First SWEN Capital Partners is a long term investor as we hold our assets on average between 4 to 15 years. Aware that failure to take account of environmental issues may adversely affect long-term financial performance, SWEN CP aims to respond to the challenges of the Energy and Environmental Transition by identifying potential devalued assets and other related opportunities.
The asset classes in which SWEN CP invests in are exposed to climate and transition risks to varying degrees. Some underlying companies, like infrastructure assets, are likely to contribute to climate change while others can bring concrete solutions. This is particularly the case in infrastructure, where the financing of new cleaner energy and transport facilities is a major lever for contributing to the energy transition.
In order to demonstrate its commitment to climate change in particular, SWEN CP has supported several initiatives as iC20 (Initiative Climat 2020) and the TCFD.
Before setting objectives for its climate strategy, SWEN CP decided to conduct a clear diagnosis of its funds exposed to climate risks (both physical and/or transitional). It undertook the task of creating a climate risk map with the help of several consultants. Faced with various difficulties in the first years, SWEN CP decided to concentrate its efforts mainly on measuring the carbon footprint for various reasons (linked to transition risks and also Carbon footprint is emerging at all levels of the economy as a standard of communication between companies and their funder).
The results of this mapping make it possible to identify and understand main risk areas and SWEN CP’s attainable goals using performance indicators (carbon intensity, carbon emissions financed, and for infrastructure assets carbon intensity avoided by comparing the performance of the portfolio assets against a baseline reference point).
As a result of this diagnosis, SWEN CP can communicate to its institutional investors and put in place a dialogue/ raise awareness to managers of their funds in their portfolio that contribute the largest carbon footprint. The aim is to raise awareness of these issues, to promote best practices in this field, and to encourage the actors concerned to implement action plans (in line with the TCFD's recommendations). Following this diagnostic, SWEN CP decided to set up a Climate Strategy in 2017 in order to factor into its investment strategies climate risks and opportunities. SWEN CP committed on several points :
- Each new fund managed by SWEN CP will allocate a fraction of its resources to "green" assets, i.e. specialized investments in the financing of solutions for the ecological transition
- For each investment in funds, asset management companies will be required to plan a meeting with SWEN CP's ESG team in the 18 months following SWEN’s investment
- The list of exclusions has been extended to the following sectors: Coal-powered plants; coal mines for thermal purposes. For diversified assets (Electricity generating stations, heat networks and conglomarate), thresholds have been put in place (% of coal in the total mix, electricity or heat emission factor, turnover).