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ATTALEA PARTNERS

Service Providers Framework 2020

You are in Strategy and Governance » Policy on ESG beliefs

Policy on ESG beliefs

SG 01. Responsible investment policy

01.1. Describe how your organisation’s philosophy incorporates environmental, social and governance factors, and the link to your business offerings.

Attalea's founding partners are convinced that an adequate management of extra financial risks and opportunities are key to value generation. 

We believe that Private Equity, Private Debt and Infrastructure investors are in an extraordinary position to influence their portfolio companies, mostly SMEs that conform over 95% of Spain's total number of companies, employing c.40% of employees (excl. self-employment).

Our philosophy is to "take ESG into action", by helping our clients to action the various ESG value levers, which are in our view:

  • Top-line growth, identifying ESG opportunities that allow companies to tap new markets ("blue oceans") or expand into existing ones (eg. certifications that allow to become a provider in public licitation);
  • Cost efficiency, identifying ESG pockets of cost levers, such as energy efficiency, human resources management or fine/lawsuits minimisation;
  • Employment productivity, as a strong ESG value proposition is currently a lever to attract and maintain talent;
  • Investment optimisation, allowing a better Return on Investment on Capex
  • Brand value, as, through ESG, strong brands offer stakeholders a way to align their values with their actions.

01.2. Indicate whether you have policies that formalise the incorporation of your ESG beliefs in your business offerings.

01.5. Additional information [OPTIONAL]


SG 02. Norms used to develop policies (Not Applicable)


SG 03. Policy offerings to clients

03.1. Indicate whether you offer standard, off the shelf, policies to clients as part of your product offerings, and/or whether you create tailored versions for individual clients.

Off the shelf
Tailored
Asset class-specific RI guidelines
Sector-specific RI guidelines
Screening/exclusions policy
Engagement policy
(Proxy) voting policy
RI guidelines set out within the Investment Policy Statement (IPS)
RI guidelines set out in a freestanding RI policy
Multi-year RI implementation project plan
Conflict of interest management policy
Stockbroker allocation policy
Securities lending policy
Other, please specify (1)
Other, please specify (2)
Other, please specify (3)
None of the above

03.2. Provide a brief description of the key elements, any variations, or exceptions applying to these policies.

Attalea Partners designs tailor-made Responsible Investment policies for our clients. Alternatively, should the client have already a Responsible Investment, we provide a review of Responsible Investment policies to match current best practices in the market.

Our clients, the private market universe (Private Equity, Private Debt, Infrastructure), aim to integrate ESG considerations within their investment processes. Therefore, the scope of the policies we design for them falls within the integration characteristics, that is, the explicit and systematic inclusion of ESG considerations in the investment processes. The policies we design actively adress all phases of the investment process including screening, Due Diligence, Investment or Credit Commitees, ESG Value Creation beliefs and philosophy, Portfolio Management and ESG action-plan implementation and finally, exit processes. We also adress the need to commit to transparency and communication of the ESG efforts as well as the promotion of the acceptance and implementation of the UN Principles, and finally engagement within the industry and policy makers.

We typically reference Responsible Investment policies to the main international frameworks, guidelines and conventions, such as (not exhaustive) UN (UN Global Compact and UN PRI), OCDE, ILO, recommendations of Private Equity and Infrastructure associations, financial markets regulators, and global initiatives (TCFC, CDP), standards (GRI), and certifications (B-Corp, SDG, ISO), encouraging our clients to actively reference the policies to SDG contribution.   

Finally, we encourage our clients to review their Responsible Investment Policies on a yearly basis to include LP preferences, reference to the most relevant global initiatives, update on means devoted to ESG, etc. We emphasize the need to review systematically any side letter signed with LPs and incorporate it at the next policy update review.

