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.
In 2024, our GHG emissions reduction targets on our operations and portfolio were approved by the Science Based Targets initiative¹. We have initiated a series of actions to progress on our Portfolio SBTs on Sofina Direct. See more on this in our annual report.
¹ SBTi is a corporate climate action organisation that enables companies and financial institutions worldwide to play their part in combating the climate crisis.
Our approach
We build relationships with partners who share our values and approach towards sustainability.
We are committed to making continuous progress to move from mitigating ESG-related risks alone to making a net positive impact through our investments and our stewardship.
We aim to reduce the environmental footprint of our portfolio companies, through discussing their sustainability roadmaps with them and monitoring and encouraging them to develop greenhouse gas (“GHG”) emissions reduction targets in line with the goals of the Paris Agreement.
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
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.
Sustainability roadmaps
Sustainability roadmaps – Our approach to monitor the sustainability progress of our portfolio companies
Since 2022, we have collaborated with selected portfolio companies to develop sustainability roadmaps, defining their ambitions and goals. This year, we expanded the initiative to 21 companies across Europe, the United States, and Asia, covering 60.2% of our NAV for Sofina Direct. We introduced a survey to assess a range of topics, including sustainability strategy, environmental targets, communications, regulatory compliance, governance, and supply chain management.
By mapping companies’ responses to the various developmental stages (e.g. seed/series A, early growth (series B and C), late growth), we help them assess their current standing on specific topics. The survey aims to establish a baseline for a significant sample of our portfolio and is a tool to engage with portfolio companies on sustainability matters.
Members of the investment and sustainability teams discussed the survey with the portfolio companies. From the survey responses, individual scorecards and recommendations were produced for portfolio companies highlighting priority areas for improvement and value protection or creation. Through this exercise, we aim to assist portfolio companies to enhance their performance through focused dialogues or our participation on their boards.
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.
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.