Investing with a conscience
At Flexstone, we believe that it is our responsibility as a corporate citizen and investor to contribute to the sustainable transformation of the private equity industry, and the global economy as a whole. It is our core conviction that sustainability is fundamental to long-term value creation and superior financial performance, and that we can drive real positive change in the economy through our investment activities and corporate actions.
As a Signatory of the UN PRI, Flexstone seeks to implement best practices for responsible investment at every step of the investment process, from pre-investment ESG due diligence and risk assessment to investment monitoring and reporting during the holding period.
By applying Flexstone’s responsible investment framework to all new prospective investments on a best-effort basis, we can provide our clients with investment products that align with their values and provide risk-adjusted returns. Sustainability is at the forefront of our core values, and we are committed to continuously developing our approach to sustainability according to our clients’ needs and industry best practices.
Flexstone Sustainable Investment Framework
As a Signatory since 2014, Flexstone adheres to the six Principles for Responsible Investment as defined by the UN PRI:
Principle 1: We incorporate sustainability criteria into investment analysis and decision-making processes;
Principle 2: We are active owners and incorporate sustainability criteria into our ownership policies and practices;
Principle 3: We seek appropriate disclosure on sustainability highlights and issues by the entities in which we invest;
Principle 4: We promote acceptance and implementation of the Principles within the investment industry;
Principle 5: We work together to enhance our effectiveness in implementing the Principles; and,
Principle 6: We report on our activities and progress towards implementing the Principles.
INITIATIVE CLIMAT INTERNATIONAL
On February 23, 2022, Flexstone signed the manifesto of the initiative Climate international (iC International), a global private equity community that takes action on climate on the management company’s and portfolio’s levels. By joining the iC international initiative we will commit to the following actions:
- Publicly demonstrate commitment to act on climate change by becoming a signatory
- Engage with GPs on climate change to further the commitments and goals of iC International
- Support and promote the iC International to PE firms under which funds are entrusted
- Integrate climate change analysis into investment process
- Meaningfully engage with PE firms under which funds are entrusted to develop an emissions reduction and climate change action plan
GENDER EQUALITY CHARTER
In 2020, Flexstone committed to the France Invest-sponsored “Gender Equality Charter” with the following stated objectives:
Increase the percentage of women having responsibility for Investment Committee decisions to 25% by 2030 and to 30% by 2035;
Set a target for women to make up 40% of investment teams by 2030;
Involve management in delivering on these commitments;
Ensure that published job offers are gender neutral and free of gender stereotypes;
Ensure non-discriminatory recruitment and assessment practices by:
- Considering several female candidates against male candidates until the end of the process to limit profile analysis bias;
- Making sure to use a gender-neutral list of questions so that women are not asked different questions;
- Ensuring that Flexstone is as evenly represented as possible during the profile assessment, interview, and selection phase; and,
- Broadening the eligible profiles when recruiting for skills related to the unlisted investment business.
Establish monitoring indicators and communicate them annually to track and measure progress.
Implement measures to retain female talent.
FRANCE INVEST SUSTAINABILITY COMMISSION
Flexstone is a member of the France Invest Sustainability Commission since January 2022. This Commission is a working group that supports companies by providing tools to integrate ESG factors across their corporate and investment operations.
Flexstone is committed to promoting sustainability through public engagements and its actions to empower each individual at Flexstone to make responsible decisions on a daily basis. We have a dedicated Sustainability Policy and Principles to guide our actions globally as a corporate citizen and employer and take a holistic approach to integrating sustainability across our corporate culture and actions.
