HPE Growth
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Principal Adverse Sustainability Impacts Statement (Article 4)

EU Sustainable Finance Disclosure Regulation

The Sustainable Finance Disclosure Regulation (“SFDR” or the “Regulation”) applied from 10 March 2021. The Regulation requires financial market participants such as HPE Growth B.V. (the “firm” or “HPE Growth”) to provide information to investors with regards to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics, and sustainable investment.

The firm considers principal adverse impacts of investment decisions on sustainability factors in a manner appropriate to its size and the nature and scale of its activities and the types of financial product it makes available. Depending on the characteristics of the product which it is managing, and in particular the product’s designation as promoting “environmental or social characteristics” or having “sustainable investment” as its objective, the firm will determine and disclose whether, and the extent to which, it considers the principal adverse impacts of its investment decisions.

In relation to products that do not expressly claim to promote environmental or social characteristics or have a sustainable investment objective, HPE Growth does not consider the principal adverse impacts of its investment decisions.

In relation to products that promote environmental or social characteristics, or have sustainable investment as their objective, the firm considers principal adverse impacts to the extent described in that product’s pre-contractual documents. In all cases, please refer to a product’s pre-contractual information for the specific policies applicable to that product.

Therefore, this Principal Adverse Sustainability Impacts Statement (“this Statement”) specifically addresses the obligation in Article 4(1)(a) of the Regulation:

“Financial market participants shall publish and maintain on their websites:

(a) where they consider principal adverse impacts of investment decisions on sustainability factors, a statement on due diligence policies with respect to those impacts, taking due account of their size, the nature and scale of their activities and the types of financial products they make available.”

HPE Growth notes that pursuant to the Regulation, the EBA, EIOPA and ESMA (the “ESAs”) are mandated to develop regulatory technical standards (the “RTS”) with respect to climate and other environment-related adverse impacts, and with respect to social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

HPE Growth notes further that as of the date of this Statement, the European Commission has adopted the RTS, which has not yet been ratified. Notwithstanding the aforementioned, where adverse impacts are considered in respect of one of the firm’s products, the firm will apply the standards as set out in the adopted RTS as of the date of this Statement and will take into account ongoing advice to monitor and update its related policies and procedures where necessary due to any change in the RTS in order to ensure alignment and compliance with applicable laws and regulations.

HPE Growth will also monitor the development and adoption of any further regulation and RTS and consider, where appropriate on a product-by-product basis, the adoption of those standards to be set out in such regulation or RTS.

More information related to the firm’s responsibilities under the SFDR, and the firm’s approach to environmental, social and governance (“ESG”) factors and responsible investment in general, can be found on the firm’s website here.

Sustainability Factors

 

“Sustainability factors” are defined in Article 2 (24) of the Regulation as: “environmental, social and employee matters, respect for human rights, anticorruption and antibribery matters”.

 

Adverse Sustainability Impacts Statement

 

This Statement constitutes HPE Growth’s adverse sustainability impacts statement pursuant to Article 4 of the RTS, in the format prescribed therein.

Because this Statement is HPE Growth’s first such statement, this Statement corresponds prospectively to the period of 1 August 2022 to 31 December 2022. As envisioned in the derogation contained in Article 4(3) of the RTS, there is no data available from the remainder of calendar year 2022, because it has not yet happened. There is therefore no quantitative information to be published in the format specified in Article 4(2) of the RTS. HPE Growth has therefore adopted an adverse sustainability impacts statement in a non-quantitative format as permitted under the derogation contained in Article 4(3) of the RTS.

HPE Growth will publish the required information relating to 1 August 2022 to 31 December 2022 in the format specified in Article 4(2) of the RTS on or before 30 June 2023.

Summary

 

As noted above in the second paragraph of this statement, HPE Growth considers principal adverse impacts of its investment decisions on sustainability factors in a manner appropriate to its size and the nature and scale of its activities and the types of financial product it makes available. The present statement is the consolidated principal adverse sustainability impacts statement of HPE Growth. This principal adverse impacts Statement covers the first reference period from 1 August 2022 to 31 December 2022.

As a responsible investor, HPE Growth experiences the roll-out of (digital) technology as an opportunity to contribute to a more sustainable, secure and integer future. HPE Growth believes that there is a strong link between effective ESG integration and improved welfare of companies and society. Investment decisions that negatively impact climate or other environment-related resources, or have negative implications for society, are detrimental to value creation. HPE Growth will use reasonable best efforts to make the necessary preparations to gather, monitor and report the principal adverse sustainability impact indicators listed below.

Description of principal adverse sustainability impacts

 

HPE Growth uses the definition of principal adverse sustainability impacts as described in Recital 20 of the Regulation: “Those impacts of investment decisions that result in negative effects on sustainability factors, with sustainability factors referring to environmental, social and employee matters, respect for human rights, anticorruption and antibribery matters.

