ESG Report 2016 - BaltCap
ESG report 2016ENVIRONMENTAL, SOCIAL &GOVERNANCE (“ESG”)REPORT FOR 2016April 20171
ESG report 20162
ESG report 201604MESSAGE FROMMANAGING PARTNERS07BALTCAP09BALTCAP’S APPROACH TOENVIRONMENTAL, SOCIALAND GOVERNANCEMATTERS12ABOUT THIS REPORT17OVERVIEW OF THE 2016SURVEY FINDINGS21CATEGORY SUMMARY:WORKPLACE POLICIES24CATEGORY SUMMARY:ENVIRONMENTALPOLICIES27CATEGORY SUMMARY:MARKETPLACE POLICIES30CATEGORY SUMMARY:COMPANY VALUES ANDANTI-CORRUPTION33CATEGORY SUMMARY:COMMUNITY POLICIES36ABOUT THE SURVEYMETHODOLOGY3
ESG report 2016MESSAGE FROM MANAGINGPARTNERSWe are pleased to present our 6th Environmental, Social and GovernanceReport. As the leading private equity and venture capital investor in the Balticcountries we also strive for leading the way in incorporating ESG issues into theinvestment process. Every year we ask our portfolio companies to complete arigorous self-assessment. Find out more and take a look into this ESG report for2016.Together with our portfolio companies we are the leading investor contributingto the growth of Baltic economy. Looking back, BaltCap has been managingnumerous funds and has made over 70 investments directly contributing to theregional capacity building. We conduct our operations in accordance with thehighest legal and ethical standards. We expect nothing less from our portfoliocompanies.BaltCap has been following the most rigorous set of principles for responsibleinvestment for a long time. Our company has been a signatory of the UnitedNations Principles for Responsible Investment since 2008.Responsibleinvestment is a natural part of our business.BaltCap is also a long-time participant in Estonian Sustainable Business Index.In 2016, BaltCap participated for the 7th consecutive year. For our long-termcommitment and excellent ESG performance, BaltCap was awarded a silverlevel Quality Label in the 9th Estonian Sustainable Business Index.In other words, we take performing well in terms of ESG issues seriously and theresults from the 2016 ESG survey prove that again. The average score for ESGperformance among the portfolio companies has improved compared to theyear before. Furthermore, increasing number of portfolio companies havecertified system for managing health, safety, quality, and environmentalperformance. Today 50% of the respondents have a management system thatfollows internationally acknowledged standards.Moreover, the improvements and highlights for 2016 include:Unimed, Estonian dental care provider, opened a new state-of-the-artclinic in Tartu. The new facilities significantly improve the workingenvironment and take the customer experience to a new level. Inaddition the new location in the city centre is easily accessible bypublic transport.4
ESG report 2016Magnetic MRO, aircraft maintenance service provider, completed its500th heavy check of commercial aircraft in its base in Tallinn Airport.Over the years, the company has provided its customers includingairlines based in North-Eastern Europe a reliable service near theirhome base reducing the need to fly long distances to have an aircraftmaintained. Furthermore, Magnetic MRO has also improved its servicecapacity and is able to carry out heavy maintenance checks for 6aircrafts simultaneously. During the past few years, the company hascreated many new jobs and as an internationally active business hasbecome an excellent career base for aircraft engineers and mechanics.FCR, digital media agency, assisted restructuring process of TruvoGroup in Belgium saving the business and ensuring jobs for 300specialists in Belgium. FCR Media now covers 12 markets in Europe andSouth America offering needed advertising services in digital channelsto more than 100 000 small businesses.Ecoservice, waste management company, continued to reduce thelandfilled waste and improving recycling rate in Lithuania. In 2016, thecompany’s secondary raw materials' recycling increased by 14% to 14076 tons and construction waste recycling more than tripled to 16 712tons as a result of launching a new construction waste recycling line.Kelprojektas, Lithuanian road engineering company, contributed toaward winning infrastructure projects: “Movable bridge over the riverDane on the street Pilis, in Klaipeda”, Product of the Year 2016 byLithuanian Confederation of Industrialists and “Project of nationalarterial road A5 Kaunas-Marijampole-Suvalkai of the section from 45,15to 56,83 km reconstruction to highway”, Best Road Project of the Year2016 in Lithuania.However, we recognize that to be an industry leader much remains to be doneto keep us above the rest. We continue to strive for excellence, be more and bepart of a sustainable future. If you have any questions or comments about thisreport or our ESG principles, please do not hesitate to contact us.5
