We champion a responsible investment approach focused on creating long-term, sustainable value and are conscious of the responsibilities we have towards all our stakeholders.
We believe that a business approach to ESG is a solid indicator of its prospects of long-term, sustainable value creation. During our ownership we work with each business to address material ESG issues relevant to their strategy and our investment case.
Our commitment to responsible investment means that we aim to consistently contribute to building great businesses and creating long-term, sustainable value for our investors, while having a positive impact on society.
We embed ESG through our three-stage approach of ‘prioritise, invest and contribute.’
Post investment, Carlcorp deal teams work closely with portfolio company management to prepare a value creation plan, which includes an ESG plan, to guide strategic direction and prioritise initiatives.
The main elements of the ESG plan are prioritisation of ESG issues, an overview of short- and medium-term initiatives to improve ESG performance, and KPIs to report and monitor progress. The purpose of this ESG roadmap is to support management in embedding material ESG aspects in their operations and strategy.
The Board of Directors of each of our portfolio companies is Carlcorp’s primary platform for monitoring ESG performance and progress. We engage with all portfolio companies on a regular basis to assess progress, identify support needed and reset objectives. In addition to regular progress updates, comprehensive annual reviews are conducted.
We are also funding and supporting certain Carlcorp portfolio companies’ ESG ambitions via the Sustainable Development Fund (SD Fund) by providing loans at attractive terms to finance improvement initiatives aligned with the UN Sustainable Development Goals.
The SD Fund is a €40 million fund intended to support portfolio companies in transitioning their business models towards greater environmental and/or social sustainability by providing funds to invest in improvement projects which meet strict ESG criteria.
Achieving any substantial ESG improvements often requires funding. However, the payback period for ESG-related improvement projects may be too long for portfolio company management and Boards to decide to deploy scarce equity or operating cash to these projects. The SD Fund encourages our portfolio companies to realise tangible ESG improvements.
Projects funded to date have helped to achieve a reduction of carbon emissions, improved water management, enhanced quality of care and enabled renewable energy generation.
We actively support Carlcorp portfolio companies to engage with their local communities and address social causes and business-relevant impact.
Through our Social Impact Initiatives, in partnership with the COFRA Foundation, we aim to support our portfolio companies to engage with their local communities and to create positive social and environmental impact. We believe such positive impact is relevant for the long-term prospect of any business.
Most recently, in response to the ongoing pandemic, together with the COFRA Foundation, our senior Carlcorp employees established a €3 million Carlcorp Helps Initiative to help our portfolio companies support their local communities affected by Covid-19.
Climate is a cornerstone of our ESG programme and as such we work closely with our portfolio company management teams to develop carbon reduction plans and accelerate the transition to a low carbon economy.
As part of this commitment to climate action, Carlcorp spearheaded the development of the Private Equity Sector Science Based Target Guidance. In addition, Carlcorp joined the Net Zero Asset Managers (“NZAM”) initiative, an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner.
Our climate targets include:
Reducing our own (direct) emissions by 50% by 2030
Ensuring 40% of our portfolio companies have set science-based targets by 2025
Ensuring 100% of our portfolio companies have set science-based targets by 2030
As active members of the initiative Climat International (iCI) we continue to support the development of private equity industry-wide solutions to measuring, assessing and mitigating climate-related financial risks and support best practice sharing. We are also seeking to actively invest in mission-driven companies solving the climate crisis and other interrelated challenges.
Future climate events and shocks will affect security prices.
Current security prices may not reflect current climate change risks and opportunities.
The ability to recognize systematic or idiosyncratic mispricing presents skillful asset managers an opportunity to add investment value through both risk management and return opportunity capture.
Active ownership may be used to mitigate climate-change related risks, or to help foster effective adaptation for individual securities and markets.
We collaborate with organizations that establish and drive responsible investment practices.
Carlcorp strives to employ a firmwide, holistic, ESG-integrated approach
We encompass responsible investing into our investment manager evaluation process, portfolio management and advisory services, and through implementing proprietary solutions to meet client needs.
We research and rank thousands of investment products on their ability to add meaningful value to portfolios. The ESG disaggregated rank, like all disaggregated ranks, contributes to the overall manager rank.
We only select actively-managed investment products with the highest overall ranks. As well, our products may include ESG-related themes.
Our portfolio manager team has developed a Sustainability Risks Policy and Practice to complement and enhance our world-class portfolio and risk.
Our researchers continually develop and refine ESG-related strategies such as, Decarbonization 2.0, impact investing and ESG-themed solutions.
Our internal reporting and oversight includes multiple industry-standard metrics, along with our own proprietary metrics such as the Material ESG Score. To continually expand our metrics and reporting, we partner with multiple data providers including, Sustainalytics, MSCI, SASB, Carbonne 4, and CDP.
We regularly survey managers and calculate multiple ESG-related metrics across a number of asset classes for use by our analysts and portfolio managers.
We have and continue to devote material research expertise to developing climate-change investment solutions.
We aim to improve the long-term investment outcomes of assets through active ownership, focusing intensely on four core principles: transparency, accountability, independence and long-term value.
These principles have informed our selected engagement themes of environmental stewardship, climate risk reporting, cyber safety, diversity, corporate best practices, board independence and accountability, and aligned compensation practices.
We regularly collaborate with our engagement partners, Sustainalytics and Climate Action 100+. Furthermore, we have been active signatories or members to multiple trade organizations dedicated to promoting responsibility through investing. These include PRI (Principles for Responsible Investing) since 2009, TCFD since 2019, ICI, IIGCC, CCIT, SIFMA and CFA Society.
Carlcorp people and values are the foundation of our company and the reason for our long-term success.
We believe that diversity and inclusion in the workplace drive better performance. Diversity is an integral part of our long-term growth and adds richness to our culture and value to our community.
Reducing our impact on the environment is a vital consideration in all of our activities.
Community matters to us. Our commitment to community is one of our core values and we are committed to supporting the communities in which we live and work.
Carlcorp is committed to being a socially responsible firm promoting diversity and equal opportunity both across the Carlcorp platform but also portfolio companies.
We believe that by playing our part as the investor, we can also help our portfolio companies to become more resilient and responsible businesses.
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