Diversity, Equality, and Inclusion
At Flexstone, we have chosen to demonstrate our commitment to diversity, equity, and inclusion through the following actions:
- Ensuring that our global culture, workplaces, and HR policy are gender-inclusive, and provide a safe and rewarding working environment to all employees;
- Signing the Gender Equality Charter sponsored by France Invest, which sets forth specific, measurable objectives to be achieved by 2030;
- Providing employees with annual training on DEI issues, including unconscious bias training and tools for fostering a more inclusive work environment;
- Including the diversity of candidates and talent pools as a part of the Firm’s recruitment objectives when working with external head-hunters; and,
- Becoming a signatory of the ILPA Diversity in Action Initiative which focuses on a foundational set of actions that LPs and GPs can take to advance diversity, equity, and inclusion, both internally and within the private equity industry more broadly.Implementing an inclusive recruitment policy to retain diverse talent and promote equality.
Flexstone Partners is currently developing its GHG reduction strategy, and seeks to align its climate strategy with the Paris Agreement, which aims to limit global warming at 1.5 °C compared to pre-industrial levels.
In order to achieve its emission reduction targets and contribute to the global net-zero transition, Flexstone will undertake the following actions:
- Assessing, monitoring, and reporting Flexstone’s scope 1, 2, and 3 carbon footprint on an annual basis, as of 2022;
- Identifying short-term and long-term actions to reduce, as much as possible, the Firm’s carbon footprint and climate impact; and,
- Developing a carbon offset scheme to offset the Firms CO2 emissions from energy and transport, and to finance the development of high-quality carbon markets.
Statement on Sustainable Finance Disclosure Regulation
Flexstone reports on its corporate sustainability initiatives, investment process, and progress towards its sustainability objectives through an annual report available hereafter.
Transparency of the integration of sustainability risks
For information on the integration of sustainability risks and opportunities in the investment process, see Flexstone’s Sustainable Investment policy.
SFDR classification of future funds
Flexstone’s ambition is to have all of its new investment products classify as Article 8 under the SFDR. As defined by EU Regulation 2019/2088, Financial products that are classified as Article 8 promote environmental and social characteristics, provided that the companies in which investments are made follow good governance practices.
No Consideration of Adverse Impacts of Investment Decisions on Sustainability Factors
Flexstone Partners does not consider principal adverse impacts of investment decisions on sustainability factors (thereafter “PAIs”) at the entity level. However, Flexstone has initiated a data collection campaign in 2022 to measure the performance of its investments against the PAIs indicators applicable to investments listed in Annex I of the Delegated Regulation (EU) 2022/1288. So far, the data collected does not cover all our investments and requires additional effort to make it more reliable. Therefore, Flexstone is not currently able to publish the information related to the PAIs but the company is making its best efforts to improve data quality and comply with PAIs reporting requirements in the coming years.
As a Signatory of the Gender Equality Charter, Flexstone is committed to increase the percentage of women having responsibility for investment decisions to 30% by 2035, and set a target for women to make up 40% of investment teams by 2030.
In 2022, Flexstone also became a member of the ILPA Diversity in Action initiative, which brings together LPs and GPs who share a commitment to advancing diversity, equity, and inclusion in the private equity industry.
In 2022, Flexstone partnered with Sirsa, a consulting firm specialized in sustainability, to conduct the Firm’s first scope 1, 2, and 3 carbon footprint assessment.
Sirsa also estimated the carbon footprint of Flexstone’s funds by using a proxy methodology developed by ADEME, in alignment with the GHG Protocol guidelines.
Flexstone will use the results of the carbon footprint assessment to develop the Firm’s GHG reduction plan in alignment with the Paris Agreement
In February 2022, Flexstone launched its first annual Reporting 21 ESG data collection campaign.
The objective of the campaign is to increase Flexstone’s capacity to systematically monitor and report on its GPs and portfolio companies’ ESG performance and progress. The data collection campaign will also help Flexstone meet evolving regulatory requirements, and to promote the standardization of ESG data collection processes.
Flexstone’s investment professionals work together with the Firm’s Sustainability Analyst to consider ESG risks and opportunities during the investment process.
Flexstone’s proprietary ESG framework is applied to all investments during the pre-investment phase, in order to identify any material ESG risks or controversies. In addition, all investments made by Flexstone must align with the Firm’s Sustainable Investment policy.