Eland Private Equity

Responsible Investment Policy

Eland Private Equity is an Investment Fund Manager specializing in investing in all types of assets. Eland has different investment programs, among which are direct investment in renewable energy assets and thematic funds of funds, in biotechnology.

I. Our Responsible Investment Beliefs

At Eland Private Equity we recognize that the incorporation of environmental, social and good governance (ESG) factors in our investment processes and in the management of our investees contributes to the preservation and creation of value and is a means of managing risks and opportunities within our investment activity.

We believe that assessing ESG risks and opportunities it is part of our fiduciary duty, and we have an open conversation with our investors to understand and consider their sustainability objectives in our investment decisions.

We understand that acting as responsible investors is a process of continuous improvement in which to progressively incorporate the best ESG practices.

We recognize our ability to influence and transform companies and align their actions with the contribution to Sustainable Development Goals (SDG). In our investment activity, we will give priority to generating a positive impact on health and well-being (SDG 3), access to affordable and clean energy (SDG 7) and climate action (SDG 13).

II. Principles and commitments

We are committed to acting guided by the values and principles of the most rigorous international standards when carrying out our investment activity. We will strive to align the strategies and operations of our investee companies and funds with the universal regulations on human rights, labor, the environment, and anti-corruption promulgated by the United Nations Global Compact, the International Labor Organization, and the OECD Anti-Bribery Convention. .

We are aligned, and we have subscribed to the United Nations Principles for Responsible Investment (UN PRI). In this sense, we follow the following principles:

  1. Incorporate ESG issues into investment analysis and decision-making processes.
  2. Incorporate ESG issues into the exercise of our proprietary practices and policies.
  3. Influence our direct investments, as well as funds in which we invest, so that they report on the ESG issues that concern them.
  4. Promote acceptance and application of the Principles among the investment industry.
  5. Work with other signatories to improve effectiveness in applying the Principles.
  6. Report our activities and progress in applying the Principles.

III. Dedicated resources

Eland Private Equity understands that the application of ESG best practices requires an appropriate ESG governance structure. Therefore, we provide our staff with ESG training; we have an ESG Manager, and we complement our governance with the external support of specialized ESG consultants.

The ESG Manager, together with the partners of Eland Private Equity, oversee that the integration of sustainability risks in the investment activity is considered among the evaluation criteria of the team members, and is part of the internal processes of Compulsory compliance with the remuneration policy.

IV. Integration of sustainability risks and the analysis of adverse sustainability events in the investment process

Eland Private Equity engages in different investment activities, and this investment policy affects all of them. Eland screens, selects, and invests in VC funds worldwide through funds of funds. It also makes direct investments through thematic funds.
Eland Private Equity is committed to integrating ESG considerations into its investment process. The manager still does not take into account the main adverse effects of its investment decisions and its investment advice on sustainability factors, specifically the indicators included in Annex I of the draft Regulatory Technical Standards. The nature of the vehicles managed by Eland (direct investment and funds of funds) means that in order to take into account the main adverse events, Eland should receive the necessary information to comply with the regulations. At this point, Eland does not have enough information to be able to indicate when it will be able to take into account the main adverse events.

In both investment strategies, in the pre-investment phase, we exclude from our investment universe a set of activities that we understand are contrary to our principles of responsible investment and those of our investors and that imply a significant risk to our reputation, prepared in accordance with the exclusion list of the International Finance Corporation of the World Bank and that of the European Investment Bank.

In particular, we exclude from our investment universe the following set of activities:
  • Illegal economic activities: the production, commercialization or other activity, which is illegal under the laws or regulations of the Spanish or Portuguese jurisdiction. Human cloning for reproductive purposes is considered an illegal economic activity in the context of these guidelines.
  • Tobacco and distilled alcoholic beverages: the production and trade of tobacco and distilled alcoholic beverages and related products (excluding beer and wine sector).
  • Production and trade of arms and ammunition: the financing of the production and trade of arms and ammunition of any kind. This restriction does not apply to the extent that said activities form part of or are accessory to European Union policies or said weapons and ammunition are intended for merely hunting or sporting use.
  • Casinos: financing of casinos and equivalent companies.
  • Production and commercialization of radioactive material. This expressly does not apply to any activity dedicated to the purchase of medical equipment, quality control and measurement, or any other material that Korion deems acceptable.
  • Restrictions in the information technology sector: research, development or technical applications related to electronic data programs or solutions, specifically aimed at internet gambling (excluding official or public lottery games or other company games , foundations or organizations with social or charitable purposes) and online casinos or pornography.
  • Production or sale of non-adhered asbestos fibers.
  • Driftnet fishing in the marine environment using nets longer than 2.5 km. at length.
  • Life sciences sector: when supporting the financing of research, development or technical applications related to:
    • Human cloning for research or therapeutic purposes
    • Companies that do not adhere to the “Convention for the Protection of Human Rights and the Dignity of Human Being with Regard to the Application of Biology and Medicine’s guidelines”.
    • Companies that do not follow “Good Manufacturing Processes (GMP) guidelines” and
    • Lack of ethics committees monitoring clinical trials.
We review our list of exclusions regularly to cover controversial issues identified in our ongoing dialogue with our investors.
Next, we differentiate the integration process for direct investments and fund-of-funds management.