 

Description of policies to identify and prioritise adverse sustainability impacts

 

The firm’s incorporation of ESG factors in its investment appraisal, due diligence and decision-making processes identifies principal adverse impacts on relevant Sustainability Factors. Throughout the lifecycle of a product’s investment, the firm’s due diligence data collection and monitoring enable the relevant investment team to identify and manage the materiality of any principal adverse impacts, or their risk of occurring, and take suitable mitigating action. The Head of ESG prepares ESG policies, and is ultimately responsible for the implementation of these organisational strategies and procedures, including taking appropriate measures to ensure that investment teams comply with them.

As with Sustainability Risks (as disclosed in the Sustainability Risk Policy, available on the website at [INSERT LINK]), HPE Growth will use reasonable best efforts to ensure principal adverse impacts on Sustainability Factors are screened, monitored and measured in a manner suitable to each HPE Growth product. The diligence policies with respect to these impacts are disclosed on a product-by-product basis in the relevant pre-contractual disclosures (such as the private placement memorandum or offering memorandum).

The RTS contains 14 mandatory ESG metrics (‘principal adverse sustainability impact indicators’) that are relevant to the private equity products that HPE Growth offers. These indicators should be gathered at portfolio investment level and aggregated at entity level (i.e., HPE Growth). These mandatory indicators will be included in the firm’s retrospective principal adverse impacts statement covering the first reference period (i.e., 1 August 2022 to 31 December 2022).

The firm is making necessary preparations to gather, monitor and report the mandatory principal adverse impact indicators within the specified time period. HPE Growth will report on all indicators related to principal adverse impacts on sustainability factors as set out in Table 1 of Annex I of the Regulatory Technical Standards of the Regulation as described above.

Furthermore, HPE Growth will select at least one additional indicator related to principal adverse impacts on a climate or other environment related sustainability factor that qualifies as principal as set out in Table 2 of Annex I, as well as at least one additional indicator related to principal adverse impacts on a social, employee, human rights, anti-corruption or anti-bribery sustainability factor that qualifies as principal as set out in Table 3 of Annex I. HPE Growth will select these additional indicators based on the probability of occurrence and severity of adverse impacts (including their potentially irremediable character).

The report on the mandatory and additional indicators related to principal adverse impacts will contain a description of the actions taken during the relevant reference period and actions planned for the next reference period to avoid or reduce the principal adverse impacts identified.

Engagement policies

 

The extent and nature of the direct control that the firm exercises in each portfolio company necessarily depends on the size of the equity position it has taken in the portfolio company. The firm takes board positions and / or observer roles in its portfolio companies. Through this board position and / or observer role and based on data received on a quarterly basis from its portfolio companies, HPE Growth stays informed about adverse sustainability impacts and other ESG topics. HPE Growth evaluates portfolio companies on a range of ESG topics using its proprietary ESG Framework.  The results, feedback and opportunities for improvement, are subsequently discussed with the management team of the respective portfolio company.

Material ESG issues that are identified during the due diligence process, or through ongoing monitoring, are addressed at company board meetings and in the value creation strategy outlined in the 100-day plan.

 

References to international standards

 

The firm is a signatory of the United Nations Principles for Responsible Investment (“PRI”), and commits to the following principles:

  1. Incorporate ESG issues into our investment analysis and decision-making processes.
  2. Be active owners and incorporate ESG issues into our ownership policies and practices.
  3. Seek appropriate disclosure on ESG issues by our portfolio companies.
  4. Promote acceptance and implementation of the principles within the investment industry.
  5. Work together to enhance our effectiveness in implementing the principles.
  6. Report on our activities and progress towards implementing the principles.

HPE Growth makes use of the UN’s Sustainable Development Goals as key indicators by which to measure the societal impact of its current and potential investments. Specifically, the firm looks for investment targets that can provide and / or contribute to Gender Equality (SDG 5), Decent Work and Economic Growth (SDG 8), Industry Innovation and Infrastructure (SDG 9) and Peace, Justice and Strong Institutions (SDG 16). Other SDGs which are considered if they are material to the investment are Good Health and Well-being (SDG 3), Quality Education (SDG 4) and Climate Action (SDG 13).  HPE Growth looks for ways to improve and demonstrate the outcomes its investment decisions have on the SDGs by applying its ESG Framework.

The goal of the Paris Agreement is to keep global warming below 2° Celsius.  HPE Growth hopes to positively contribute to the overall goal of the Paris Agreement by gathering, monitoring and reporting climate-related adverse impact indicators in relation to certain of its funds. With those of its funds that consider principal adverse impacts, HPE Growth seeks to work with its portfolio companies to ensure they have adequate monitoring procedures for the measurement of adverse impact indicators including the Scope 1, 2, and 3 GHG emissions.  HPE Growth does not invest in companies that engage in the exploration, extraction, and production of coal or crude oil.

As HPE Growth prepares to develop a methodology for selecting, monitoring and reporting on other adverse impact indicators, it will also develop and report on the methodology and data used (including any forward-looking climate scenarios) to measure that adherence or alignment, including a description of the scope of coverage, data sources and how the methodology forecasts the future performance of projects.

 

Review of the Policy

 

This Principal Adverse Sustainability Impacts Statement (Version 1) is effective as of 1 August 2022.

 

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