Objective: for each due diligence process to yield a comprehensive vision of the target’s CSR challenges, risks and opportunities.
Eurazeo has developed an approach built on the following dimensions: environment, social, societal, supply chain, ethics and governance. The list of criteria examined derives from a cross-cutting analysis of several recognized French and international standards:
- the Principles for Responsible Investment (PRI);
- Article 225 of the Grenelle II law;
- the Global Reporting Initiative;
- the work of the AFIC ESG Commission;
- the 10 principles of the United Nations Global Compact;
- the United Nations Sustainable Development Goals;
- the CDP’s climate change questionnaire ;
- the Materiality Map of the Sustainability Accounting Standards Boards.
→ More information: Criteria and issues examined evaluation matrix
In carrying out this analysis, all available or prepared documents are reviewed:
The objective is to create a matrix that allows for the assessment of:
- risks, strengths and prospective opportunities;
- the resilience of the business, the business model, the industrial model in a transition to a low-carbon economy;
- the maturity of the target and its positioning in relation to its sector and in view of the expectations of its stakeholders on all CSR issues.
Before each investment, a materiality analysis is carried out in order to determine the priority challenges and issues for each company. To this end, Eurazeo uses the Sustainability Accounting Standards Boards (SASB) tool to identify, by sector, the substantial challenges indicated in this document as material.
In addition, Eurazeo PME has a risk matrix developed jointly with its Risk Management and Legal Departments, which serves to identify the main points requiring vigilance when reviewing investment targets.
Focus: risks and opportunities related to climate change
Climate change risk is part of this matrix; it is analysed for all prospective investments reviewed. Specific due diligence can be carried out in order to determine the extent of the Company’s exposure to physical risks (impacts related to risk of flooding for instance), as well as to transition risks (review of financial impacts related to change in the carbon trading mechanism for instance).
Action plans are then drawn up during the ownership phase in order to determine the issue’s materiality. The following criteria are examined:
Efforts to adapt to climate change are also examined because they can provide opportunities, such as :
Depending on the availability of information during the identification phase, full analysis of the financial impact of these risks and opportunities is carried out.
During the ownership phase, accurate monitoring of change in carbon emissions is performed as part of annual CSR reporting. Eurazeo also assists companies in drawing up an emissions reduction plan with quantified targets.