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Bpifrance Investissement

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.

During the due diligence process, Bpifrance Investment realizes an ESG report of the entity to be invested in when reviewing the application, by analysing 14 questions in 4 key ESG domains, and  by interviewing the entrepreneur on priority stakes according to the activity and the size of the company.

ESG Invest tool helps the investor for this analysis, proposing, by size and sector of activities, pertinent ESG issues, classified in ascending order

This report helps to:

- locate, if need be, important enough ESG issues not to invest;

- identify some (2 or 4) decisive issues for every invested entity;

- Sensitize managers and arouse an improvement process.

In addition to the risk analysis, this report is used to determine and to implement actions of improvements in cooperation with the entrepreneur. It also helps determining companies’ best practices.

This ESG analysis must be joined to every investment file and is part of the company’s evaluation. This internal approach can be completed for some files with a more exhaustive audit by an external organization.

This report’s conclusions appear in the investment memo which is submitted to the investment committee. The company’s commitment to progress takes shape in a “letter of progress” or in a corporate social responsibility clause (CSR), joined to the shareholder’s pact.

Secondly, throughout the detention of the participation, Bpifrance Investment aim to sensitize and accompany the manager, for a better consideration of the most relevant stakes in sustainable development for the company.

Managers’ support requires a follow-up through a regular dialogue with the investor, in which developments in ESG for the company are noticed.

05.3. Additional information. [Optional]

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.

We invest mostly (as regard to the number of investments per year) in small caps. So there very few available ESG public information except in the target company itself. We make our ESG opinion about the companies mostly through documents from the companies, visits in the firms, meetings with its management, and so on, all made by people in charge of investments.

We use a inhouse tool we built in 2015, and actualizedin 2018, in which we fill all the relevant information we collect (taking into account the business sector of the firm, and its size), and which gives us at the end of the process an ESG cotation of the firm.

Our processes of investment stipulate that this analysis is a part of every investment memo

PE 07. Encouraging improvements in investees (Private)

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