Our ambition
As a UNPRI signatory since 2019 and to achieve our sustainability ambitions as a responsible investor, we incorporate ESG into our decision-making process. This has been formalised in a Responsible investment policy covering Sofina Direct and Sofina Private Funds as well as the different stages in the investment decision making.
Sofina Direct – Policy by key stage of the investment lifecycle
ORIGINATE AND ASSESS
Sourcing of investment opportunities within our sectors of focus.
Assessment of investment opportunities using our ESG framework which allows us to make a positive screening¹ of the company to assess:
- whether the company contributes to addressing societal challenges through its products and services (what); and
- the ESG performance of its operations (how).
→ Sector-specific metrics from the SASB² standards are
now integrated into our ESG due diligence process, to ensure a more systematic assessment of material ESG risks and sustainability impacts associated with potential investments.
DEPLOY
Investment decision is made taking into account:
- the contribution of the company to societal challenges (what);
- the ESG performance of the company (how).Action plans may be agreed upon with the company to address the findings of the ESG due diligence (i.e.ESG risks and opportunities).
MANAGE
Use ownership position and board/observer seat to provide expertise on ESG matters, monitor the ESG performance of the companies, encourage ESG reporting and suggest ESG performance improvement levers to change (i.e. through sustainability roadmaps).
Our influence as a minority investor varies but we commit to promoting ESG initiatives through governance bodies. For holdings with limited governance rights, we focus on monitoring progress and advocating for ESG issues through appropriate forums.
EXIT
Conduct exit through embedding ESG considerations, depending upon our ownership stake and influence as a minority shareholder.
Redeploy proceeds into companies that address societal challenges and/or with a better ESG performance.
SUSTAINABILITY ROADMAPS – OUR TOOL TO MONITOR THE ESG PROGRESS OF OUR PORTFOLIO COMPANIES
Since 2022, we have been engaging with selected portfolio companies to build sustainability roadmaps to define their ambition and goals regarding certain sustainability matters (e.g., cli- mate and biodiversity, gender pay equity, diversity and inclusion, etc.) and KPIs to track their progress towards their identified goals. We took a company specific approach with a focus on material ESG matters for the company, its business model and stakeholders to ensure a common vision on ESG priorities between Sofina and portfolio companies.
In 2023, we continued our sustainability roadmap exercise for the 14 European companies within Sofina Direct. Overall, we observe that companies are making progress towards their goals, albeit uneven across companies. Most roadmaps prioritise topics related to people (e.g. employee health and safety, diversity and inclusion) and environment (e.g. GHG emissions, supply chain, and waste) and the majority of the companies have dedicated teams focusing on sustainability issues. In 2024, we will expand this exercise to additional portfolio companies and will prioritise science based climate targets, in line with our carbon strategy.
We further believe that the Corporate Sustainability Reporting Directive (“CSRD”) will serve as a common framework for European portfolio companies in scope of the CSRD to identify material topics, develop relevant action plans, and report progress on an annual basis. As we have launched our own process towards CSRD compliance, we also support our portfolio companies on CSRD implementation through knowledge sharing and progress monitoring as board member and active shareholder.
1 ‘Positive screening’ is further defined in PRI’s Introductory Guides to Responsible Investment.
2 SASB (Sustainability Accounting Standards Board) develops industry-based sustainability standards for 77 industries. These standards provide metrics and guidelines about sustainability-related risks and opportunities that could reasonably affect a company’s cash flows, access to finance or cost of capital over the short, medium, or long term.
Sofina Private Funds – Policy by key stage of the investment lifecycle
Our approach towards Sofina Private Funds differs from Sofina Direct, as we have no decision-making power over the direct operations of the portfolio companies managed by our General Partners.
ORIGINATE AND ASSESS
Assessing the General Partner on two main aspects:
-
commitment to responsible investment and degree to which the General Partner integrates ESG considerations into its investment process;
-
assessment of how ESG matters are implemented into the General Partner’s operations.
DEPLOY
Investment decision is made taking into account the outcome of the ESG assessment made on the General Partner.
Most favoured nations provisions containing ESG commitments are elected when possible.
MANAGE
ESG aspects are analysed when evaluating fund performance.
General Partners are encouraged, during our interactions with them and through our presence in annual general meetings to adopt ESG best practices.
If need be, concerns are raised with the relevant governance bodies of the funds.
EXIT
ESG factors are considered depending on how actively the General Partner pursues ESG criteria in its investments.