ESG

This financial product promotes environmental or social characteristics but does not have as its objective sustainable investment.

The Fund seeks to promote environmental and social characteristics from an overall perspective during the ownership phase through dialogue with the managers of the portfolio funds. Prior to making investments in the Fund, an ESG due diligence is performed that focus on a qualitative overall assessment of portfolio fund managers ability to manage ESG issues and to make sure that their practices are reasonably aligned with ATP PEP’s ESG policies.

Investments are only being made into funds or companies that comply with the exclusion criteria and The Fund does not invest in portfolio funds who invests in companies principally engaged in the extracting and/or exploration of fossil fuels (coal, oil or gas) or in utility companies exceeding certain thresholds for carbon intensity in its energy production.  

The Fund is a fund-of-funds with the aim of creating returns for its investors. The Fund can invest in buyout funds (primarily in the small and midcap segment), distressed funds, growth equity/venture capital funds and co-investments and special situations, including continuation funds.

Investments are subject to certain concentration limits set out in the limited partnership agreement entered into between the investors and the Fund. The geographical focus of the Fund is North America and Europe as further set out in the limited partnership agreement.

Focus on ESG charateristics (environmental, social and governance) is a firmly integrated part of the investment strategy of The Fund. An ESG due diligence is performed for all new investments for the Fund in order to assess the ESG characteristics of the investment.

As an important part of the Fund’s investment process, due diligence is performed on the various portfolio funds’ management teams in relation to whether good and adequate governance practices are in place for the fund manager. This includes interviews and references.

As part of the ongoing monitoring of the funds, membership of those funds’ Advisory Boards is often sought to the extent possible, and the Fund will participate on AGMs as well as investor meetings in the portfolio funds. In case of material detected irregularities related to good governance a dialogue will be initiated to seek to address the issue.

The Fund promotes environmental or social characteristics for all investments with the exception of instruments for liquidity and currency hedging management.

The fund is a fund-of-funds. The Fund therefore invest in portfolio funds which again invest in various types of companies across multiple sectors. The Fund does not control in which specific companies the portfolio funds invest in. The spectrum of environmental and social characteristics is therefore very broad. The Fund monitors environmental and social characteristics from an overall perspective.

The Fund monitors each portfolio fund investment made through inter alia annually requesting all such portfolio funds to respond to ESG related monitoring questions set out in ATP PEP’s “ESG Data Questionnaire” systematically sent to all portfolio funds. The ESG Data Questionnaire focuses on the portfolio companies such portfolio funds have invested in.

The Fund has continuous dialogue with portfolio fund managers and thereby monitor the social or environmental characteristics promoted by the Fund, including by way of sending an annual “ESG Data Questionnaire” to be responded by the portfolio funds.

The Fund has a strong focus on encouraging portfolio fund managers to deliver relevant ESG data.

The Fund annually sends out ATP PEP’s “ESG Data Questionnaire” to the portfolio funds in which the Fund is invested. The data received from the portfolio funds is used in an analysis report which contains benchmarks on sector level and comparisons with peers, providing each fund manager to act on results deviating from peers in that particular subsector for each portfolio company. The ESG data questionniare sent out by The Fund is not always responded to by all portfolio funds and the portfolio funds responding do not neccesarily always provide comprehensive responses to all questions.

As data is self-reported by portfolio fund managers, an overall sanity check is to the best of The Fund’s ability performed on the data received. The Fund does not used estimated data.

As stated above, the ESG data available to the Fund is primarily based on self-reported material and data received from the fund managers of the portfolio funds of the funds managed by the Fund and as such there is an inherent risk of inaccuracy. To the extent information provided to our knowledge is materially incorrect – and the assessment of correctness is in itself very difficult in practice – the Fund facilitate dialogues with the portfolio funds to understand facts.  As data quality and quantity is still maturing, funds are followed on a more qualitatively level in terms of their ESG development.

ATP PEP’s ambition to promote environmental or social charactheristics is independent of these limitations.

The Fund is a fund-of-funds and therefore ESG due diligence is focused on a qualitative overall assessment of portfolio fund managers’ ability to manage ESG and such portfolio funds’ ESG policies.

The ESG due diligence performed includes sending out an “ESG Due Diligence Questionnaire” to portfolio funds requesting various ESG related information from the potential portfolio fund where the information is not otherwise available to the Fund. This is typically followed by an interview with the ESG responsible at the portfolio fund manager. The findings of the due diligence process carried out is included in the final investment recommendation. The ESG due diligence is carried out and lead by the Head of ESG and forms an important part of the Fund’s overall due diligence and investment decision.

The Investment Committee of ATP PEP ensures that ESG due diligences has been performed. The Fund does not use external control of the ESG due diligence.

The Fund has continuous dialogues with portfolio fund managers to monitor the development in their approach to ESG. The data analysis made based on responses to the ATP PEP “ESG Data Questionnaire” from portfolio funds gives a good starting point for this dialogue.

As part of the ongoing monitoring of the funds, membership of those funds’ Advisory Boards is often sought to the extent possible, and the Fund will participate on AGMs as well as investor meetings in the portfolio funds. In case of detected material irregularities related to good governance a dialogue will be initiated to seek to address the issue.

The Fund does not use a reference benchmark.