Once the policy is signed by our clients, we continue to advise them on how to take it to practice. In particular, we provide consultancy services on the following:

  • Management company RI long-term strategy and yearly action-plans;
  • Material themes to adress according to sector / global trends;
  • ESG Governance at management company level, establishing Committees when appropriate, ESG roles and accountability;
  • Stakeholder map, risk and materiality matrix at management company level;
  • Management company strategic KPI design and selection;
  • Automation of processes, specifically in KPI generation;
  • Monitoring tools;
  • Third-party assurance and audit of KPIs and reports.

03.3. Additional information. [OPTIONAL]


SG 04. ESG/RI in business offerings (Not Applicable)


SG 05. Outsourcing of services (Private)


SG 06. Providing training/education

06.1. Indicate whether you provide training/educational services on ESG/RI. Tick all that apply.

06.2. Describe the main components of your training/educational services on ESG/RI and any variations depending on the group you provide training/education to.

Attalea offers ESG training sessions for our clients at all levels, including in-company training sessions as well as employee handbooks. We insist on having the training session as a pillar of our consultancy services, as it creates a common language between our clients' senior management, investment directors, junior employees, with Attalea's consultants. It is also a place of debate, dialogue, and exchange of ideas and impressions, which allows our clients to communicate their ESG vision and strategy, and all of its employees to understand and embed it in their day to day work.

Our training services are tailor-made to the client and type of group we are providing the education to. The main components of our training services are the following:

  1. Private Equity Managing companies:  high-level overview of Responsible Investing in Private Equity. Best Practices. ESG and Fiduciary duty. Integration of ESG considerations in the Private Equity investment process. Map of Spanish Private Equity players according to ESG level of integration. The role of Responsible Investment in the value-creation process.  ESG in practice. How to communicate and manage ESG integration with portfolio companies. How to communicate and manage ESG integration with portfolio companies. How to take ESG into action. KPI design and selection, monitoring. Case studies and role play. We typically undertake training to all levels at the client group, given the small size of the Private Equity teams in Spain. We adjust the message according to the seniority of the audience, that is: 
  • Founding Partners / Partners.
  • Investment Directors. 
  • Junior employees.

2. Portfolio company: What is ESG? ESG as value-creation lever. Anticipating and adapting to ESG trends. ESG risks, opportunities and materiality mapping. Stakeholder map. The importance of appropriate ESG Governance and policies. ESG in practice, deep dive into Environmental, Social and Governance value-creation levers. ESG measurement: KPI design and selection, monitoring. 

We adjust the message according to the seniority of the audience, for SMEs, in our experience, training is addressed to: 

  • Senior management
  • Portfolio company ESG team
  • Middle-management

 

06.3. Describe whether these training/educational services include any commercial elements.

          Our training services include commercial elements and explain our service offering due to our audience's lack of knowledge of ESG's breadth and depth. We provide our clients with a quick skim through the many issues they can encounter and how we can help them in various themes and situations.
        

06.4. Additional information. [OPTIONAL]


SG 07. Applying, advancing and promoting the PRI principles

07.1. Describe how your organisation applies, advances and promotes the PRI Principles.

Attalea Partners was born to become the trusted advisor of reference to help our clients deliver their ESG / Impact goals. Attalea's mission includes to actively apply, advance and promote the PRI Principles. In this sense, we help our clients, mainly private asset owners, to understand and apply the PRI Principles. We have 3 types of clients:

  • Private Equity established players that want to become best practice within UN PRI;
  • Private Equity new players that want to embed RI within their investment processes and are born with the intention to integrate ESG from inception;
  • Other asset owners (infrastructure or private debt) that still need to understand the importance of ESG in the value-creation process.

Our methodology is to first encourage our clients to adhere to UN PRI, explaining to them in detail the commitments they are about to embrace. Once they have adhered, we then provide ESG training to the team, usually founding partners, partners and investment directors, so they can effectively apply the PRI Principles. Finally, we help our clients to abide to their commitment as UN PRI signatory. As a success story, we have engaged with one new Private Equity player and they have adhered to UN PRI early 2020.

07.2. Highlight whether there are any ways that your organisation would like to engage further with the PRI. [OPTIONAL]

There are various ways we would like to engage further with the PRI:

1) Participating in Collaboration projects, through the Collaboration Portal, to participate in Research projects in any of the Environmental, Social or Governance arenas.

