The integration of sustainability risks in the investment decision-making process
Adelis Equity Partners Fund I AB, Adelis Equity Partners Fund II AB, Adelis Equity Partners Fund III AB, Adelis Equity Partners Fund IV AB, SSID CV Fund AB, SSID Co-Invest Fund AB and F3 Presto HVD CV Fund AB (the “Companies”), as part of their respective wider investment process and risk mitigation procedures, undertake extensive and tailored investment due diligence when evaluating potential investments and monitor each investment across a spectrum of risk-factors identified as relevant throughout its lifetime. The Companies recognize the need to consider sustainability risks, meaning environmental, social and governance (“ESG”) issues which, were they to occur, could have a material negative impact on the value of an investment, and may affect the risk-adjusted returns of an investment or a portfolio in different ways and to varying degrees depending on the specific investment. Where relevant to an investment, sustainability risks are considered as one factor among several other factors. The assessment of sustainability risks therefore forms part of the Companies’ wider investment decision-making process and reflects factors identified as relevant at the outset as well as factors which may become relevant due to changes in environmental or social conditions, changes in law or policy, market expectation, new information or research and other developments.
Sustainability risks are generally identified and evaluated as part of the broader investment due diligence process. The significance of sustainability risks to the investment proposition is assessed in the context of the relevant underlying asset, including its overall risk and return profile. Other relevant considerations may include the level of intended or actual control or influence exercised by the Companies over an investee company.
In identifying and assessing sustainability risks, the Companies use several methods, including (without limitation) investment analysis and direct engagement with investee companies and their management. Details on how sustainability risks are integrated into the investment decision-making processes during pre-investment due diligence and ongoing monitoring are described in Adelis’ Responsible Investment Policy.
Identification of one or more sustainability risks alone will not generally preclude the Companies from pursuing an investment where such investment is otherwise assessed to meet the investment criteria, including where such sustainability risks can be appropriately monitored and managed. However, in circumstances where the sustainability risks are detrimental to the potential performance of an investment, the Companies may cease to pursue the opportunity further.
The Companies continue to monitor and adapt to prevailing market conditions and risks and may from time to time refine or modify their approach with respect to the integration of sustainability risks in response to such conditions and risks.
Consideration of sustainability adverse impacts
Adelis Equity Partners Fund I AB, Adelis Equity Partners Fund II AB, Adelis Equity Partners Fund III AB, SSID CV Fund AB, SSID Co-Invest Fund AB and F3 Presto HVD CV Fund AB (the “Companies”) do not consider the principal adverse impacts of investment decisions on sustainability factors as it considers the existing procedures and frameworks with respect to pre-acquisition due diligence to be appropriate to the investment strategy of the Companies’ funds. However, the financial product managed by Adelis Equity Partners Fund IV AB will consider the principal adverse impacts of investment decisions on sustainability factors for the purposes of Article 7 of the SFDR in accordance with Adelis Responsible Investment Policy. Further details on how PAI are considered, including the indicators used and methodologies applied, are described in the Fund’s pre-contractual disclosures and periodic reporting.
Alignment of the remuneration policy with respect to integration of sustainability risks
For the purposes of Article 5(1) of Regulation (EU) 2019/2088, the remuneration policies of Adelis Equity Partners Fund I AB, Adelis Equity Partners Fund II AB, Adelis Equity Partners Fund III AB, Adelis Equity Partners Fund IV AB, SSID CV Fund AB, SSID Co-Invest Fund AB and F3 Presto HVD CV Fund AB (the “Companies”) include a broad range of factors that are considered in order to determine the appropriate level of remuneration for individuals. However, sustainability risk is not considered as a discrete and separate performance component but rather forms part of the wider assessment of the relevant individual’s contribution to the Companies.
Sustainability-related disclosures for Adelis Equity Partners Fund IV
Summary
This financial product promotes environmental and social characteristics, but does not have sustainable investment as its objective. The fund monitors performance across four key ESG focus areas aligned with the United Nations Sustainable Development Goals: climate action, transparency, decent work, and gender equality. These themes are integrated into the investment strategy through clearly defined exclusion criteria, mandatory ESG due diligence, and structured active ownership supported by a proprietary ESG roadmap.
The fund allocates 100% of its investments to economic activities that contribute to the promotion of these environmental and social characteristics. ESG-related risks and opportunities are assessed during pre-investment due diligence and are continuously monitored throughout the ownership period. Performance is evaluated using a defined set of sustainability indicators, including greenhouse gas emissions, gender diversity, employee well-being, and governance practices. Relevant data is collected annually from portfolio companies via a third-party reporting platform, with built-in validation and quality assurance processes. The fund does not have a designated reference benchmark.
