Investing in a sustainable manner with high ESG standards
Environmental, Social and Governance (ESG) issues have become of increasing concern to society and business in recent years. Gilde believes that including these topics in our investing into and management of portfolio companies, we can control and mitigate all kinds of risk exposure (including ESG/sustainable risk exposure) and enhance returns by focusing on ESG value creation opportunities. Gilde introduced its first ESG policy in 2008 to formalize its own corporate and social responsibility and ensure responsible corporate behavior in our portfolio companies.
When considering an investment opportunity, we take into account the following ESG principles:
- Comply with all applicable laws and regulations applicable to Gilde Buy-Out Funds and to those local and national laws and regulations in regions where Gilde Buy-Out Funds invest;
- Avoid investments in companies that do not respect its ESG-principles or do not maintain ethical standards similar to GBOP’s standards;
- Respect human rights and fundamental rights to work, i.e. proper working conditions and no child labor, as set out by human rights conventions such as the International Labour Organization (ILO);
- Respect animal rights;
- Respect the interests of stakeholders in our portfolio companies;
- Promote adequate corporate governance including policies to avoid bribery and corruption in line with national laws and international conventions such as the OECD Anti-Bribery Convention;
- Ask and encourage management of portfolio companies to operate in accordance with Gilde’s ESG- principles and ethical standards, and advance these throughout their value chain. Where needed, GBOP will push for correction through its capacity as shareholder and supervisory board member;
- Require Co-investors to agree to the provisions with regard to ESG that are included in the shareholders’ agreement of portfolio companies.
ESG principles and high ethical standards embedded in the full investment cycle
In the early stages of a transaction, the investment professionals will review a potential investment’s adherence to GBOP’s Ethical Standards and ESG Policy.
Where a transaction is found to have ESG issues that could have a potential adverse impact and therewith considered to be a material ESG/sustainability risk or ESG opportunity for value creation, these will be incorporated as part of due diligence.
This assessment may be conducted by Gilde’s own subject matter experts or by engaging external advisors.
The ESG findings are reviewed before closing the transaction by the Investment Committee as part of our standard investment process.
To safeguard compliance to our ESG principles and ethical standards by portfolio company management. Gilde will incorporate standard clauses in the Shareholders Agreement.
In case material ESG issues or value creation potential is identified, GBOP’s investment professionals will incorporate initiatives and targets in its portfolio company value creation program processes and tools to address ESG issues and or unlock the value of identified value creation opportunities.
By embedding ESG issues and value creation opportunities in its structured portfolio company value creation program Gilde is able to closely track progress and if required provide additional support to ensure ESG initiatives unfold to benefit society and enhance investment returns.
Rewarding employee’s overall performance
ESG is considered to be the prime responsibility of the Gilde investment professional. By embedding ESG in the full investment cycle accountability of ESG performance is part of the overall performance of Gilde Buy-Out Funds as well as individual performance of employees. Gilde Buy Out Partners has a remuneration policy that ensures sound and appropriate remuneration in line with the market standards and ESMA/AFM principles required for all alternative investment fund managers and in line with the Gilde objectives, performance and policies such as but not limited to its ESG Policy. Key purpose of Gilde’s remuneration policy to align interest of its employees with the interests of the investors in the Gilde fund and to avoid incentives (also with respect to sustainability risk) that could result in excessive risk-taking.