2) Providing best-practices and case studies sourced from our experience in Spain, that can be used in any study that PRI might publish on the Private Market.

3) In particular, we find that the Private Debt market is under-sourced in UN PRI (tools, resources, and the PRI Reporting Tool), as it focuses mainly on quoted instruments. The asset class is somewhat new to ESG, and PRI resources respond typically to the fixed income public market. We have a long-dated experience in this arena and would like to contribute to the PRI resourcing within this asset class. 


SG 08. Actions taken to promote responsible investment

08.1. Indicate which of the following actions your organisation has taken to promote responsible investments during the reporting year, independently of collaborative initiatives.

08.2. Additional information. [OPTIONAL]


SG 09. Long term trends

09.1. Indicate which of the following long-term trends are addressed in your product outputs.

09.2. Explain how this long-term trend affects your product outputs.

Governments, industries and wealth managers globally are preparing or already addressing the change in the population pyramid in the developed countries. Main trends are 1) ageing population 2) wealth transfer from the baby boomer generation to the millennial generation and 3) increasing female decision-makers.

At Attalea Partners, we follow closely these trends and advise our clients from various perspectives:

  • LPs increasing awareness to align investment and financial goals with their  investors' values without diminishing their return expectations;
  • Regulation tackling social issues, such as diversity and inclusion;
  • Markets needing to address ageing population and companies have to include specific products to meet their needs;
  • Millennials as decision makers, native digitals, total awareness of the world's major issues, and need to align their decisions with their values, including who they work for (talent attraction), how they make purchasing decisions, and how they invest.

Our advise is delivered in various forms, such as ESG Due Diligence, regular conversations with our clients, market updates and advise on investable opportunities that are market leaders within these trends.

09.2. Explain how this long-term trend affects your product outputs.

Climate Change is the current key ESG trend globally. We provide our clients with the necessary tools to adress it effectively.

  • Environmental Assessment: the Environmental Assessment has become a critical step within project development. We undertake environmental evaluation from the initial project stages improves, Environmental Impact Studies of plans, programmes and projects, Design of projects and strategies of Positive Environmental Impact, Landscape Studies, Implementation of Environmental Management Systems (EMAS, ISO 14001), Environmental monitoring of the project.
  • Impact measurement: specialised assistance, from data collection to preparation to certification audits. Within this, we undertake: 
  1. Carbon Footprint Measurement: calculation of the Carbon footprint of the organisation and product (ISO 14064, ISO 14067; GHG Protocol, PAS 2050, Carbon footprint registration, compensation and carbon dioxide absorption projects-MITECO).
  2. Environmental Footprint: calculation of the Environmental Footprint of the organisation and product (HAP methodology of the European Union) through multicriteria analysis of environmental impact with the perspective of the complete life cycle.
  3. Water Footprint: Water Footprint Calculation according to international scheme (ISO 14046, Water Footprint Network).

09.2. Explain how this long-term trend affects your product outputs.

Climate change, water scarcity, rising sea levels, finite natural resources, facing a more populous and urbanised world are one of the biggest problem the world is trying to solve. What will happen the day most common resoursces, such as freswater, see their prices rise exponentially?

At Attalea Partners we adress actively this long-term risk within our (i) ESG Due Diligence (ii) risk, opportunity and materiality matrix and (iii) energy efficiency and environmental consultancy services. 

We also adress these issues within SDG consultancy, analysing investors and companies contribution to the relevant and material SDG targets that adress Resource scarcity.

09.2. Explain how this long-term trend affects your product outputs.

Cybersecurity is at the forefront of investors, companies and legislators' worries. This major risk impacts significantly reputation and can cause enourmous economic costs. Investors are keen on been informed on how companies manage this risk and expect them to report on governance issues around cybersecurity. 

