Environmental, social and governance
Waterland’s environmental, social and governance (ESG) standards go beyond simple compliance with rules and regulations. Waterland’s Policy on Responsible Investing is intended to ensure that Waterland contributes to the promotion of a sustainable future for businesses, society and the environment. In order to monitor the effectiveness of Waterland’s Policy on Responsible Investing, an ESG Committee was installed comprising two senior investment professionals (including the Chief Investment Officer) and two senior support professionals (including the CFO).
Pursuant to Article 3 of the Sustainable Finance Disclosure Regulation (the “SFDR”), Waterland is required to disclose the manner in which sustainability risks (as defined hereafter) are integrated into the investment decision-making process. 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 investments made by Waterland.
Consideration of sustainability risks is integrated into Waterland’s decision making and risk monitoring to the extent that they represent a potential or actual material risk and/or opportunity to maximize long-term risk-adjusted returns. These are considered throughout the lifecycle of the investment process, at pre-deal screening and due diligence, during ownership and prior to exit. Further detail is provided in Waterland’s Responsible Investment Policy found here.
Waterland remuneration practices are designed to promote sound and effective risk management and not to encourage risk-taking that is inconsistent with its risk appetite or the risk profile of the portfolios that they manage. Waterland’s Policy on Responsible Investing sets out how its investment process incorporates a consideration of ESG risks. Such risks form part of Waterland’s assessment of risk for the purposes of its remuneration policy (“issue/opportunity spotting”). Waterland staff is being assessed on ESG risks and good incorporation of Waterland's ESG standards, as highlighted in the Policy on Responsible Investing. These take into account compliance with all of the firm’s policies and procedures as well as with the firm’s internal risk management framework and risk limits, including those relating to the integration of sustainability risks.
Waterland is required to publish information on whether it considers the “adverse impacts of investment decisions on sustainability factors” (the “Principal Adverse Impacts”) under the SFDR. Waterland does not currently consider the Principal Adverse Impacts of investment decisions on sustainability factors in connection with all their products and services, as defined under and in accordance with the SFDR. This is because it is not currently in a position to obtain and/or measure all the data which it would be required by the SFDR to report, or to do so systematically, consistently and at a reasonable cost with respect to all its investment strategies to clients and investors. This is in part because underlying investments are not widely required to, and may not currently, report by reference to the same data.
In addition, the final regulatory technical standards, which set out the scope of Principal Adverse Impacts and the corresponding mandatory reporting template have not yet been adopted by European legislators, and hence there remains legal uncertainty.
In practice, Waterland considers and reports to investors, on a voluntary basis, applying the same standards as in the SFDR, information on its consideration of the adverse impacts of investment decisions on sustainability factors where that information is available, depending on the investment strategy and Waterland’s influence and control on investments. This includes consideration of a relevant sub-set of the “sustainability factors” listed in the SFDR, including environmental, social and employee matters, respect for human rights, anti-corruption and/or antibribery matters by means of its policy on integration of environmental, social and governance risks and value creation opportunities into its investment process.
Waterland is a signatory to the United Nations-backed Principles for Responsible Investment (PRI) and is committed to PRI’s Six Principles:
- We will incorporate ESG issues into investment analysis and decision-making processes
- We will be active owners and incorporate ESG issues into our ownership policies and practices
- We will promote acceptance and implementation of the Principles within the investment industry
- We will seek appropriate disclosure on ESG issues by the entities in which we invest
- We will work together to enhance our effectiveness in implementing the Principles
- We will each report on our activities and progress towards implementing the Principles
In the 2020 Assessment Report, Waterland was assessed with an A+ on Strategy & Governance and an A on Private Equity.
Waterland Private Equity Investments B.V. is registered as a fund manager in the register maintained by the Dutch regulator, the AFM (Autoriteit Financiële Markten).