ESG process with regard to investment activity and acquisitions
The acquisition and financing of assets and companies (jointly referred to as “assets”), particularly in Switzerland, Germany and neighbouring European countries, is part of Patrimonium’s core business.
As well as financial analysis, the integration of ESG and sustainability topics is an integral part of all the steps in the Patrimonium investment process.
The analysis of the impact of ESG topics on the value of an investment (the so-called “sustainability risk” within the meaning of the European Disclosure Regulation) is part of the general risk assessment that is carried out as part of the fiduciary responsibility for each investment. This differs from one investment to another and is checked on a regular basis.
The assessment of ESG and sustainability topics is carried out at branch (ESG exclusions) and at company level. Patrimonium has developed its own ESG scoring model for this, which is used both for the first valuation as well as for investment monitoring.
The ESG evaluation can mean that individually designed approaches are required, depending on the situation or the asset class (e.g. in the real estate sector).
ESG evaluation in the sourcing phase
As part of the “sourcing” process, a large number of potential investments are examined.
Negative Screening (Exclusion List)
As part of the negative screening, branches, companies and assets that are fundamentally out of the question for financing or acquisition are filtered out in a first phase.
Value Based Screening:
Using the General Classification of Economic Activities, companies that are active in particular areas are filtered out:
- Armaments (NOGA code 254, 8422, 3042)
- Tobacco (NOGA code 120)
- Prostitution
- Pornography
- Cloning of human beings
- Gambling (NOGA code 92)
- Coal, oil, fracking (NOGA code 05, 06, 07, 08, 09)
- Atomic energy
- Palm oil
- Animal testing
Norm-based Screening:
In order to be considered for an investment, companies must also fulfil the internationally recognised minimum management standards.
ESG evaluation in the due diligence and monitoring phase (“ESG Integration”)
Companies and assets that are accepted in the due diligence process are assessed and evaluated by means of on an internal scoring model (ESG scoreboard). As well as fulfilling the financial criteria, an investment or an acquisition must attain a minimum score in the ESG scoreboard in order to be taken into consideration.
Assets that can be considered for an investment and are subject to desk research and further internal analyses must complete an ESG questionnaire at the outset. After the financing has been carried out, the questionnaire must be completed annually in the monitoring phase.
Patrimonium’s scoring model can be requested from the Compliance department at any time.
Geography and positioning as ESG factors
Patrimonium invests directly and individually in the private markets, mainly in Switzerland, Germany and the neighbouring European countries, and adopts a highly meticulous approach to the choice of investments. In the real estate sector, the geographical investment focus is on the major cities in Switzerland as well as agglomerations with good transport links. The investment objects are selected, managed and monitored individually.
Due to the geographical proximity of the direct investments to the head offices, as well as the direct, individualised investment procedure on well-known markets, the integration of ESG and sustainability criteria in the portfolio companies and their immediate social and ecological environment can be monitored even more efficiently. Moreover, multiplier effects can be avoided.
