Equistone has developed robust Environmental, Social and Governance policies to ensure we are targeting a level of industry best practice. Equistone’s Responsible Investing Policy is implemented across the investment and portfolio management process and is also embedded into our European Investment Committee discussions. As part of our initiatives to continuously improve Responsible Investing, we appointed PwC to develop an ESG assessment tool to identify inherent ESG risks of new investments and our portfolio companies.
We continue to believe strongly in citizenship and in January 2019, Equistone became a signatory to the United Nations Principles of Responsible Investment (UNPRI) and also signed the Initiative Climat International (formerly iC20 Climate Initiative) which is the first initiative in the private equity industry to support the reduction and management of greenhouse gas emissions by portfolio companies.
We believe in the value of diversity in our industry and have strived to build diversity into our recruitment initiatives. In 2018, we became a supporter of Level20, the not-for-profit organisation established to inspire women to join and succeed in the private equity industry, and in 2020, we became a member firm of Out Investors, a global network for LGBT+ investment professionals.
Responsible Investing Policy
Equistone believes that aligning the interests of our clients and portfolio companies with those of society at large can enhance returns for our investors. We believe that businesses must preserve the trust of stakeholders in order to create long-term value for investors, and we therefore take an interest in how companies in our portfolio manage these issues, and, on behalf of our clients, encourage companies to adhere to the highest standards of business conduct. As a signatory of the UNPRI, Equistone is committed to promoting industry best practice ESG initiatives throughout our own organisation and the organisations we interact with.
Equistone will continue to seek opportunities to create outstanding value for investors whilst making a positive impact on the communities our companies serve.
In making investment decisions, we aim to avoid investing in companies that do not:
- Respect human rights
- Comply with current legislation (including environmental and social legislation)
- Seek to comply with their industry standards and best practice
Furthermore, we will have regard to the following when making our investments:
- We will not make any investment in a portfolio company whose principal business (i) is associated with corruption and/or deliberately and repeatedly violates the law; (ii) is registered in a country subject to embargoes imposed by the UN or the European Union; (iii) has as its primary business activity (a) trade and/or distribution of arms or ammunition (b) the production, trade of tobacco products or (c) or any activity of prostitution or procuring of prostitutes; or (iv) generates significant revenues from coal-based extraction or power generation;
- We will not knowingly make an investment in a portfolio company which seeks to exploit child labour;
- We will observe the limitations resulting from international financial sanctions;
- In our review and consideration of prospective investments, we consider the ethical ramifications of our investment activities; and
- We will include specific commentary on relevant ESG issues in our communication around new investments and in our reporting.
Sustainable Risk Finance Disclosure Regulation (2019/2088) (the "Disclosure Regulation")
Equistone Partners Europe Limited and Equistone Partners Europe SAS make the following disclosures in accordance with Articles 3(1), 4(1)(b) and 5(1) of the Disclosure Regulation.
Approach to sustainability risk
A sustainability risk means "an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment". This is a broad term which could describe a large number of events or conditions related to, for example, climate change, pollution, biodiversity or human rights violations, amongst others. For Equistone, sustainability risks are risks which, if they were to crystallise, would cause a material negative impact on the value of the portfolios of our funds.
Before any investment decisions are made on behalf of any funds that we manage, we identify the material risks associated with each proposed investment, including sustainability risk. We consider such risks as part of our fund risk management process, having regard to the fund's investment policy and objective. This leads to the submission of investment proposals to investment committee.
The relevant investment committee assesses all identified risks alongside other factors set out in the proposal. Following its assessment, investment decisions are made having regard to the fund's investment policy and objectives.
We pay staff a combination of fixed remuneration (salary and benefits) and variable remuneration (including bonus). Allocation of variable remuneration to investment professionals reflects personal, team and firm performance. Compliance with all of our policies and procedures, including policies and procedures relating to the impact of sustainability risks on the investment decision making process, shall be taken into account as part of that overall assessment.
Consideration of sustainability adverse impacts
Although ESG and sustainability risk is important to Equistone and we take it seriously, we do not consider the adverse impacts of investment decisions on sustainability factors in the manner prescribed by Article 4 of the Disclosure Regulation.
This is our current position, which we will keep under review. The detailed requirements were not settled by 10 March 2021, when we were required to decide and publish our initial approach. We are continuing to assess the mandatory data collection and disclosure requirements which are applicable to firms which opt in to consider the principal adverse impacts of their investment decisions. In particular, we are considering whether: (i) opting in would be the right strategic decision for us as a firm, and would help us to effectively facilitate our broader ESG and sustainability objectives; and (ii) we could gather and/or measure the mandatory data on which we would be obliged to report systematically, consistently and at a reasonable cost to our investors.