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Eurazeo

PRI reporting framework 2020

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage

New selection options have been added to this indicator. Please review your prefilled responses carefully.

01.1. Indicate if you have an investment policy that covers your responsible investment approach.

01.2. Indicate the components/types and coverage of your policy.

Select all that apply

Policy components/types

Coverage by AUM

          Code of Conduct
        

01.3. Indicate if the investment policy covers any of the following

01.4. Describe your organisation’s investment principles and overall investment strategy, interpretation of fiduciary (or equivalent) duties,and how they consider ESG factors and real economy impact.

Eurazeo’s CSR strategy is focused on continuous improvement and adopts a sustainable growth process for portfolio companies that extends beyond the investment horizons. CSR is integrated at each stage of the investment cycle: 

  • Identification phase: Eurazeo's goal is to perform CSR due diligence on all prospective acquisitions undergoing advanced review. Following this due diligence, a favorable or unfavorable positioning on CSR is presented to the Investment Committee;
  • Acceleration phase: Eurazeo provides companies with all the human, financial and technical resources needed to support them in their transformation. This phase is based on a roadmap allowing the deployment of a pragmatic and value-creating CSR approach;
  • Divestment phase: Eurazeo’s goal is to share the CSR progress achieved by the companies with the potential buyers via CSR vendor due diligences for all divestments.

Eurazeo's added value lies in its ability to help its portfolio companies strengthen and scale up. Based on its extensive expertise, it can offer strategic and operational support that is unique in the Private Equity market.

CSR is central to Eurazeo's business model. Eurazeo and Idinvest share the same vision of responsible investment and are actively working on harmonizing their responsible investment approach into a common framework.

01.5. Provide a brief description of the key elements, any variations or exceptions to your investment policy that covers your responsible investment approach. [Optional]

As an active and responsible shareholder, Eurazeo is the first French private equity firm to have incorporated sustainable development into its business through a proactive strategy.

CSR is a value creation opportunity for Eurazeo and its portfolio companies and fully contributes to their transformation and sustainable growth. Eurazeo's commitments embody this ambition which aims at combining value enhancement and responsibility throughout the investment cycle. To this end, Eurazeo deploys the necessary time and resources, while combining economic development, social progress, reduced environmental impacts and balanced governance.

After having initiated its CSR strategy in 2008, Eurazeo formulated a four-pillars CSR strategy in 2014, with quantitative targets for 2020:

  • Invest responsibly: integrate CSR at all stages of the investment cycle
  • Establish exemplary governance: ensure that all companies have exemplary governance bodies
  • Create sustainable value - ensure that all Eurazeo companies have a CSR improvement plan
  • Be a vector of change in society - ensure that all companies improve their societal footprint

Eurazeo's CSR strategy covers all fully consolidated and equity-accounted companies (with a shareholding of >5%). The Group's CSR approach encompasses all its investment divisions, though its implementation is adapted to each asset class and the level of governance influence the investment teams have with the portfolio companies.

Eurazeo and Idinvest - acquired by Eurazeo in April 2018 - share the same vision of responsible investment and embed CSR throughout the investment cycle. Eurazeo's CSR strategy is a common framework to all of its divisions, however, due to its recent acquisition, Idinvest's investment divisions are not yet consolidated in the CSR strategy's 2019 results. The two entities are currently working on a common Responsible Investment approach. In the 2019 annual report, Eurazeo will integrate information on Idinvest’s CSR strategy and results.

Regarding the private equity asset class, in 2019, the CSR strategy and its 2020 objectives covered Eurazeo Capital, Eurazeo PME, and Eurazeo Brands investment divisions (which represent nearly 60% of the Group's Private Equity AUM). Idinvest Partners, responsible for Idinvest Venture and, partially, for Eurazeo Growth (formerly Idinvest Growth and Eurazeo Croissance) investment divisions, already incorporates ESG throughout the investment cycle (it represents 40% of the Group's Private Equity AUM). As such, a 100% of private equity asset classes are covered by the CSR strategy and approach.

For more information about Eurazeo's responsible investment approach, please refer the Group's Registration Document (available on https://www.eurazeo.com/en/mediacenter/).

01.6. Additional information [Optional].

          
        

SG 01 CC. Climate risk

01.6 CC. Indicate whether your organisation has identified transition and physical climate-related risks and opportunities and factored this into the investment strategies and products, within the organisation’s investment time horizon.

Describe the identified transition and physical climate-related risks and opportunities and how they have been factored into the investment strategies/products.

Risks and opportunities related to the transition towards a lower carbon economy are systematically considered within the Group's overall ESG assessments.

Risks

Climate-related KPIs are included within the Group's overall ESG assessment and are evaluated throughout the investment cycle (at acquisition, during the holding period and in divestment). To respond to the French Law for the Energy Transition, Eurazeo publicly discloses its climate-change management approach which covers all investment divisions. In addition, for its private debt funds with over €500 under management, Idinvest conducted a tailored assessment relating to physical and transition risks.

1. Physical risks:

1.1. Manage and reduce the site exposure to natural hazards

Examples of risk factors: presence in locations exposed to direct short- and medium-term physical risks.
Examples of risk assessment methods: assessment of the degree of exposure, the ability to implement risk mitigation measures and the existence of insurance coverage.

