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Bpifrance Investissement

PRI reporting framework 2020

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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.

For each investment decision, Bpifrance consistently takes into account the ESG non-financial criteria (Environment, Social and Governance) that might have an impact on its investments.

Its responsible investment approach is defined based on international standards and collective commitments from financial investors so as to comply with Bpifrance’s general interest Bpifrance’s investments are fully part of this general interest mission by enhancing SMEs’ shareholding structure and ensuring their development based on a model ensuring a financial performance in line with market standards combined with the set-up of a sustainable operating model.

During the due diligence process, Bpifrance Investment realizes an ESG report of the entity to be invested in when reviewing the application, by analysing 14 questions in 4 key ESG domains, and  by interviewing the entrepreneur on priority stakes according to the activity and the size of the company.

ESG Invest tool helps the investor for this analysis, proposing, by size and sector of activities, pertinent ESG issues, classified in ascending order

This report helps to:

- locate, if need be, important enough ESG issues not to invest;

- identify some (2 or 4) decisive issues for every invested entity;

- Sensitize managers and arouse an improvement process.

In addition to the risk analysis, this report is used to determine and to implement actions of improvements in cooperation with the entrepreneur. It also helps determining companies’ best practices.

This ESG analysis must be joined to every investment file and is part of the company’s evaluation. This internal approach can be completed for some files with a more exhaustive audit by an external organization.

This report’s conclusions appear in the investment memo which is submitted to the investment committee. The company’s commitment to progress takes shape in a “letter of progress” or in a corporate social responsibility clause (CSR), joined to the shareholder’s pact.

Secondly, throughout the detention of the participation, Bpifrance Investment aim to sensitize and accompany the manager, for a better consideration of the most relevant stakes in sustainable development for the company.

Managers’ support requires a follow-up through a regular dialogue with the investor, in which developments in ESG for the company are noticed.

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.

          An ESG monitoring tool  allows the investors to assess the inclusion of ESG criteria by the companies, can be completed by external audit

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

We invest mostly (as regard to the number of investments per year) in small caps. So there very few available ESG public information except in the target company itself. We make our ESG opinion about the companies mostly through documents from the companies, visits in the firms, meetings with its management, and so on, all made by people in charge of investments. 

The ESG monitoring tool allows the investors to assess the inclusion of ESG criteria by the companies and the potential areas of improvement based on the headcount and the sector of the company. 

Beyond the identification of potential ESG issues, this review allows to define and activate improvement actions in coordination with the entrepreneur. It also allows identifying the company’s best practice in the ESG space. This analysis is fully integrated within each investment case and takes part of the global appreciation of the company.The conclusions of this review are included in investment note submitted to the investment committee. The company’s improvement commitments are formalised in an “Improvement letter” or a CSR clause in the shareholders agreement.

PE 07. Encouraging improvements in investees (Private)

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