DIRECT INVESTMENTS

Pre-Investment

Companies that meet our investment criteria and do not fall into any of the excluded sectors are subject to a vetting process by the investment team that includes an internal ESG assessment. The ESG assessment covers the following topics:

  • List of ESG exclusions and restrictions.
  • High level analysis of the sustainability risks, adverse events and opportunities in the field of sustainability that are materially financial of the geographies and sectors in which the company operates.
  • Risk assessment, analysis of adverse events and opportunities in terms of sustainability specific to the company that are considered material.

Financial materiality at the sectoral level will be determined using SASB standards® or other similar ones.

The conclusions of the ESG assessment are attached to the investment memorandum and discussed in the Investment Committee for final approval of the transaction.

In case any of the risks, adverse events or opportunities in terms of sustainability is considered important, the Investment Committee may decide to carry out a due diligence external ESG. The due diligence It will include an action plan to reduce or eliminate the risks or adverse incidents identified.

Post-Investment

During the investment phase, whenever its participation in the same allows it, Eland will appoint a senior member as director of the investee company. This role ensures Eland’s involvement in key strategic and operational decision-making processes, including ESG strategy.

The Eland representative will ensure that ESG initiatives are discussed on the Board, promote ESG best practices and seek appropriate disclosure of ESG issues by investee companies.

Eland, taking into account those ESG issues that are relevant in the context of the activity of each company, will promote the adoption of the following ESG actions in investee companies:     

  1. Adherence to Eland’s ESG policy and the United Nations Global Compact.
  2. Appointment of an ESG manager in the investee company.
  3. Inclusion of ESG topics in Board meetings.
  4. Design a 3-4 year Value Creation Plan that establishes the ESG strategic objectives based on financial materiality as well as the actions necessary to achieve these objectives.
  5. Define KPIs that make it possible to measure and monitor sustainability risks and the main adverse incidents in terms of sustainability that are relevant in the context of the activity of each company. Among the latter, those referring to the use of energy, renewable energy, water, consumption of raw materials, waste production, greenhouse gas emissions, impact on biodiversity, the violation or lack of processes or compliance to avoid violation of the principles contained in the United Nations Global Compact or the OECD guidelines for multinational companies, the wage gap, diversity on the Board, among others.
Prior to any divestment action or additional round of funding, Eland will conduct an ESG assessment to determine to what extent ESG management has contributed to creating a more valuable and sustainable company.

FUNDS OF FUNDS

Initial screening

Eland will not consider investing in any manager whose current or potential fund portfolio may include investments that are excluded by Eland’s exclusion list. To ensure that the underlying managers comply with Eland’s exclusions, Eland will use its best efforts to obtain a written commitment from the management company (side-letter or equivalent) to avoid investments in the excluded sectors.

Due diligence

Eland has defined a process for due diligence structured that is aligned with the best practices of ILPA, UN PRI and regulatory requirements (Europe, the “SFDR – Regulation (EU) 2019/2088”) and SEC requirements. It incorporates ESG questions that allow Eland to invest with managers who are aligned with its values and analyze sustainability risks and major adverse events on sustainability factors in the underlying funds.

Eland’s Fund of Funds team will, among other ESG topics, look at at least:
  • ESG policy and, in particular, the policy for the integration of sustainability risks in the investment decision-making process and if the main adverse incidents in terms of sustainability and the due diligence policies in relation to said are taken into account adverse incidents.
  • Adherence to the United Nations Principles for Responsible Investment (UNPRI).
  • Incorporation in an OECD country.
  • Formal commitments related to the integration of ESG in fund formation agreements, in LPAs or in side letters when requested by investors .

Monitoring

Eland monitors its investments through communication with the managers throughout the life of the investment, at least once a year. Eland requires managers to annually complete an ESG questionnaire reporting the most relevant ESG issues in the portfolio. This questionnaire includes questions on the integration of sustainability risks in the manager’s investment process and on the consideration of the main adverse incidents in terms of sustainability (materiality analysis, due diligence process, action plans). The responses to the questionnaire are used as the basis for establishing a dialogue with the managers with the aim of driving the continuous improvement of ESG practices.

V. Transparency and communication

Eland will annually assess its performance and progress on ESG through a reporting and reporting process based on UN PRI criteria (Transparency Report).
Finally, the Eland team will participate in the promotion of responsible investment among the investment community and society in general. In this sense, the members of the Eland team will participate as attendees, members, promoters and/or speakers in conferences and events that aim to promote and share best practices in ESG matters.