1.2. Ensure the resilience of the business activity

Examples of risk factors: use of natural resources exposed to supply sustainability issues
Examples of risks assessment methods: assessment of critical supply chains and possible substitutions 

2. Transition risks:

2.1. Ensure the resilience of the industrial model

Examples of risk factors: inability to adapt production and distribution facilities when faced with regulatory, energy or supply chain constraints.
Examples of risk assessment methods: assessment of technical, technological and financial feasibility.

2.2. Ensure the resilience of the business model

Examples of risk factors: company's inability to maintain a level of economic performance if it faces some or all of the risks mentioned above
Examples of risks assessment methods: modelling of test scenarios

Opportunities:

Eurazeo is keen to identify climate-related opportunities both during the screening and acquisition stages and during the holding period of its portfolio companies. Such opportunities include the identification of high growth companies in the low carbon economy and the transition towards a low carbon economy,  more specifically, to climate change mitigation and adaptation.

  • Improve energy performance and obtain energy from renewable or low-emission sources (e.g. Iberchem and Seqens in Eurazeo's portfolio).
  • Design products or services with reduced carbon footprint (e.g.Back Market and Vestiaire Collective in Eurazeo's portfolio; and Remade Group in Idinvest's portfolio).
  • Ensure sustainability throughout the supply chain (e.g. Organic Alliance in Idinvest's portfolio).
  • Invest in new high-growth potential sectors (e.g. Reden Solar in Eurazeo's portfolio and Zola Electric and ForseePower in Idinvest's portfolio).

2020-2030 climate strategy:

  • Eurazeo has defined a new climate strategy for the timeframe 2020-2040 to align its activities with a well below 2° scenario and achieve zero net emission by 2040. In line with the GIEC recommendations, specific objectives will be set for activities within Eurazeo and its investments. Eurazeo plans to reach its objectives by reducing emissions throughout the value chain.
  • Eurazeo will submit these objectives to the SBT initiative and publish key features of its climate roadmap in 2020. These objectives will constitute one of the foundations of Eurazeo's new CSR policy and CSR commitments for 2020-2030 together with continuing to drive progress on all aspects of ESG.

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

Describe the associated timescales linked to these risks and opportunities.

The Group identified the potential timescales linked to climate-related risks and opportunities:

  • Short-term risks and opportunities: changes in consumer preferences (e.g. shift of consumers preferences towards organic food products). Presence in countries exposed to high climate-related physical risks.
  • Medium-term risks and opportunities: significant devaluation of some of the Group's assets and investments (e.g. devaluation of portfolio companies in highly energy-intensive sectors) and improved-value of companies in low carbon sectors (e.g. renewable energies, clean technologies).
  • Long-term risks and opportunities: geo-climatic risks leading to partial or total shutdown of activities (e.g. floods implying major damage to portfolio company's production sites).

01.8 CC. Indicate whether the organisation publicly supports the TCFD?

01.9 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

Climate-related risks and opportunities are included within the Group's responsible investment approach and are systematically evaluated throughout the overall ESG assessment and monitoring processes (both at acquisition and during the holding period).

Risk management strategies:

  • Acquisition due diligence to assess investments' exposure to climate change
  • Annual monitoring of related environmental indicators
  • Encouragement for portfolio companies to reduce carbon emissions as a proportion of EBITDA

In addition, in the context of the Group's CSR strategy for 2020, all companies are encouraged to reduce their environmental impact. Please note that Eurazeo's CSR strategy covers all fully consolidated and equity-accounted companies (with a shareholding of >5%). The Group's CSR approach encompasses all its investment divisions, though its implementation is adapted to each asset class and the level of governance influence the investment teams have with the portfolio companies. Following Idinvest acquisition, the Group is currently working on a common CSR strategy that will take into account the specificities of each asset class.

1.10 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.


SG 02. Publicly available RI policy or guidance documents

 

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

Other, specify (1) description

          Code of Conduct
        

URL/Attachment

02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

URL/Attachment

02.3. Additional information [Optional].


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

Eurazeo and its subsidiaries have defined a set of policies, have allocated responsibilities and have set Chinese walls between their investment divisions to avoid and manage potential conflicts of interests.

Responsibility is one of the Group's core values. It is rolled out through a certain number of commitments and principles, particularly a strict business code of conduct, robust risk control and exemplary governance in compliance with the highest market standards. This relies on a Supervisory Board, comprising shareholder and independent representatives, which oversees the Group's management by conducting regular checks, participates in strategic decision-making and sheds light on the decisions of the Executive Board, particularly for the analysis of planned investments and divestments.

Eurazeo has drafted several documents addressing conflicts of interests and providing guidelines to avoid and manage potential conflicts. These guidelines define the notion of conflict of interest, explain what is at stake, give examples and describe the appropriate behaviour and procedures to follow.

Each investment division operates independently and has specific tools (independent information systems) and dedicated teams (back-office and investment teams).

Eurazeo's documents:

  • Code of Conduct

Idinvest Partners documents:

  • Code of Ethics
  • Conflict of interest management policy

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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