eEquity is investing responsibly and is promoting sustainability work in the portfolio companies
In order to build maximum long-term value creation, eEquity is convinced that it is of utmost importance to consider the environmental, social and governance implications of our investments and also influence our portfolio companies to act in a socially responsible manner.
eEquity is a member of the Swedish Private Equity and Venture Capital Association (“SVCA”), the industry body and public policy advocate for the private equity and venture capital industry in Sweden, and has committed to follow SVCA’s ethical guidelines. Further, eEquity’s follows the UN Principles for Responsible Investment.
We make sure to take into account potential environmental and social issues throughout our investment horizon spanning from initial due diligence and investment decision, through the holding period, and our exit strategy.
Sustainability risks
Sustainability Risks refers to an environmental, social or governance event or condition that, if it occurs, could cause an actual or a potential material negative impact on the value of the investment.
eEquity integrates sustainability risks, as referred to in Article 3 of the Disclosure Regulation, throughout the investment process in accordance with eEquity’s Investment Policy. A sustainability risk assessment is performed as part of the Due Diligence processes in order to identify any material sustainability risks in relation to the investment. Following the Due Diligence, relevant mitigative actions are identified alongside other strategic measures, and integrated into an investment specific roadmap. All identified risks must be approved as acceptable and in accordance with eEquity’s general risk policies before an investment opportunity is pursued. Sustainability risks are monitored and continuously evaluated on a regular basis as part of the ongoing follow-up of the investment roadmap.
Remuneration policy
eEquity remuneration model is described in eEquity’s Remuneration Policy and includes both fixed and variable remuneration. The variable remuneration is based on a performance assessment, in which both financial and non-financial criteria are considered. The criteria include a number of targets and KPI’s, among them sustainability related ones, and considers the employee’s compliance with internal rules and certain outlined criteria for screening, sourcing and investment decisions with regards to sustainability related matters and sustainability risks.
Adverse impacts
Principle Adverse Impacts refers to negative effects of the investment decision on sustainability factors.
While eEquity will continue to aspire to consider sustainability matters in the investment process, eEquity does not currently consider principal adverse impacts of investment decisions as per Article 4 of the SFDR. eEquity has chosen not to do so for the present time, as the requirements on the content, methodology and presentation of such impacts remain to be finalized. eEquity will evaluate and update our position accordingly when the regulatory technical standards outlining the content and definition of such impacts have been finalized.
Fund level
eEquity aim to identify potential ESG issues and take into consideration into our due diligence, decision-making and management practices in various ways through three different lenses depending on the particular investment opportunity.
Adverse impact
Principle Adverse Impacts refers to negative effects of the investment decision on sustainability factors.
While eEquity will continue to aspire to consider sustainability matters in the investment process, the fund does not currently consider principal adverse impacts of investment decisions as per Article 4 of the SFDR. eEquity has chosen not to do so for the present time, as the requirements on the content, methodology and presentation of such impacts remain to be finalized.
Promotion of environmental or social characteristics.
eEquity’s Fund no. 5 promotes the following environmental and social characteristics in accordance with Article 8 in the Disclosure Regulation.
1. Gender equality/diversity
eEquity strives to ensure gender equality in the portfolio companies of the fund. Gender diversity is considered in screening and Due Diligence by seeking to select companies founded by women and/or with gender diversity in management and board of directors. eEquity also promotes gender diversity through active ownership by actively encouraging/supporting portfolio companies to increase gender diversity in ownership, management and boards of directors over time.
2. Decrease in greenhouse gas emissions
eEquity promotes the reduction of greenhouse gas emissions in the fund’s portfolio companies. All portfolio companies of the fund will track their greenhouse gas emissions and together with eEquity establish targets for reduction. The companies’ improvement and performance will be monitored and followed up on an annual basis.
3. Exclusion of certain sectors and business activities
eEquity excludes hazardous sectors and business activities when investing, in accordance with the eEquity exclusion list, and prohibits development of such activities among portfolio companies through active ownership.
eEquity exclusion list includes business activity relating to
• illegal economic activity
• production of and trade in tobacco and distilled alcoholic beverages and related products
• financing of the production of and trade in weapons and ammunition of any kind
• casinos and equivalent enterprises
• research, development or technical applications relating to electronic data programs or solutions which aim specifically at 1) supporting and activity referred to above, 2) internet gambling and online casinos or 3) pornography, or are intended to enable to illegally enter into electronic data networks or download electronic data
Methodologies used to assess, measure and monitor the environmental and social characteristics
The fund promotes the environmental and social characteristics in question by the consideration of these characteristics in sourcing and during the Due Diligence. Thereafter the development of a plan for improved performance in relation to these characteristics through a, for each company customized, roadmap. During the ownership phase the roadmaps are used to accomplish tangible progress among the portfolio companies. All companies will be monitored and assessed by their performance in relation to the mentioned roadmap on an annual basis. The data will be provided by the portfolio companies themselves to eEquity.
The fund’s portfolio companies are expected to disclose and progress on at the least the following sustainability indicators:
– Greenhouse gas emission reductions.
– Share of female representation in board, management and/or ownership.
– Compliance to exclusion list.
Good governance practices
eEquity is committed to responsible corporate behavior. eEquity ensures that the fund’s portfolio companies follow good governance practices by setting clear expectations with respect to transparency and accountability with regards to business governance aspects. These expectations are reflected in the sourcing and Due Diligence phase as well as post-investment where eEquity implements robust governance policies among portfolio companies for compensation, audit, and risk management to avoid corruption and other unethical business practices.
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