ESG report 2016BPT Real EstatePeeter SaksMartin KõdarDagnis Dreimanis6Simonas Gustainis
ESG report 2016BALTCAPBaltCap is the leading private equity and venture capital investor in the Balticcountries focusing on small and midmarket buyout, expansion and growthcapital investments. We partner with ambitious management teams, ctiveoperationalengagement. We aim to create strong partnerships with the companies we workwith, allowing us to take a hands-on role in strategic development and valuecreation.BaltCap has strong presence in all three Baltic countries with local offices andexperienced investment team. Since 1995, BaltCap has been managing severalprivate equity and venture capital funds with total capital of over 260 millionand has made 74 investments to date.We are supported by a broad blue-chip investor base that includes bothinternational and local institutions like the European Investment Fund, theEuropean Bank for Reconstruction and Development (EBRD) and the largestpension funds in the Baltics.Impuls gym7
ESG report 2016Investment strategyBaltCap’s investment philosophy is based on value creation delivered throughactive ownership. We focus on working in partnership with management teamsto deliver long-term revenue and profit growth, as well as building businessesthrough acquisition. We invest equity or equity-related instruments, and like tosupport strong, ambitious management teams with whom we have a goodcultural fit.Facts about usMain countries of operationEstonia, Latvia and LithuaniaNumber of Investments74 (of which current 35)BaltCap Private Equity II SCSpBaltCap Private Equity Fund L.P.BaltCap FundsBaltCap Latvia Venture Capital Fund K.S.Lithuania SME Fund KUBBaltic Investment Fund III L.P.Baltic Investment Fund III C.V.Contact point for questionsTriinu Oll, triinu.oll@baltcap.comHomepagewww.baltcap.com8
ESG report 2016BALTCAP’S APPROACH TOENVIRONMENTAL, SOCIAL ANDGOVERNANCE MATTERSOur environmental, social and governance principlesAs a signatory of the United Nations Principles for Responsible Investment(UNPRI), an investor initiative in partnership with UNEP Finance and the UNGlobal Compact, BaltCap follows the policies and practices of responsibleinvestment and has incorporated ESG considerations into daily operations.BaltCap is committed to the followingParticipating actively in the strategic management of portfoliocompanies through Council and Board memberships;Identification, credit analysis and supervision of portfolio investmentswill be carried out with due regard to ecological and environmentalfactors;Not to invest in companies that are engaged in arms manufacturing,manufacture of tobacco, hard spirits, gambling, human cloning,genetically modified organisms and illegal economic activity;Not to proceed with any investment transaction without knowing whothe beneficial owner of the counterparty is;Carry out relevant due diligence (including environmental and socialdue diligence) in all the investment cases;Ensure that appropriate standards of corporate governance are inplace or will be implemented within a reasonable time period in allportfolio companies in compliance with the OECD CorporateGovernance Principles;9
ESG report 2016Ensure that all portfolio companies comply with the health, safety,worker protection and environmental regulations and standardsapplicable in the country where the investment is situated;Manage our business affairs sustainably and reduce our overallexposure to risk;Comply with EBRD’s Environmental and Social Risk ManagementManual;Comply with all applicable laws, regulations and best practiceprinciples of the private equity industry, abiding by the Invest EuropeProfessional StandardsBaltCap is actively contributing to the local market development by being afounding member of the Estonian, Latvian and Lithuanian Private Equity andVenture Capital Associations. BaltCap is also an active member of ResponsibleBusiness Forum in Estonia.Implementation and monitoringIn order to provide necessary training and ensure environmental