EU Sustainable Finance Disclosure Regulation 2019/2088 (SFDR)
Energy Capital Partners Management, LP (“ECP”, the AIFM) makes the following disclosures in accordance with the EU Sustainable Finance Disclosure Regulation (2019/2088).
Sustainability Risk Policies
When evaluating private equity investment opportunities, ECP considers sustainability risks associated with such equity opportunities through the application of its ESG Policy and related procedures. In particular, for its equity investments, ECP evaluates certain material sustainability risks and key mitigating factors in respect of the relevant asset type and industry. ECP tracks relevant data on such risks, and where appropriate, integrates such data into the investment research, acquisition and post-acquisition monitoring process. A fifteen-person, cross-functional ESG Committee oversees ECP’s firm-wide ESG Policy and ultimately reports to the ECP Partners on sustainability risk management.
ECP’s ESG Policy governs ECP’s approach to the integration of sustainability risks across the equity investment process, including:
Pre-acquisition due diligence: ESG due diligence is undertaken to identify sustainability risks and opportunities, including, but not limited to climate risk, cybersecurity and other operational risks; and an industry-level materiality analysis in conjunction with analyzing historical asset performance is completed to identify key sustainability risks.
Portfolio company ESG engagement and integration: Ongoing engagement with portfolio companies on ESG integration (including through quarterly and annual ESG questionnaires) is performed to further mitigate and manage sustainability risks. ECP strives to ensure that its controlled portfolio companies are aligned with its core values of safety, environmental responsibility, customer focus, integrity, and teamwork. Management teams and board of directors of controlled portfolio companies are expected to prioritize sustainability risk management across portfolio company decision-making in a way that is aligned with ECP’s existing ESG Policy.
ESG reporting: The ESG Committee, in partnership with deal teams, shares quarterly updates with ECP and the Investment Committee on equity controlled portfolio company’s efforts in the identification and management of sustainability risks.
For further information, ECP published its first ESG and sustainability report in 2021, which is available at: https://www.ecpgp.com/responsibility.
Principal Adverse Sustainability Impacts
In its equity investments, ECP has considered, and continues to consider, ESG factors in its investment process, but it does not consider principal adverse impacts of investment decisions on sustainability factors as specifically set out in Regulation 2019/2088 on sustainability-related disclosures in the financial services sector dated 27 November 2019 (SFDR), except as specified in applicable pre-contractual documentation.
ECP’s investing philosophy embraces the idea that the sustainability, security, and productivity of our economy and communities rely on a backbone of safe, affordable, environmentally conscious, and reliable infrastructure. ECP has developed an ESG policy that enables the assessment of governance practices at the portfolio company level during the investment process and then subsequently during post-investment engagement with portfolio companies. Accordingly, ECP engages with portfolio companies to encourage (and, where possible, improve) strong corporate governance practices, which includes but is not limited to key areas such as sound management structures, sound remuneration structures, robust employment relations and tax compliance.
ECP continues to closely monitor regulatory developments with respect to the SFDR and other applicable ESG-focused laws and regulations, including the implementation of related and secondary legislation and regulatory guidance, and will, where required or otherwise appropriate, make changes to its existing policies and procedures.
ECP pays its employees a combination of fixed remuneration (salary and benefits) and variable remuneration (including bonus, at ECP’s discretion). The variable aspect for applicable employees takes into account performance and a number of other factors, which include compliance with ECP’s policies and procedures.