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Alder Funds

PRI reporting framework 2020

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.

Sustainability fit is one of our investment criteria. In some cases we have had extra meetings to solely discuss the environmental fit. We also have the opportunity to engage external consultants in our assessments.  

ESG policy on investment selection:

We evaluate risks and opportunities related to sustainability when considering possible investments. Our framework includes tools for the different stages of the investment process:

‒  Identifying possible target companies - screening of the company against Alder’s exclusion list. Alder does not invest in any company whose business comprises sale of alcoholic beverages, commercial gaming, production of tobacco or tobacco products, pornography or production of military weapons.

‒  Initial assessment – Evaluation of whether environmental benefit in business model meets our investment criteria.

‒  Due Diligence: We perform a sustainability due diligence as a component of the overall due diligence process. Alder’s bespoke model for this purpose covers environmental, social and governance topics to identify risks and opportunities, potential red flags and required actions, which will be incorporated into the value creation plan of the portfolio company should we make the investment.

‒  Investment decision – Conclusions from the sustainability assessment are included in the investment memorandum - sustainability risks and opportunities are highlighted, the company’s current handling of these is evaluated and necessary and recommended action steps are identified. Sustainability aspects are taken into account in the investment decision in parallel with commercial, financial, and other relevant aspects,

05.3. Additional information. [Optional]

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.

We have an investment focus on Sustainability, so inherent in our investment model is that we strive to invest in companies that offer a solution to global environmental challenges in creating a better, sustainable industry. Therefore, ESG considerations will be part of the company's value creation and customer offer and as such vital in the evaluation of the potential investment. Our investment assessments always include a chapter on ESG and unique solutions that an investment offers to the industry.

We perform a broad based ESG due diligence, in which we review the target company's business model,industry and geographic exposure and stakeholder concerns. Environmental, social and governance risks and opportunities are identified and included into Investment Committee documentation and decision process. 

PE 07. Encouraging improvements in investees (Private)

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