We have integrated the analysis of sustainability risks into all phases of our investment decision making process. Principles for Responsible Investments as defined by the United Nations are a key element in this process - from the initial investment decision through the entire ownership period.
We have defined certain exclusion criteria, which prohibit any investment by the funds managed by ECM. Such exclusion criteria include gambling, pornography, weapons and tobacco. Further exclusion criteria are serious misconduct in the areas of environmental, social or governance (ESG). This includes, for instance, the cause of environmental damages, misconduct against employment law or human rights or damage to customers based on inadequate product safety or data security.
After the initial review of the businesses and sectors the deal team analyses company specific ESG aspects based on seller documents, management presentations, own research and expert interviews. To the extent considered relevant external consultants are mandated to perform a separate ESG due diligence. The risks and opportunities identified in the internal and external due diligence are part of the discussion of the Investment Committee.
During the ownership period, we provide support to the management teams of the portfolio companies in developing appropriate measures to achieve ESG goals specifically aligned to their business model. The initial assessment of the ESG status of a new investment and the development of KPIs can be supported by independent third party ESG reviews. The portfolio company regularly reports to its supervisory board on the developments of its defined individual ESG goals and implementation of strategic measures.