HLD’s ambition is to contribute, in its capacity as long-term responsible shareholder, to the value creation of its investments by integrating Environmental, Social and Governance (hereafter “ESG”) factors in its investment approach.
As trusted partners, we strive to use our position as strategic, operational, and financial counsel to optimize the environmental, social, and societal impact our portfolio companies have on the economy, while strengthening their leadership.
The engagements laid out in this Policy set the framework within which we operate as investors and to which we adhere in compliance with the best practices in relation to governance and professional ethics.
HLD is an investment group providing companies firmly established in targeted high growth markets with long-term support. Founded by passionate entrepreneurs and financed on equity raised from investors who are themselves entrepreneurs, HLD focuses on identifying and partnering with promising European companies with development opportunities, whatever their sector or size.
Our unique investment model is not subject to time constraints. It allows us to focus on accompanying management teams in their long-term value creation, as part of a trusting and advisory partnership. Our decision to invest without a time horizon means we are not dependent on economic cycles, and provides us with the ability to fully support our portfolio companies in their strategic transformation and adaptation to societal changes and evolutions, on their own terms.
Our mission as investors is reflected in our values of Entrepreneurial Spirit, Commitment, Trust and Ambition, which drive our investment philosophy.
HLD’s DNA, founded on strong family values and entrepreneurial flair, bolstered by solid technical investment know-how and supported by permanent assets, provides the necessary conditions for our portfolio companies’ sustainable growth.
Our ESG commitment is integral to our positioning as a long-term investor.
We are committed to instituting responsible practices in the long-term financing of the economy, and specifically in the creation of European champion companies with strong fundamentals, delivering value to society.
To this effect, we will apply and maintain the highest compliance and ethical standards within HLD and our portfolio companies. We will also integrate ESG criteria throughout our investment practices, and for all our investments.
On an everyday basis, we will leverage our long-term approach to engage with portfolio companies on material ESG themes, foster ESG progress and develop each company’s potential to generate value.
As signatories of the United Nations’ Principles for Responsible Investment (UN PRI) since July 2018, we publicly commit to applying and promoting high ESG standards in all our activities.
Roles and Responsibilities
HLD’s ESG commitment is shared and driven by all of HLD’s partners and senior managers. At the operational level, HLD’s investment teams are responsible for ensuring that HLD’s ESG commitment is translated into investment practices, and are in charge of integrating ESG criteria at each stage of the investment cycle.
In addition to this commitment by HLD’s partners and investment teams, we have established an ESG Committee, presided by an independent Board member. Specifically, the ESG Committee is charged with ensuring stewardship of the Policy and fostering the coherent and consistent implementation of ESG practices by the HLD investment team.
HLD’s ESG Policy covers the lifecycle of our investments from pre-investment due diligence to post-investment monitoring, reporting and value creation.
We focus on identifying the relevant ESG themes and progress areas for each of our investments, and establish a constructive dialogue with the management teams of our portfolio companies, consistent with our shared entrepreneurial values and sustainable growth vision.
In line with our long-term and company-tailored investment strategy, we aim to focus on ESG issues that are highly relevant for each company, according to its sector, business model and geographic footprint.
We pay particular attention to business ethics criteria for our portfolio companies as we aim to partner with management teams who share our standards and principles.
In addition, our ESG approach notably covers the following:
- Labor practices, diversity, and inclusion
- Employment and economic growth in communities
- Environmental performance and resource-efficiency in production
- Engagement on ESG in value chains
- Sustainable innovation
- Climate action
- Investment Universe Screening and Exclusion
HLD will not invest in companies or other entities that generate their revenues from:
- Coal mining, extraction, and coal power generation
- Tobacco and related products production or sale
- Prostitution and pornography
- The manufacturing, production, or sale of anti-personnel mines, of cluster, biological or chemical weapons or other weapons or defense systems that are not part of, or not compliant with policies established by the democratically elected governments of EU or NATO countries.
The list of sectors covered by this Exclusion Policy may be reviewed periodically and updated as required to integrate any future social or environmental changes.
We integrate ESG criteria in our decision-making process, by carefully considering relevant ESG issues associated with any potential investment during the due diligence phase, in parallet to all other financial due diligence processes.
Specifically, investment teams carry out an ESG due diligence with respect to the company's compliance with the main applicable ESG laws and regulations as well as maturity and performance on material ESG issues for their activity and sector. As part of this process, HLD may call on the expertise of external consultants to perform ESG due diligence. Key ESG issues, representing either a risk to the portfolio company’s business or an opportunity for value creation, are highlighted as part of this process.
Where necessary, investment professionals will work with the relevant company’s management team to develop a realistic and company-specific action plan to address ESG findings post-investment. Specific action plans will be developed to mitigate any ESG risk identified.
We aim to support and accompany our portfolio companies as they develop, in both financial and extra financial aspects.
To manage portfolio companies' ESG performance throughout the ownership period, investment teams are responsible for monitoring the implementation of the ESG action plan developed. Annual business reviews provide the opportunity for investment professionals to review ESG progress with portfolio companies and assess the degree of implementation of the agreed-upon ESG action plan. This review also provides an opportunity for the companies to take stock of what has been achieved over the year and define any areas for improvement in the following twelve months.
Indeed, we firmly believe that providing our holdings with guidance, support and dialogue is the only way to work with them towards tangible and lasting change.
At exit, we aim to highlight the ESG progress made throughout the ownership period, based on initial ESG findings during the due diligence process, and ESG KPIs collected throughout the company’s ownership period. We also aim to ensure management continuity at the time of exit to help the company preserve its mission and entrepreneurial spirit.
Transparency and communication
HLD is a voluntary signatory to the United Nations’ Principles for Responsible Investment (“UN PRI”) and has implemented processes to adhere to those principles, where and when appropriate.
We seek to be transparent in our efforts to integrate ESG considerations in all our investments and commit to report annually on our progress towards implementing our ESG principles.
Diversity and Inclusion
HLD promotes diversity of talents and aims to provide equal opportunities to all, irrespective of socio-economic background, ethnicity, gender, and disability. As part of this commitment to diversity and inclusion, in 2020 HLD signed France Invest’s Charter Promoting Gender Equality in Private Equity and in companies.
Philanthropy – Fonds HLD Méditerranée
Launched in 2018, "HLD pour la Méditerranée" represents the philanthropic application of our engagement. This endowment fund emerged from a shared vision among HLD’s partners and employees to safeguard the Mediterranean Sea by providing support to non-profits acting to protect the Sea's ecosystem.
Faithful to HLD’s values, our endowment fund supports innovating and ambitious projects with a strong potential to protect the marine environment. We also aim to create a climate of trust with the project holders by supporting them with our business and financial expertise.