The assessment and mitigation of environmental, social and governance (ESG) risks are an integral and necessary consideration of our due diligence processes for each investment and go beyond simply complying with the applicable environmental laws and other permitting procedures. Our Investment Committee must approve all potential investments against our ESG-parameters and policy and any breach prevents us from making an investment.
1. Environmental. These considerations are a key factor for renewable energy projects. A thorough environmental impact assessment (EIA) is required in order to procure the permits/licences to build and operate wind, solar, hydro in all European jurisdictions. We have undertaken to comply with the EU EIA Directive and apply it to investments in the EU and will apply to investments outside the EU if relevant in the future. We are particularly sensitive to potential impacts on the habitat, air and water, especially if the area is a Natura 2000 site. Assessments generally cover the following areas;
- Flora and fauna
- Birds, bats and aquatic biodiversity
- Soil and water/ water flow
2. Social. We take due consideration of social issues involved in our investment decisions and management of portfolio companies. Local communities are closely involved in the permitting phase of the projects we invest in and under EU-standard permitting procedures local citizens have a right to participate in the procedure and often lease the land benefiting economically during the life of the project. Many of the projects in which we invest do not have employees. We tend to outsource operations, which are typically contracted competitively under international, project-finance standard terms. When we outsource operations or engage contractors, we ensure local employees are engaged when possible and as appropriate, for instance in operations and maintenance and security of the projects we invest in. We always insist that all applicable employment laws and health and safety regulations are duly observed. Moreover, in corporate investments, where the investee company has employees, we closely monitor that such investee company adheres to all applicable employment laws and health and safety regulations and all employee rights are respected. Quarterly board meetings will review such issues.
3. Governance. We seek to address and resolve any material governance issues prior to investing. Investment structures ensure control and accountability is maintained of our ownership interest in our targets so that we can implement straight forward direction and governance systems. Structures are established to ensure that interests between parties are aligned and where necessary independent non-executive directors are sought. We will abandon discussions over a prospective transaction if we have any doubts over the integrity or practices of a counterparty and we may initiate a forensic review as a safeguard in this regard. Impax’s compliance team complete checks on suppliers, service providers and counterparties engaged during sales and exit processes to comply with anti-monitoring laundering requirements and policies are in place at subsidiary company levels.