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Naxicap Partners

PRI reporting framework 2019

You are in Direct – Private Equity » Pre-investment (selection)

Pre-investment (selection)

PE 05. Incorporating ESG issues when selecting investments

05.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

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

All investment memorandums include a pre-investment ESG analysis. The pre-analysis highlights the main ESG risks, opportunities and recommendations and is considered when making an investment decision. The ESG analyses are conducted based on both financial and extra-financial data. Our investment teams have access to specific sector reports, annual reports, studies from industry experts as well as a general guide created by Naxicap Partners’s ESG team covering the main material issues of each sector. 

ESG due diligences are mandatory pre-investment. The due diligences, carried out by external auditors, deliver a more thorough understanding of the main ESG challenges and areas of improvement aiming to define the roadmap for the coming years. The auditors conduct interviews with the management teams and have, in addition to their own internal sources, access to relevant documents provided directly by the target company. The ESG due diligence as well as the ESG analysis presented in the investment memorandums both covers central ESG issues considered material to the specific target company, as evaluated by the auditor. The main areas of analysis are:

  • Corporate Governance and Risk Management
  • Business ethics
  • HR strategy & Career management
  • Health & Safety
  • Environmental management system & GHG emissions
  • Responsible procurement
  • Service quality & Customer satisfaction
  • Community involvement

The due diligences cover an in-depth analysis of each ESG theme, including their level of materiality for the company, their strategic importance in relation to the sector, a summary of the company's performance, relevant KPI’s and other key performance elements as considered material by the auditor. The methodology used is a wide-spread service offered to several management companies in the PE-industry when assessing a target company on ESG issues in the pre-investment stage. 

05.3. Additional information. [Optional]

As one of the commitments as signatory of IC20, all investment memos, related to new investments and/or reinvestments where the total amount invested exceeds € 5M, include a pre-investment climate analysis in the investment memorrandum with a special fous on risks and opportunities related to climate change (see Strategy and Governance section) This analysis is verified by PwC and/or INDEFI.


PE 06. Types of ESG information considered in investment selection

06.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

06.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

ESG due diligences are mandatory pre-investment. The due diligences, carried out by external auditors, deliver a more thorough understanding of the main ESG challenges and areas of improvement aiming to define the roadmap for the coming years. Further, all investment memorandums include a pre-investment ESG analysis. The pre-analysis highlights the main ESG risks, opportunities and recommendations and is considered by the Investment Comittee before making an investment decision.


PE 07. Encouraging improvements in investees (Private)


PE 08. ESG issues impact in selection process (Private)


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