A responsible approach throughout the management process
The Siparex Group is distinguished by its approach as a long-term corporate investor that respects the “Environmental, Social, and Governance” (ESG) criteria. The Group’s policy in this area is reflected in its public commitments (including adhering to the United Nations Principles for Responsible Investment), in incorporating the ESG dimension into the process for investigating investment projects, as well as in producing ESG reports intended for subscribers to the funds.
6.5. Factoring the ESG aspect into the management process
The focus on Socially Responsible Investment (SIR) is intrinsic to Siparex’s investment policy and management method. In the French market, Siparex is one of the pioneer companies to adopt a structured “Environmental, Social and Governance” (ESG) initiative, reflecting its ethical approach to investment. This initiative concerns all Siparex fund stakeholders. It represents the professional ethics observed for almost 40 years when dealing with the Siparex Group’s investors and entrepreneurs. But it is also closely linked to the Siparex Mid-Market Funds’ management approach, which bases financial performance on the genuine creation of industrial value, in the broadest sense, one corollary of which is job creation.
This systematic commitment, since 2000, to extra-financial criteria when selecting and deciding on investment opportunities, has legally resulted in shareholders agreements and regulations for funds managed by Siparex. Before any new investment, the ethics clause enables a discussion to arise between the Director and the management team, to identify potential “ESG” risk areas and to validate the company’s sensitivity to the broader issue of sustainable development, with an ongoing concern for contributing to improving its economic performance in the medium/long-term. Aside from the increasingly stringent regulatory environment for capital management, Siparex takes the view that it has a responsibility, as an operator in direct contact with companies, to promote an initiative aimed at achieving progress on “ESG” issues. This is why the regulations of Siparex’s various investment vehicles have adopted the best practices specified in this area.
Siparex’s ESG initiatives represent (i) commitments by the management company, (ii) the incorporation of ESG criteria into investment processes, and (iii) formalized ESG reporting.
The management company’s commitments are seen in:
a Responsible Investor Charter, drawn up in 2012 (see Appendix 2);
the Principles for Responsible Investment (PRI) recommended by the UN, to which Siparex has been a signatory since 2013 and which enable the Company’s commitments to be set out more formally.
The integration of the ESG aspect in the investment processes takes the form of:
the ESG assessment of investment targets (1st PRI principle), which includes exclusion criteria, integration of a generic ESG assessment framework for investment targets into the Structuring Memos (introduced as part of the launch of the Fund), and the presence of an ethics clause in every Agreement;
encouraging equity interests to adopt a progressive approach (2nd PRI principle) through definition of an “ESG” roadmap for new interests;
ESG reporting, which enables regular reporting to investors on the progress of the ESG initiative (3rd PRI principle). These reports are compiled based on the equity interests’ responses to an annual questionnaire. An annual ESG report, mapping the investment portfolio's performance, is then forwarded to subscribers (see Appendix 2).