and socialawareness among BaltCap team, the members are regularly attendingconferences and trainings where ESG, sustainable development and corporatesocial responsibility topics are part of the agenda.BaltCap also carries out and compiles an annual self-assessment regarding itsenvironmental, social and governance procedures as well as performance basedon the UNPRI reporting tool and Responsible Business Forum Estoniaquestionnaire. The results of this self-assessment are in turn evaluated, rankedand published by the Responsible Business Forum in the annual CorporateSustainability and Responsibility Index and by UNPRI in its Report on Progress.In order to ensure that our environmental, social and governance principles arefulfilled, we monitor portfolio companies’ environmental and social performancethrough our own ESG survey, which is presented in this report.Communication and transparencyActive co-operation through business associations mentioned above is animportant part of our communication activities to address the issues of10
ESG report 2016responsible entrepreneurship and encourage the development of corporateresponsibility in the Baltic region.The ESG progress regarding the portfolio companies is reported to our investorsregularly. Material ESG issues are covered in the quarterly reports to investors.In addition, an annual report is published based on the annual ESG screeningresults. Furthermore, there is of course daily communication and co-operationwith our business partners.Stenders shop in Asia Pacific11
ESG report 2016ABOUT THIS REPORTThis is our 6th annual report presenting BaltCap’s principles and performance inEnvironmental, Social and Governance (ESG) matters. Our previous ESG reportwas published in February 2016. This report is the main point of reference forour stakeholders regarding our annual Environmental, Social and Governanceperformance.BackgroundBaltCap is a signatory of the United Nations Principles for ResponsibleInvestment (UNPRI) initiative and thus committed to implement the principlesand communicate on the progress. Since 2011 we are annually carrying out anESG survey among our portfolio companies in order to follow up and measurethe progress in ESG matters.The purpose of the survey is also to highlight the importance and raiseawareness regarding responsible entrepreneurship. We hope that thequestionnaire helps companies to identify the material aspects and relevantactions they can take to strengthen their businesses, reputation and reduce theiroverall risk exposure.ESG survey 2016The survey carried out during the period December 2016 - February 2017 hadthe same scope and was identical with the questionnaire used in ESG survey2015. The main focus of the survey is to provide an ESG performance overviewthat meets the expectations of our investors and the latest developments in theprivate equity industry. The questionnaire is designed to fully comply with thelatest requirements of European Bank for Reconstruction and Development forannual environmental and social reporting.32 out of 33 currently active portfolio companies responded to thequestionnaire. The response rate was 97% (88% in 2015). 13 out of 13 portfoliocompanies of BaltCap Private Equity Fund I&II responded to the survey. Theparticipation was voluntary for JEREMIE initiative funds’ companies (BaltCapLatvia Venture Capital Fund and Lithuania SME Fund) and in total 19 out of 20of those companies responded to the survey, demonstrating continuous interestin ESG issues.12
ESG report 2016Methodology in briefIn the same way as the year before, our ESG questionnaire for 2016 consisted offive main categories (see Table below) each divided into three groups anagementandperformance. The survey is carried out in form of a web-based self-assessmentquestionnaire signed by management/executive officer of each participatingportfolio indicatorsAssesses thepolicy &managementsystem ofthe portfoliocompanyAssessesthe portfoliocompany’sapproach tomanagerisksExamines orkplace policiesEnvironmental policiesMarketplace policiesCompany values &anti-corruptionCommunityOverview of respondentsThe scope and boundaries of this report include the following companiespresented below.Type ofbusinessEmployeesTurnover( 000)Environmental& social riskclassification*Private equity (PE) portfolio – including the companies of BaltCap Private Equity II SCSp,BaltCap Private Equity Fund L.P., Baltic Investment Fund III L.P. and Baltic Investment FundIII C.V.Propertymanagement874 404MediumDental careprovider27310 168MediumWastemanagement58127 928Medium/High13
