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Zouk Capital

PRI reporting framework 2019

You are in Direct - Infrastructure » Pre-Investment (Selection)

Pre-Investment (Selection)

INF 05. Incorporating ESG issues when selecting investments

05.1. Indicate if your organisation typically incorporates ESG issues when selecting infrastructure investments.

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

Zouk has identified six key points at which ESG considerations are critical. This helps us to apply a holistic approach to ESG throughout the investment cycle.

Below is an illustration of how Zouk considers ESG through the investment cycle: 

Initial screening: Zouk applies ESG considerations from its initial screening of investment opportunities. Whilst performing an initial assessment of any company, platform or project, Zouk will immediately decline any investment that does not pass through the Ethical Investment Exclusions Policy.

Due Diligence: During due diligence, Zouk further consider the value proposition and risk assessment of the ESG evaluation. At this point, Zouk conduct a Sustainable Impact Assessment and an ESG Risk Assessment. This serves two main purposes:

1. Confirms the sustainable impact potential of a Company or Project determining 1) adherence to Zouk’s investment thesis and 2) scope and scalability of the value creation across ESG considerations

2. Helps to identify the potential ESG-related risks associated with an investment and conclude if there is an appropriate mitigation / need for an action plan

Investment Decision: If the deal is brought to the Investment Committee, the deal team will present the assessment and findings from the ESG due diligence as part of the discussion. These considerations form a key part of the final investment decision.

The Sustainable Impact Assessment findings indicate what the ESG merits of the investment are, in particular highlighting how these might extend the value proposition of an investment beyond financial considerations.

The ESG Risk Assessment findings identify to the Investment Committee any relevant and material ESG-related risks and propose mitigations for these and / or the need and suggestions for an action plan.

Investment Agreement: Following the investment decision, the deal team will take into account all due diligence findings and recommendations from the Investment Committee in order to finalise the documentation for the transaction. Where appropriate, the documentation will integrate a section on ESG in order to formalise a policy.

Such an ESG “Action Plan” may govern the ESG measures that need to be put into place and the timeframe the Company will have to implement these.

Monitoring: Following investment, ESG remains a key focus throughout Zouk’s ownership. Zouk seek to monitor all the key impact criteria that were identified through due diligence and documentation. It is often the case that the ESG performance criteria are closely correlated with some of the key performance indicators (“KPIs”) for a business.

 


INF 06. ESG advice and research when selecting investments (Private)


INF 07. Examples of ESG issues in investment selection process

07.1. Indicate which E, S and/or G issues are typically considered by your organisation in the investment selection process and list up to three typical examples per issue.

ESG issues

List up to three typical examples of environmental issues

          Renewable - as per our investment mandate, potential investments have to have a renewable / sustainable angle for us to consider them
        
          Energy efficiency and/or recycled waste processed depending on specific investment
        
          
        

List up to three typical examples of social issues

          Equality - we look for companies that have diverse representation between genders and backgrounds at senior management level.
        
          Community involvement - where relevant, we look for the community around one of our investee companies to be actively involved.
        
          ABC policies - We look for our companies to have strong anti-bribery and corruption policies in place
        

List up to three typical examples of governance issues

          Committees - we look for Boards of our investee companies to have appropriate committees with appropriate representation established
        
          Data protection - we ensure all of our investee companies apply the highest level of data protection to any data they hold
        
          Contractors - When negotiating with contractors we ensure that contracts require them to consider the  source of all materials and work environment for their employees.
        

07.2. Additional information. [Optional]

Social – We consider health and safety on all projects and closely monitor this during construction and throughout the operational life of the assets. All infrastructure assets are required to comply with industry standards to ensure operational safety.

Governance – Shareholder and board structure are considered on investment, where there is a minority shareholder independent Directors are appointed if required to maintain corporate governance requirements.

 


INF 08. Types of ESG information considered in investment selection (Private)


INF 09. ESG issues impact in selection process (Private)


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