This report shows public data only. Is this your organisation? If so, login here to view your full report.

Swedfund International AB

PRI reporting framework 2019

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

          Portfolio Director
        

Other description (1)

          Legal Counsel
        

Other description (2)

          External ESG-consultants
        

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

INVESTMENT PROCESS

Initial assessment

Swedfund annually evaluates a wide variety of investment proposals. The initial assessment examines whether the proposal is consistent with our investment strategy and criteria, and how our investment can contribute to attainment of the global goals. We carry out an overall evaluation of the country, the business and its business plan, strategic partners and our potential role. In every investment that we make, our role must be additional, which means that we provide resources which are crucial to the development of the business that would otherwise not have been available.

Concept clearance

After the initial assessment, the investment team draws up a proposed decision, the “concept clearance”, which is then presented to Swedfund’s Investment Committee. Swedfund’s Investment Committee, which has both an advisory and a decision-making role, decides whether to proceed with the investment proposal and carry out an in-depth analysis. The Investment Committee is chaired by Swedfund’s CEO and includes an investment manager, a director of strategy & communication, a director of special operations, a chief lawyer and a senior expert in sustainable development. The investment Committee and the investment team discuss the key risks in the investment which must be analysed during the due diligence process.

Due diligence

If the committee decides to proceed, the investment proposal will proceed with a due diligence. A thorough analysis is then carried out in which many different factors are examined, including the business concept, business plan, market, financial history and forecast, investment calculation, partners, legal aspects, expected societal development results and sustainability risks and impacts, including the environment, employment conditions, human rights and corruption. During the due diligence phase, the investment team meets representatives of different functions of the company in order to gain a deeper understanding of the company and the processes, routines and documents that they have shared with Swedfund. If necessary, external expertise is hired to examine specific issues. Before the meeting, the company will be asked to complete a comprehensive questionnaire on environmental, social and corporate governance related issues. The due diligence process forms the basis for the information that is used in the decision-making process. This includes an ESG Action Plan (ESGAP), which sets out the applicable requirements and also forms part of the investment agreement. It describes the changes or actions that the company need to implement in order to meet Swedfund’s sustainable development requirements.

Screening

When the due diligence process is completed, a screening meeting will take place during which the Investment Committee will decide whether the investment meets our requirements and is ready to be presented to Swedfund’s board of directors. If the investment is not approved at this stage, it may be because new information came to light during the due diligence process. It is not uncommon for new questions to be raised, which the team then examines in the final stage of the due diligence process. From 2018 onwards, we have also established a clear strategy for exiting investments.

Decision by the board of directors

The initial phase is concluded with the investment team presenting the investment proposal to Swedfund’s board of directors, which then reaches a decision. If the investment is given the go-ahead, an agreement will be negotiated. The investment agreement includes not only legal conditions, but also sustainability and reporting requirements.

Active ownership 

Once the agreement has been signed and the funds have been disbursed, the work that was begun earlier during the investment phase will continue. We work actively and continuously with our portfolio companies, focusing on commercial and sustainability issues which were identified during the due diligence phase. During the period for active management, which usually extends over 7-12 years, an ongoing dialogue and close contact are maintained with the portfolio companies in order to monitor their performance, goal attainment and contractual conditions, both through visits, active board work and dialogue and through their annual report (the Swedfund Sustainability Report). Both internal audits and third-party audits are conducted. The Senior Investment Manager is responsible for following up and ensuring that the companies comply with the agreed conditions, relevant parts of our policies and ESGAP. Within a three-year period from the date of disbursement, companies must achieve Swedfund’s strategic sustainability goals. To help companies attain these goals, we can allocate funds in the form of Technical Assistance (TA), which can for example be used for training or consultancy.

Exit phase

Swedfund is a long-term financing institution, but it is not a permanent owner. We end the investment and the partnership either through selling our shareholding, through repayment of the loan or through expiry of a fund’s term.