ESG report 2016Wastemanagement60330 361Medium/High1 06987 125LowFinancialtechnologysolutions11311 467LowMachinery trade26358 492LowTransportinfrastructureengineering29810 183HighAircraftmaintenance,repair andoverhaul34447 085MediumOccupationalhealth care774 715MediumBusinessprocessoutsourcingservice provider90522 263LowRoadconstructionandmaintenance35753 930HighPumpingsystems rental1164 694Medium/High5 086372 815Directionalmedia companySubtotalPortfolio of JEREMIE initiative funds – including the companies of-BaltCap Latvia VentureCapital Fund K.S., Lithuania SME Fund cer462 al operator221 ain ofbranded coffeeshops2897 990MediumGardenfurnitureproduction1778 986Medium14
ESG report 2016Liquid crystaldisplayproducer25730MediumGym and healthclubs operator41215 536LowMedical careservicesprovider3976 536MediumLaboratorysupply provider607 076HighChocolatemanufacturer653 487MediumCosmeticsproducer1416 276HighUrban journeyplanningapplication401 033LowMonitoringsystems emmaintenance531 505Medium111 81166 7906 897439 605Volumetric 3Dmonitordeveloper andsupplierSubtotalGrand totalTREV-2 street maintenance15
ESG report 2016Overview of private equity portfolio companiesRevenues of PE portfolio ( m)EBITDA of PE portfolio ( m)4923861%95%23Entry253LatestEntryLatestEmployees in PE portfolio7 35957%4 681EntryLatestEach year the portfolio companies also pay significant amounts in salaries, taxesand invest in the development of the business. 61million(2015) 79 million ofnet salaries paidby portfoliocompanies in 2016 34million(2015) 62 millionof total taxespaid(includingsocial taxes,PIT and CIT)in 201616 17million(2015) 24 millionof totalcapitalexpenditurein 2016
ESG report 2016OVERVIEW OF THE 2016 SURVEYFINDINGSESG Survey results 2014-201670%61%201465%2015201660%55% 57%38%43% 45%43% 43% placePoliciesCompany valuesand anticorruption32% 32%CommunitySummaryInperformance(average score 70%), reflecting thatimproved on the overall level and in2016,theESGthe portfolio companies put a strongthe Workplace, Environmental andemphasis on the health and ployeeremained on the same level in thesatisfaction and employees’ viewsCompany values & anti-corruptionregarding important issues for thecategory and had a minor drop in thebusiness. Companies’ relatively strongCommunity category.performanceinthiscategorycompared to the other topics can alsoTheaveragescoreacrossallbe explained by the rather effectiverespondents and all ESG categoriesenforcementhas increased from 45% in 2014 toofthelegislationregarding the occupational health and50% in 2016. We are delighted tosafety as well as labour rights.report that the overall performancehas continued to improve since 2014.Another category where the generalperformance scored above averageAs the year before, the portfoliowascompanies continue to perform bestMarketplaceServicein the category Workplace on, which are some of the17
ESG report 2016questionnaire topics in this category,50%are essential issues for every businessandthuscompaniesingeneralAverage score 2016demonstrate a strong performance inthis section.Thecategorywhereportfolio48%companies scored below average andhave most development potential wasAverage score 2015Community. Compared to the lastyear’s result the category averagedropped slightly, remaining s45%stillconsidered secondary to day-to-dayAverage score 2014business issues. Nevertheless, as thegovernments’ and public interest inbusinessescontributingtolocalandAmong the specific issues covered insocial responsibility is increasing, thisthe survey, the common practicecategory has a potential to becomeamongimportant in the near future.business sectors are promoting equalcommunity rkallincludingCertified management systems forprocess for countering all forms ofmanaging ESG issues such as ISOdiscrimination, ensuring occupational90001, ISO 14001 and OHSAS1800 arehealthapplied by increasing number ofimprovementscompanies. However, the small-sizeenvironment,enterprises still apply a practicalemployees’approach based on team members’important issues for the business andcommon values and goals for theresolving complaints from customers,business rather than documentedsuppliers and business wsaccountregardingprocedures and policies.Risk management remains a majorchallenge and in many categories theaveragescorehasdecreasedcompared to 2015. Comparing the riskassessment in all categories, the76%environmental risk assessment is mostfrequently mentioned procedure. RiskConsider ESG policies important inassessment regarding risks related tothe business environment where theycorruption is a rare practice and stilloperateapplied by only a small share ofrespondents.Tosumup,theaverageESGperformance has improved comparedto the last year, however there is18