No sustainable investment objective
This financial product promotes environmental or social characteristics but does not have as its objective sustainable investment.
Environmental or social characteristics of the fund
As active owners, the fund additionally highlights four key areas to drive performance, namely: climate action, transparency, decent work, and gender equality, aligned with the United Nations Sustainability Development Goals.
• Climate action: Promote initiatives to mitigate climate change and reduce the carbon footprints within our portfolio companies, decrease climate-related financial risks and create new avenues for value creation.
• Transparency: Promotes accountability, compelling portfolio companies to set, pursue, and communicate progress on measurable sustainability goals.
• Decent work: Includes workplaces that promote health and well-being and provide competency development for their employees, thereby building employer branding and value propositions that are beneficial to attracting and retaining talent. The commitment to decent work for our portfolio companies also extends to ensuring sustainable value chains where relevant to their sourcing models.
• Gender equality: Promotes equal opportunities and representation of all genders within our portfolio companies, aiming to reduce gender disparities in the workplace.
Investment strategy
The investment strategy of the fund is focused on making control-oriented investments in companies that act as platforms for strong growth. The strategy has a particular emphasis on sectors where the team has extensive experience and expertise, and on situations that exhibit process inefficiencies, generally involving entrepreneurs or other owners looking for a strong value adding partner to support future growth ambitions.
The responsible investment strategy to meet the environmental and social characteristics promoted by the fund are incorporated into pre-investment processes and through ESG integration during active ownership.
During sourcing, the fund applies exclusion criteria for companies in sectors with adverse/negative ESG impacts. As such, the fund shall not source or invest in companies whose activities directly or indirectly involve pornography and the sex industry, gambling, controversial weapons or fossil fuel extraction, refining, and/or fossil fuel-based power generation. As part of the investment analysis process, conducting an ESG due diligence covering risks, improvement areas, and value creation opportunities is a mandatory component of any final investment recommendation brought to the Investment Committee for decision. Pursuant to the Responsible Investment Policy, the due diligence shall put particular emphasis on the direct impact of a company’s activities, including the sustainability of its products and services as well as the potential indirect impacts within the company’s value chain.
The due diligence feeds into the ownership phase, where a new portfolio company is assigned a maturity level based on the fund’s ESG framework. The core of the framework is the fund’s ESG roadmap, which is a step-by-step process designed to accommodate companies of various sizes, outlining what each company must achieve during the fund’s ownership and as the company grow. This roadmap provides a structured approach to governance, strategy, and reporting, ensuring that our portfolio companies progressively enhance their ESG maturity during the ownership period. This includes:
• Governance-related requirements to build an effective management system.
• Strategy-related requirements to leverage value creation opportunities.
• Communication-related requirements to report on performance.
The three stewardship categories additionally include ten sub-categories covering: roles and responsibilities, steering documents, training and education, risk management, supply chain management and process building, materiality analysis, strategy development, as well as sustainability communication and reporting. Good governance practices are assessed utilizing the fund’s ESG roadmap.
Proportion of investments
The proportion of investments of the Fund used to meet the environmental and social characteristics promoted by the Fund is 100%.
Monitoring of environmental or social characteristics
The fund conducts periodic performance evaluations related to the implementation of the ESG roadmap and the four areas and applies a collaborative and tailored approach together with the portfolio companies’ management team to foster developments within the various topics.
Methodologies
The sustainability indicators used to measure the attainment of the environmental or social characteristics of the fund include:
• Scope 1-3 greenhouse gas emissions (GHG) intensity (tCO2e/revenue).
• Energy consumption (MWh) and share of renewable energy consumption.
• GHG reduction targets and commitments.
• Number and share of portfolio companies with completed double materiality analysis.
• Number and share of portfolio companies with a sustainability strategy.
• Number and share of portfolio companies with a published sustainability report.
• ‘Number and share of portfolio companies with a Code of Conduct.
• Number and share of portfolio companies with a Supplier Code of Conduct.
• Number of work-related accidents, lost days due to injury and sick leave.
• Annual employee turnover rate.
• Gender diversity in the Board of Directors, C-Suite and all employees.
• Percentage of average unadjusted gender pay gap.
The methodology for collecting input data, calculating greenhouse gas emissions, and consolidating them into Scope 1, Scope 2, and Scope 3 categories follows the guidelines of the GHG Protocol. For financed emissions, the calculation applies PCAF attribution factors to ensure accurate and standardised reporting. Scope 1 and 2 shall always be calculated using activity-based or supplier-specific input data. Scope 3 may include a combination of activity-based, supplier-specific or spend-based input data. Each portfolio company receives a tailored structure for data inputs relevant to its operations.
