, private debt or infrastructure fund.

More generally, all transactions in which a staff member would have a distinct advantage because of their function at Acess are prohibited. Any ownership by a Director or employee, mandate or outside business activity with another company must be disclosed to and authorized by the Board, as provided for in the Code of Ethics. Exceptionally, Access may take on for its own account residual positions in the portfolio of Access funds in order to enable their orderly liquidation without further delay.

Controls and formalization: All staff must declare their personal accounts upon hire, and notify the Head of Compliance of any changes. The Head of Compliance may, at any time, request any statement or relevant details on personal transactions. Such records would be sought and held by the Company Secretary. Upon hire, all staff must read and sign the Code of Ethics. Signed copies are held by the Company Secretary. On an annual basis, all staff must re-affirm significant ownership, mandates or business activities with third-party companies.

2) Potential conflict: Unfair treatment between clients brought by the different linked agent of ACP.

Procedure: ACP undertakes to respect the principle of equality between investors. Without prejudice to the rights attached to the different classes of units that would have been created for the same fund, Access refrains from favoring certain investors and undertakes to ensure that the members of the personnel treat them fairly. Sides letters communicated to all investors before the last closing of the fund.

3) Potential conflict: Investments by a co-mingled or dedicated fund advised or managed by ACP Group into another product advised or managed by ACP Group.

Procedure: Generally speaking, investing in other ACP Group funds is not permitted under the funds’ investment policy.

4) Potential conflict: Confidential information pertaining to portfolio companies acquired by ACP Group Directors or employees in the course of their professional activities.

Procedure: As provided in the Code of Ethics, Directors and staff of Access must at all times ensure the strict confidentiality of any restricted information provided by holdings or target holdings. Should any Director or employee find himself in possession of confidential information, he may not use it for any purpose other than the one for which he initially acquired such information. He must also refrain from sharing this information with any other Access' Group Director or employee without advising him of its confidential nature. For the avoidance of doubt, all rules pertaining to market abuse and the prevention thereof, and specifically related to material non-public information, must be adhered to at all times. Obligations related to confidentiality and professional secret remain in place even after the termination of the Director or employee’s ties with ACP Group.

Controls and formalization: Annual certification by employees of adherence to Code of Ethics.

5) Potential conflict: Remuneration; gifts and entertainments; outside business activities.

Procedure: Access' remuneration policy follows the professional rules incorporated in the AIFM Directive (and relevant national laws as applicable). It derives from fixed and performance-related fees paid by Access funds, as appropriate for the type of function of the employee; there is no direct remuneration paid by the GPs to any Access Director or employee. Any new or existing outside business activities or remuneration must be disclosed and are subject to approval by the Board, as provided for in the Code of Ethics. In particular, Access' Directors and employees do not act as Directors of portfolio GPs or portfolio companies. Any pre-existing ties with a holding or target holding by a Director of employee that would impair his or her capacity to make independent decisions must be disclosed to the Board. Finally, as provided for in the Code of Ethics, Directors and employees may generally not accept any remuneration, gifts or entertainment of any form in the course of their duties. Gifts which cannot be refused must be declared in writing to the RCCI. Gifts with a value under 150 euros may be kept, subject to the disclosure above. Gifts with a value of 150 euros or more cannot be kept, unless approved by the Managing Partners.

Controls and formalization: Required disclosures and approvals; annual certification by employees of adherence to Code of Ethics; list of all outside business activities of staff

6) Potential conflict: Selection of counterparties and service providers.

Procedure: Selection of service providers and counterparties is carried out via an independent process based on predetermined, objective criteria. See specific procedure (Compliance Manual Book A).
Counterparties and service providers will be re-assessed annually.

Controls and formalization: Initial and ongoing due diligence.

7) Potential conflict: Influence over decision-making

Procedure: In the funds of funds business, Access does not have any control over the investment / divestment decisions of the GPs, aside from its representation on Advisory Boards which solely allows it to provide guidance in situations where the GP has a conflict of interest. In the direct co-investment business, Access or any of its employees may be exposed to privileged information about a company that is also held by a portfolio fund: Market abuse policy will apply.

 


SG 04. Identifying incidents occurring within portfolios (Private)


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