At Attalea we adress actively this risk within our (i) ESG Due Diligence (ii) risk, opportunity and materiality matrix and (iii) selection of cybersecurity professionals (legal & IT). We advise on Cybersecurity Governance, protocols, emergency action plans and reporting key risks and issues to stakeholders. 

          Diversity and inclusion
        

09.2. Explain how this long-term trend affects your product outputs.

Workplace diversity and inclusion is a growing force in sustainable investing. Investors, companies and legislators are increasingly embracing the fact that diverse and inclusive workforces are more productive, innovative and capable of driving businesses. Investors are increasingly putting pressure on companies to establish SCR policies which reflect its communityis needs. 

Attalea Partners is developing a series of services to adress our clients needs regarding workplace diversity and inclusion by establishing partnerships with local facility services socially responsible companies.

We also adress these issues within SDG consultancy, analysing investors and companies contribution to the relevant and material SDG targets that adress Diversity and inclusion.


SG 10. Interaction with asset owners (Not Applicable)


SG 11. Aligning approach with investor goals

11.1. Describe how you typically align your organisation’s philosophy and approach to ESG/RI with your investor clients’ goals.

Attalea Partners believes that Responsible Investing is the way forward to invest, in order to better manage risks and generate long-term profitability. We believe that a correct ESG risk and opportunity management creates value. We also believe that private markets have a stronger influence on their investees to actually drive change, and that, to a large extent, Environmental, Social and Governance factors generate real impact in society as a whole. 

Our vision is that the world's investment activity has to incorporate sustainable investing to be profitable in the long-term, and this is explained in our ESG value statement in our web page www.attaleapartners.com.

Our mission is to help our clients achieve ESG integration, and very often we find that beliefs and outcomes diverge. This is where Attalea adds most value, making beliefs become a reality, and take ESG into action. This is documented in our ESG trainings as well as our ESG Case Studies, which we share with our clients.

All in all, Attalea Partners has at its heart of its service offering to align our investment philosophy and approach to ESG with our investor clients' goals.

 

 

11.2. Additional information. [OPTIONAL]


SG 12. ESG recommendations not aligned with investor goals

12.1. Describe what steps you take, if any, when your ESG recommendations are not in line with your investor clients’ goals.

When helping our clients to achieve ESG integration by incorporating ESG factors within investment decisions, we very often come across a number of situations where our ESG recommendations are not in line with our clients' role. Our approach is to provide investors with further information by co-ordinating with technical experts a set of sound and practical arguments to align our clients with our recommendations.

One example of this is the approach of Spain's private market to Climate Change. In 2019, this issue has not been vastly taken as a priority within the Private Market. Attalea Partners' advantage is that we "talk our clients language", finding the right Climate Change value-creation levers that convince our clients to take action. We repeatedly encourage our clients to sit down with our team of environmental experts to explain how energy efficiency, environmental consultancy, and other Climate Change actions contribute to the value-creation process. 

12.2. Additional information. [OPTIONAL]


SG 13. Seeking feedback from clients

13.1. Indicate whether you seek feedback from clients on your RI/ESG services and product offerings

13.2. Describe how you use this feedback in your RI/ESG services and product offerings.

Attalea Partners gathers feedback in two ways:

1) Client surveys: we undertake anonymous feedbacks when we deliver our services to the clients' teams, such as our ESG education programs. We gather feedback based on surveys and put conclusions together. This way we are able to gather instant feedback to improve and enhance our portfolio offering. We are also transparent, sharing this feedback with our clients.

2) Communication with clients: Attalea has a structured ESG feedback gathering (1) when delivering our services we undertake a short feedback survey to ensure our quality is best-in-class and (2) through constant communication with our clients, which ensures a rapid response in broadening our service offering as well as adherence to our high quality standards. 


SG 14. Managing conflicts of interest

14.1. Indicate whether your organisation has a policy for managing potential conflicts of interest.

14.4. Additional information. [OPTIONAL]

Attalea Partners' action plan for 2020 includes further Governance procedures and we are currently designing our conflicts of interest policy, as of March 2020. We expect to have this policy up and running in the next 2 months.


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