Data sources and processing
All data points are gathered annually directly from the portfolio companies and compiled and processed using a third-party data collection platform, with servers located within the European Union. Within the platform, each portfolio company has a designated reporting structure, which includes subsidiaries where applicable. Users are assigned roles as either contributors or validators. Contributors are responsible for reporting the required data points, while validators ensure the quality and comprehensiveness of the reported data at the relevant organisational level (subsidiary or group level). Verification is required at each level of the organisational structure to maintain data accuracy and reliability. Estimates shall be kept to a minimum, however, in the case of large data gaps, estimates such as extrapolations may be used by the companies. All data points are aggregated into their respective KPIs for each company.
Limitations to methodologies and data
The fund may face certain limitations regarding the availability and quality of data used to assess environmental and social characteristics, particularly related to manual data collection, data gaps, comprehensiveness, and data consistency. In many cases, portfolio companies do not yet have automated systems for tracking and reporting sustainability data, which necessitates manual data collection, a time-intensive process that may affect the consistency and completeness of the information provided. Furthermore, portfolio companies operating in regions with less developed reporting infrastructure may encounter additional challenges in delivering comprehensive data. In some sectors or geographies, relevant sustainability data may be limited or entirely unavailable, making it more difficult to perform a full assessment. In addition, variations in reporting standards and methodologies across data providers and investee companies may lead to inconsistencies in data quality and comparability.
Despite the identified limitations, these challenges do not materially affect the fund’s ability to meet its promoted environmental and social characteristics. The fund applies a consistent and structured ESG framework across all portfolio companies, enabling a qualitative and quantitative assessment of key indicators even in the presence of data gaps. Manual data collection processes are supported by clear reporting templates and validation procedures within the digital reporting platform, which help ensure data quality and comparability. Where full datasets are not available, the fund may adopt a conservative and transparent approach to estimations, and engages directly with portfolio companies to improve data coverage and reliability over time. Furthermore, the fund’s ESG roadmap ensures that environmental and social progress is driven not solely by reported metrics but also through defined actions, governance requirements, and strategic initiatives that advance ESG maturity during the holding period.
Due diligence
The due diligence shall put particular emphasis on the direct operational impact of a company’s activities, including the sustainability of its products and services as well as the potential indirect impacts within the company’s value chain, including but not limited to sector- and country risks. The ESG due diligence considers the following steps:
• Norm-based screening: the potential investment should be screened for controversies and breaches of minimum standards of business practices based on international norms and frameworks, e.g., UN treaties, UN Global Compact, and dealings with countries under Security Council sanctions.
• Desktop analysis: the potential investment shall be reviewed against sector and country risks and opportunities. The sector and country risk assessment shall be supplemented with a high-level materiality review to address company-specific topics relevant to their specific business model. Finally, the desktop analysis should cover EU taxonomy eligibility by conducting a high-level screening of economic activities listed in the delegated acts of the Taxonomy Regulation.
• ESG maturity analysis and management interviews: the potential investment’s ESG maturity is assessed based on stewardship requirements as defined by the “ESG roadmap” through a management interview with the purpose of understanding how ESG risk and opportunities are managed.
• Final IC documentation: ESG findings and conclusions are included in the final IC documentation. Where relevant, ESG-related improvements are incorporated into the value creation plan included in the final investment recommendation.
Engagement policies
The fund’s engagement with the management of investee companies varies depending on the level of control or influence exercised. Where the fund has majority ownership of an investee undertaking or a substantial asset, we will, with respect to ESG-related risks and opportunities, seek to identify, influence, and promote actions designed to potentially resolve or mitigate issues capable of causing a material negative impact on investment as part of its overall risk management process. Where the fund has limited influence (as a minority or non-controlling holder), it will seek, where appropriate and to the extent possible, to escalate sustainability risks to the management and/or majority owners to promote actions to resolve or mitigate applicable sustainability risks.
Portfolio companies are required to report progress against their applicable ESG roadmap on a quarterly basis, and to provide annual data on standardised sustainability key performance indicators. To support this process, the fund provide a dedicated online platform designed to facilitate consistent and efficient ESG reporting. ESG performance and progress at the portfolio company level are reviewed by the fund on a bi-annual basis as part of its portfolio monitoring process. In addition, ESG developments are reported to investors in connection with the Fund’s quarterly and annual reporting cycles, including through the publication of the Adelis annual ESG report. Any material ESG-related incidents are reported without undue delay to the relevant Fund’s Advisory Committee.
Designated reference benchmark
There is no designated reference benchmark for the Fund
