Impact Investment Policy
Adiant Capital, together with the funds and investment vehicles it advises (“Adiant Capital”), is a specialist investment firm focusing on private markets impact investing.
Our mission is to invest client capital in private assets and companies that generate environmental benefits such as climate change mitigation, natural resources preservation and biodiversity protection, while yielding attractive financial returns. Sustainable development is therefore at the core of Adiant Capital’s investment scope and strategy.
The present Impact Investment Principles (“IIP”) detail the background, commitments (Section 3 – Commitments) and processes (Section 4 – Processes) that support our investment thesis and operational activities. It applies to Adiant Capital and the investments it considers and shall be interpreted in accordance with local regulation and laws.
We are committed to implement the IIP in order to achieve the following:
- Deliver our mission;
- Make better investment decisions by integrating impact principles into decision making processes;
- Create and share long-term financial, societal and environmental value amongst all stakeholders by integrating impact principles into our active ownership approach;
- Promote impact principles amongst key stakeholders;
- Report on our activities and progress made in implementing impact principles;
- Operate our firm and manage our investments transparently and sustainably.
The IIP incorporates principles developed internally, in addition to international regulation and standards that we adhere to:
- Technical Expert Group on Sustainable Finance (EU Taxonomy, EU Green Bond Standard, EU Climate Benchmark) – use of TEG tools and frameworks for classification;
- Impact Management Project – use of IMP tools for impact reporting; practitioner community member;
- Task Force on Climate-related Financial Disclosures – support and implement recommendations;
- UN Principles for Responsible Investment – signatory (application pending, 2020);
- UN Global Compact and UN Sustainable Development Agenda for 2030 – support and implement recommendations;
- Operating Principles for Impact Management – support and implement recommendations;
- Equator Principles – support and implement recommendations;
- UN Guiding Principles on Business and Human Rights – support and implement recommendations.
Adiant Capital does not strictly adopt any external policy or standards beyond the processes that are defined in Section 4 – Processes, except where indicated above.
We have a robust governance process with respect to investment selection, transaction and asset management:
- All investment-related decisions are made by our independent investment committee, which guarantees autonomy in such processes;
- Where additional expertise is required, external legal, technical, commercial or financial independent advisors may be appointed.
Being active shareholders, we are involved at all stages of our portfolio companies’ life by assisting the management to implement our principles; in particular, we require portfolio companies to:
- Endorse our IIP;
- Respect applicable law, regulation and contractual terms;
- Actively prevent corruption, conflicts of interests, disloyal practices and human rights violations;
- Develop adequate contingency plans.
We exclusively invest in private companies and assets that generate a net positive outcome on the environment:
- Investments shall present inherent a net positive outcome;
- Outcome shall be objectively measurable;
- Investments shall have a high “net outcome-to-invested capital” ratio.
In analysing an investment opportunity, we perform an environmental impact assessment as part of our due diligence, covering topics such as climate, emissions, biodiversity, use of natural resources, waste management, etc. over the entire lifecycle of the products or services, including upstream and downstream segments of the value chain (e.g. impact of contractors and subcontractors). The impact assessment also identifies mitigation strategies for identified negative outcomes.
As an active shareholder, we monitor environmental outcome on an ongoing basis and require portfolio companies to:
- Implement environmental KPIs to monitor and manage risks and benefits;
- Integrate the environmental KPIs into our reporting and audit processes;
- Reduce environmental impacts relating to their operations (e.g. carbon footprint reduction, waste avoidance, sustainable procurement, biodiversity restoration, remote work, sustainable mobility schemes, etc.).
During our due diligence phase, we assess the compliance of the company with applicable social regulation and standards, which must be respected and implemented across the HR policies of the company, its suppliers and subcontractors.
We take into account expectations of stakeholders such as consumers, local community, general public and public authorities, in particular with respect to ensuring:
- A constructive dialogue with stakeholders to maintain a positive public opinion about the company (especially for infrastructure investments);
- Positive economic and social local impacts generated by the company;
As a responsible shareholder, we ensure that social standards are respected at all times by our portfolio companies, their suppliers and subcontractors, including:
- Acceptable working conditions: fair remuneration, social security, prevention of discrimination at work, promotion of equal opportunities, implementing Health and Safety measures, including prevention of accidents and diseases;
- Respect of trade union rights and prevention of illegal labour;
We further ensure that the company is equipped with robust processes to proactively identify and respond to stakeholders potential concerns.
In order to achieve our sustainable development objectives, the IIP are integrated in all our processes, from designing investment strategies, to selecting an opportunity, to performing a due diligence on it, and throughout the holding period of an investment.
At our firm level
The IIP are reflected at our company investment process level as follows:
- Our investment team factors-in financial and extra-financial reporting into its decision making, in conjunction with portfolio company management and under the supervision and responsibility of our investment committee;
- As part of our overall strategy periodic review, objectives related to the IIP are reviewed in a continuous improvement process and best market standards are implemented;
- We issue financial and extra-financial quarterly reports to our clients, in addition to issuing annual reports and annual sustainable development reports;
- The company-specific requirements relating to the IIP are integrated into the transaction documentation entered into with the portfolio company.
We value the diversity and complementary of our human resources and commit to:
- Facilitate the progression and development of individual careers and skillsets;
- Promote healthy working environment and conditions;
- Promote sustainable living amongst employees;
- Value integrity and alignment of employees with our IIP, in particular by linking compensation to financial and environmental performance;
- Adhering to a transparency code, in particular with respect to compensation policies, social protection and value sharing (shareholding, dividends, salaries).
We further control our company’s environmental footprint by sourcing renewable power produced locally, reducing our resource consumption and minimising waste. We estimate our residual travel-related emissions and reduce them by optimising travel plans and making use of virtual meetings solutions to the extend possible.
We only invest in private companies and assets active in sectors aligned with our impact strategies. The targeted companies and assets have inherently net positive outcomes and, if existing, historical environmental liabilities must be marginal and be mitigated within a short period of time.
The assessment of environmental impacts is carried out during due diligence, with the support of external specialist advisors and consultants when necessary and based on recognized methodologies. The due diligence focuses on identifying and assessing potential red flag issues such as environmental, public health, safety, governance and social issues in accordance with the IIP.
To achieve long-term environmental benefits of our investments, we implement specific financial and extra-financial reporting throughout the holding period:
- Together with the management of the portfolio company, we define environmental KPIs corresponding to SDGs 6, 7, 9, 11, 12, 13, 14 & 15 to maximize the company’s net environmental outcome and corresponding targets;
- Environmental KPIs are integrated into a financial and extra-financial reporting and risk analysis platform, which is independently managed to ensure objective assessment;
- Our financial stakeholders and clients have direct access to financial and extra-financial reporting via the same platform;
- Environmental KPIs are periodically reviewed during board and management meetings.