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Swedfund International AB

PRI reporting framework 2019

You are in Direct – Private Equity » Post-investment (monitoring)

Post-investment (monitoring)

PE 09. Proportion of companies monitored on their ESG performance

09.1. Indicate whether your organisation incorporates ESG issues in investment monitoring of portfolio companies.

09.2. Indicate the proportion of portfolio companies where your organisation included ESG performance in investment monitoring during the reporting year.

 (in terms of total number of portfolio companies)

09.3. Indicate ESG issues for which your organisation typically sets and monitors targets (KPIs or similar) and provide examples per issue.

ESG issues

List up to three example targets of environmental issues

Example 1

          Implementation of ESG Management System. Please refer to  section SG 05-06
        

Example 2 (optional)

          
        

Example 3 (optional)

          
        

List up to three example targets of social issues

Example 1

          Adherence to ILO Core Conventions, please refer to section SG 05-06
        

Example 2 (optional)

          
        

Example 3 (optional)

          
        

List up to three example targets of governance issues

Example 1

          Implementation of Anticorruption Management System. Please refer to section SG 05-06
        

Example 2 (optional)

          
        

Example 3 (optional)

          
        

09.4. Additional information. [Optional]


PE 10. Proportion of portfolio companies with sustainability policy

10.1. Indicate if your organisation tracks the proportion of your portfolio companies that have an ESG/sustainability-related policy (or similar guidelines).

10.2. Indicate what percentage of your portfolio companies has an ESG/sustainability policy (or similar guidelines).

(in terms of total number of portfolio companies)

10.3. Additional information. [Optional]

Please see section Strategy and Governance 


PE 11. Actions taken by portfolio companies to incorporate ESG issues into operations

11.1. Indicate the types of actions taken by your portfolio companies to incorporate ESG issues into operations and what proportion of your portfolio companies have implemented these actions.

Types of actions taken by portfolio companies

Implemented by percentage of portfolio companies

(in terms of total number of portfolio companies)

Implemented by percentage of portfolio companies

(in terms of total number of portfolio companies)

Implemented by percentage of portfolio companies

Implemented by percentage of portfolio companies

          Emergency readiness (incl. in the ESMS)
        

(in terms of total number of portfolio companies)

11.2. Describe how your organisation contributes to the portfolio companies’ resourcing and management of ESG issues.

Swedfund aims to contribute to the creation of businesses which are viable in the long term, and therefore requires portfolio companies to establish a management system for environmental and social issues. In conjunction with the initial analysis of a prospective investment, an assessment is made to determine whether a management system is in place. If this is not the case, the scope to bring about improvements is evaluated. If Swedfund opts to proceed with an investment, the requirements for improvements are tied to the financial conditions for the disbursement of funds.

A sustainable development policy must be established and adopted by the management of the portfolio companies. The sustainable development policy lays the foundations for the way in which a business must approach sustainable development, and it is vital that it does not simply become a desk exercise, but is also implemented in the portfolio companies’ operations. The implementation of a management system for sustainability issues is an important step to ensure that the policy is implemented and established.

To determine whether a portfolio company meets the strategic sustainability goal, Swedfund uses monitoring to determine whether the portfolio company has implemented a management system and, if so, whether it includes the relevant components:

  • SUSTAINABILITY POLICY A sustainability policy must be established and adopted by the management of the portfolio companies.
  • IDENTIFICATION OF RISKS AND IMPACTS A system/routine must be established in order to identify sustainability risks and the areas that are affected.
  • PERFORMANCE MANAGEMENT The company's results within identified risks and impact areas must be continually monitored and evaluated in order to measure and improve results over time.
  • RESPONSIBILITY AND COMPETENCE A member of the company’s management team must have overall responsibility for sustainable development issues.
  • EMERGENCY PREPAREDNESS In the case of fixed installations, action plans must have been established for accidents and disaster situations.
  • REPORTING Reporting must take place regularly and at least annually both to the management and to the board of directors of the portfolio company, as well as to Swedfund.
  • STAKEHOLDERS Internal and external stakeholders must be identified and consulted in situations which affect them and be given relevant information at appropriate times and intervals.

 


PE 12. Type and frequency of reports received from portfolio companies

12.1. Indicate the type and frequency of reports you request and/or receive from portfolio companies covering ESG issues.

Type of reporting 

Typical reporting frequency 

Typical reporting frequency 

12.2. Describe what level of reporting you require from portfolio companies, and indicate what percentage of your assets are covered by ESG reporting.[OPTIONAL]

ESG data is collected through Swedfund Portfolio Company Annual Sustainability Report which is sent out to all Swedfund's portfolio companies. The questionnaire is modified for Direct investments, Financial Institutions and Funds, to follow up on the companies performance in relation to ESG and Development effects. 


PE 13. Disclosure of ESG issues in pre-exit

13.1. Indicate whether during the reporting year your organisation disclosed information on ESG issues to potential buyers prior to exit for private equity investments.

13.2. Apart from disclosure, describe how your organisation considers ESG issues at exit.

Sometimes it is a challenge to make a partner adapt their activities to match Swedfund's requirements for sustainability and a positive impact on society. However, awareness and demands for sustainability are increasing. When Swedfund has decided to sell a portfolio company, it will be valued by an independent third party. The exit will be made on market conditions and there has to be a buyer. The best option is often to sell the shares to the company's main owner.

No matter who the buyer is, the principles are the same as when Swedfund entered the deal: The buyer shall meet Swedfund's ambitions, goals and investment terms. If a third party buys our share, we will check the buyer to investigate that their activities are consistent with Swedfund's values. That increases the likelihood that the company will continue doing business in accordance with Swedfund's sustainability targets. What happens once Swedfund has sold the company is unfortunately not something we can control. However, there is an opportunity to provide specific funding to safeguard high ESG standard even after Swedfund’s exit. Recently Swedfund has specifically developed our approach on Human Rights in an exit situation.

13.3. Additional information.


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