The exit phase generally starts when Swedfund considers the goals that were established for the investment to have been achieved or when we cease to be ‘additional’. Selling a portfolio company on the markets in which Swedfund operates is not the same as selling a company in Europe. Much more effort is required, as established processes are often lacking. In most cases, custom solutions are necessary in order to find a buyer and Swedfund often plays an active role in finding a solution in this context.

Ahead of the exit process, the portfolio company is analysed on the basis of Swedfund’s three pillars. During this process, we consider whether further initiatives are necessary. An exit report is prepared for each closure, where we analyse what we have learned and what relevant knowledge and experiences we can take with us into future investments. The report will also clearly explain how the investment has taken into account our three pillars. Everything in one step to ensure a responsible exit.

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

23 Number

07.4. Additional information. [Optional]

23 out of 41 in total, this includes personal in the Investment Organisation and Legal function 

 

I confirm I have read and understood the Accountability tab for SG 07 I confirm I have read and understood the Accountability tab for SG 07

SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Investment Committee

Other Chief-level staff or head of department

Portfolio managers

Investment analysts

Dedicated responsible investment staff

External managers or service providers

Other role, specify (1)

Other description (1)

          Legal counsel
        

Other role, specify (2)

Other description (2)

          Other role, specify (2)
        

07.6 CC. For board level roles for which have climate-related issues oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

Swedfund’s Board of Directors take the final investment decision, after which a legal agreement is negotiated. The Board has also approved and signed our (i) Sustainability Policy, (ii) Position Paper on Climate Impact and (iii) Report on Climate Risks and Opportunities 

07.7 CC. For the management-level roles that assess and manage climate-related issues, provide further information on the structure and process involved.

Climate-related issues are assessed and managed the same way as any other issues as a part of the investment process, please see SG 07.2 for more detailed information.

07.8 CC. Explain how the organisation engages external investment managers on the TCFD recommendations and its implementation.


SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

  • The board visited Ghana together with the CEO and members from the senior leadership of Swedfund with the purpose to achieve greater knowledge about responsible investments and Swedfunds' work within its three pillars social impact, sustainability and financial viability (please see further details in OO11.4). They increased their knowledge and skills within the field of private sector development, sector financial services and society at large.
  • Swedfund’s Board engaged in a session related to The United Nations Guiding Principles on Business and Human Rights (UNGPs) during which results of an external Human Rights study was presented to the Board.

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO), Investment Committee

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other C-level staff or head of department

          Investment/portfolio Director
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Portfolio managers

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investment analysts

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Dedicated responsible investment staff

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Other role (1) [from SG 07]

          Legal Counsel
        

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

Portfolio managers are responsible for the fulfillment of Swedfund's strategic Sustainability targets for each individual investment. The strategic sustainability targets should be fulfilled within three years from investment time which is followed up annually. On an aggregated portfolio level it is the Investment Directors who are responsible for the ESG performance and progress on the entire portfolio. 

Please see section SG 05-06 for RI objectives & progress, and Swedfund's strategic sustainability goals. Please see section SG 07.2 for investment process. 

Swedfund does not apply/pay bonuses. 

08.4. Describe the level of experience board members/trustees/chief-level staff have with incorporating ESG factors into investment decision-making processes.

          Swedfund’s owner directives states that it should focus equally on ESG factors as on impact and financial factors when conducting responsible investments. In December 2016, the owner directives were extended to for the first time include indictors on tax revenues, CO2 emissions, number of women in leading positions, additionality and requested reporting on these indicators on portfolio level.  

Swedfunds board composition changed with new board members in April 2017 having a solid background in ESG aspects and impact on society.  

ESG factors are included as one of three pillars in Swedfunds business model. When an investment is proposed to the board, ESG aspects of that investment is thoroughly described and evaluated. Evaluation of ESG aspects is a prerequisite for the board when deciding on a new investment.  

ESG factors are included as one of three pillars in Swedfunds business model. ESG-aspects are summarized in an ESGAP which is legally binding for the investees. Actions on the ESGAP is follow up regularly and the investee companies annually report on their work within the ESG-area which is reported in Swedfunds Integrated Report, where ESG-results are audited with the same level of authority as financial results. The Integrated Report is decided on by the board.
        

Top