At Nordian Capital we recognize the impact private equity investments may have on the environment and society. We consider it important that both Nordian Capital and our portfolio companies aim to operate in an environmentally and socially sustainable way.
Respect is our core value. Respect for our management co-shareholders and all employees of our companies and respect for the environment and society. That is what we stand for and how we work.
We believe that environmental, social and governance (ESG) aspects can have an important impact on value creation. Taking into account ESG factors can have a considerable impact on the performance of our portfolio companies as ESG factors offer opportunities to enhance revenue, reduce costs and reduce risk.
In order to comply with the Sustainable Finance Disclosure Regulation (SFDR) 1, Nordian makes the following disclosures.
Integration of sustainability risks
A sustainability risk means "an environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of the investment".
Before investment decisions are made on behalf of the Nordian funds that we manage, an investment decision process is followed which includes the approval of the Investment Committee of our funds. Part of the investment decisions process is that we assess the risks attached to a potential investment opportunity, which includes sustainability risks. Identified sustainability risks are therefore considered by us when making investment decisions.
1. Regulation (EU) 2019/2088
We strive to continuously address and incorporate sustainability in our own business processes and those of our portfolio companies, to enhance revenue, reduce costs and reduce risk. Our approach focuses on 3 principles:
Accordingly we integrate sustainability factors and risks into our decision making process before selecting an investment. Additionally we monitor and engage with our portfolio companies with the aim of improving the ESG performance of our portfolio companies and setting minimum requirements for our investments.
Nordian pays staff a combination of fixed remuneration and variable remuneration (including a possible bonus). The remuneration for relevant staff also takes into account compliance with all policies and procedures which are in effect at Nordian.
No consideration of adverse impacts of investment decisions on sustainability factors
In accordance with the SFDR, Nordian states that it does not consider adverse impacts of investment decisions on sustainability factors as set forth in the SFDR and therefore does not make the disclosures as described in the SFDR. Given the small size of the organization of Nordian, such disclosure as set forth in the SFDR and the administrative burden in connection therewith would not be proportional. However this does not mean that Nordian doesn’t take into account the adverse impact of its investment decisions on sustainability factors as set forth in article 4 sub 1 (a) of the Disclosure Regulation.
Nordian is CO2-compensated since 2019. All companies in the Nordian portfolio, and Nordian HQ itself, have committed to measuring their CO2 emissions and reducing their output every year. Remaining emissions are compensated at the end of each year through a forestry partnership with LandLife.
‘This is not an intention or a long-term project, but a fact of everyday life in the Nordian group,’ says Gregor Beusmans, partner at Nordian and initiator of the program.
CO2 emissions of all portfolio companies are calculated every quarter by an independent specialist. Each portfolio company together with Nordian continually works on programs to reduce emissions. For example, through changes in the production process or switching to suppliers of green energy.
Emissions that remain after these reductions are compensated at the end of the year by planting trees in Spain and Texas. This is achieved by the Land Life Company, a firm that is specialized in CO2 reduction through reforestation.
In 2019, compensation for all emissions that occurred in the course of 2018 was paid for by Nordian. Starting in 2020, the companies in the Nordian group will pay for the compensation program themselves, providing them with an incentive to reduce emissions.
Why?
‘Worldwide, companies are the largest sources of CO2,’ says Beusmans. ‘With €320 million invested we are a mid-sized firm in the Netherlands, and a tiny factor worldwide. But we believe in the saying ‘Change the world and start at home.’ We’re doing this because we think it’s right.’
Investors have not been put off by the program, which after all – modestly – reduces the return on their investments. During the fund raising round for Fund III, most were actually very supportive.
The companies in the Nordian portfolio, active in various sectors from software to agriculture to ICT, have all signed up to the project.
“We are using this Land Life initiative to confront our suppliers. Roughly 30% of the steel they supply at the moment is recycled. We are negotiating with them to bring that level up to 70%.”