ESG report 2016space for improvement when it comesBased on the survey in ESG in 2016,toMagnetic MRO, TREV-2 and FCR wereCompanyvaluesandanti-among the best performers.corruption and Community categorymanagement. This is something wetake seriously and need to put somemore focus during 2017.Magnetic MRO Hangar19
ESG report 2016ESG Management in portfolio companies 2014-2016Jeremie Initiative 21%Share of enterprises Share of enterprises Share of enterprises Share of enterprisesthat carry outthat have processthat putthat have a certifiedbackground check for assessment ofenvironmentalmanagement systemof significantESG risksand/or socialfor quality,suppliers andrequirements on environment and/orbusiness partnerstheir suppliershealth2014BaltCap Private Equity Fund2015201677%69%62%54%43%38%46% 50%43%46% 50%23%Share of enterprises Share of enterprises Share of enterprises Share of enterprisesthat carry outthat have processthat putthat have a certifiedbackground check for assessment ofenvironmentalman
Report. As the leading private equity and venture capital investor in the Baltic countries we also strive for leading the way in incorporating ESG issues into the investment process. Every year we ask our portfolio companies to complete a rigorous self-assessment. Find out more and take a look into this ESG report for 2016.
private equity and venture capital funds with total capital of over 260 million . investment and has incorporated ESG considerations into daily operations. BaltCap is committed to the following Participating actively in the strategic management of portfolio
ESG PORTFOLIO EXTENDED SUMMARY REPORT December 03, 2020 Portfolio Benchmark Weighted Avg ESG Score 6.20 6.03 Adjustment ESG Trend Positive 4.74% 15.81% LAGGARD AVERAGE LEADER Distribution of MSCI ESG Fund Ratings Universe Adjustment Total 0.81% 0.88% Score Adjustment 0.05 - ESG Trend Negative 2.02% 7.49% - ESG Laggards 1.91% 7.44% ESG Quality .
stated to apply to ESG ratings providers may apply to ESG data products providers, and vice versa. 1. The term ESG ratings and data products providers, as used in this report, covers providers who offer ESG ratings and/or ESG data products. Where there is a need to single out ESG data products providers who
Portion of cases where ESG affected portfolio construction LE 6.1 150/150 Pre-investment phase ESG risk management Compliance processes for negative screening LE 8 200/200 Post-investment phase ESG risk management Incorporation of ESG in regular reviews LE 9 150/150 Post-investment phase ESG risk management Identification of ESG incidents LE .
ESG quality, from the asset allocation mix, a question similarly posed by Schroders [2019]7. DWS Approach to ESG in SAA On the aforementioned point of inclusive versus exclusive ESG SAA approaches, we take the more inclusive approach. First, ‘ESG integration’ as for PRI is primarily a risk
ESG and financial variables is interpreted as ESG being the cause and financial value the effect, however the transmission can be interchanged. COMPONENTS/CRITERIONS OF ESG: 3 key components of ESG are - Environmental, Social and (corporate) Governance aspects. Since ESG factors are often interrelated, there may be scenarios
Example ESG Switchable Glass Sound Control Data ESG Switchable - Examples of Optical Performance* Thickness Standard Construction ESG Switchable Std dB Rating (Rw) ESG Switchable Acoustic dB Rating (Rw) 10 mm 4 mm Low Iron tempered glass x 1.52 PVB 0.4 mm LCD x 4 mm Low Iron tempered glass 35 37 12 mm 5 mm Low Iron tempered glass .
eral thousands of genes, but only for a few hundred tissue samples. The classical statistical methods are often simply not applicable in these \high-dimensional" situations. The course is divided into 4 chapters (of unequal size). Our rst chapter will start by introducing ridge regression, a simple generalisation of ordinary least squares. Our study of this will lead us to some beautiful .
