Sustainability & ESG Policy

Compliant with Sustainable Finance Disclosure Regulation (SFDR)

Table of Contents

ESG Policy

Context & Objectives

In this document, TheClubDeal outlines its commitment to practices and standards designed to promote environmentally and socially responsible operations. The policies described here serve as a comprehensive organizational guide for the investment policy of the fund(s)’ under management.

TheClubDeal is committed to aligning its policies in terms of environmental, social and governance criteria with the best practices in the private equity and investment sector as well as in the corporate world in general.

Theclubdeal shares the beliefs expressed by numerous professionals on the environmental, social and governance opportunities and risks, namely that “Companies that take ESG into account show better growth, are more profitable and can achieve greater cost savings.”.

Our Commitments

When reviewing potential investment opportunities, TheClubDeal, systematically analyses and scores environmental, social and governance issues in the dedicated reporting document Score#IT.

These assessments are based on data gathered through an ESG questionnaire sent to each portfolio company (held in whole or in part by TheClubDeal Club I or TheClubDeal Fund II).

Environment

When an environmental risk is identified during the due diligence process, TheClubDeal requests an audit to assess the implications of this risk. If the target company engages in activities that infringe on the ESG guidelines, the decision to not pursue the investment will follow.

TheClubDeal has implemented various initiatives to reduce its environmental footprint such as waste recycling, energy-saving initiatives, paper-reduction measures, etc. TheClubDeal encourages the companies it supports to perform the same monitoring of ESG factors and stimulates its suppliers to follow similar policies.

Furthermore, TheClubDeal will not invest in the following sectors:

  • Mining industries,
  • Industries related to the production or use of coal,
  • Petroleum production and distribution lines,
  • Equipment for nuclear power plants,
  • Intensive fishing using drift nets,
  • Producers of asbestos or PCB substances,
  • Agricultural companies operating in protected areas,
  • Palm oil production,
  • Trade in protected animals or plants,
  • Tobacco and hard drug industries
  • Military-oriented industries active in the development, production and distribution of weapons of war, nuclear, chemical, biological or other armaments and munitions,
  • Companies accused of corruption, or likely to have a negative impact on the environment,
  • Companies involved in gambling or related to pornography and the sex industry,
  • Companies whose activities, products or services are deemed illegal under any applicable law, regulation or global convention in the relevant jurisdiction
  • Companies that use expropriation for their operations,
  • Entities with 25% or more, directly or indirectly, in a business located in a tax haven recognized by the European Union,
  • Companies with suspicion of corruption or mistreatment of (independent) employees,
  • Companies that use child labor, forced labor, or do not respect their employees.

Social & Human

The funds managed by TheClubDeal will not invest in any activity that violates the integrity of people. Particular attention is paid to activities in the Smartliving, Technology and Life Science sectors.

TheClubDeal favors investments in local companies (Belgium, Luxembourg and Hauts-de-France) and, therefore, optimizes local employment.

For each investment, TheClubDeal insists on setting up an employee stock ownership plan or even a profit-sharing agreement in order to align all employees to focus on the company’s performance.   

TheClubDeal implements a responsible human resources management that consist of the following activities: employees benefit from regular training (upon request), annual evaluation interviews and participation in the company’s profits (through year-end bonuses and carried interest).

TheClubDeal will not discriminate against any of its employees on the basis of race, colour, gender, sexual orientation, religion, political opinion, age or nationality, or on the basis of pregnancy or maternity leave.

Good Governance

Due to the nature of its business of investing in unlisted companies, TheClubDeal has put in place governance systems to ensure the success and sustainability of its investments. These are inspired as much as possible by the Buysse Code III and more recent publications on the subject Buysse Code – Code Buysse III.

Before each investment, the governance of the target company is restructured when necessary to set up a Board of Directors or a Supervisory Committee composed of experts, founders and investors. The same applies to subcommittees such as remuneration, nomination, audit and scientific committees.

TheClubDeal ensures that it complies with the laws, conventions and regulations applicable to its activities and monitors that the companies it supports comply accordingly.

TheClubDeal ensures compliance with regulations relating to the fight against money laundering, corruption and the financing of terrorism within the management company and in the companies it supports.

TheClubDeal implements checks, controls and procedures to ensure that all its suppliers, subcontractors and companies it accompanies:

  • Have ethical standards that do not compromise any of the above.
  • Have audits, controls and procedures in place to ensure that their suppliers and subcontractors do not compromise any of the above.

Reporting

The reports prepared and communicated by TheClubDeal to investors are intended to promote transparency, particularly on the economic and social impact of its investments within the funds entrusted by the same investors.

ESG Disclosures

At TheClubDeal, we attach great importance to the responsibilities we have towards society, particularly those pertaining to environmental, social and governance (“ESG”) issues. The transition to a low-carbon, more sustainable, resource-efficient and circular economy will affect all operators of the economy including the portfolio entities that we invest in. On the one hand, we can contribute to developing a more environmentally friendly economy and society by considering sustainability factors while making investment decisions. On the other hand, we are also convinced that, in order to make good investments, these sustainability factors may not be overlooked.

Sustainability risk policies

Investing responsibly and avoiding sustainability risks increases the value of investments. Certain ESG-related events and situations can (negatively affect) the value of an investment.

For this reason, when considering an investment, we integrate an assessment of the sustainability risks into the decision-making process. We minimize the sustainability risks by carefully selecting the potential portfolio companies as well as the sectors in which they are active in. In addition, through the long-term position our fund takes in its portfolio companies, we may influence its sustainability-related activities and policies, thereby mitigating to some level the sustainability risks of our investments.

Also when considering new potential investments in portfolio entities, a careful selection is made. Prior to making any investment, we conduct a thorough due diligence research on target entities. Such due diligence research, among others, focuses on the target’s compliance with applicable legislation, among which also ESG-related legislation. The outcome of the due diligence findings and assessment of the target’s compliance with (ESG) legislation is taken into consideration when an investment decision is taken by us.

As an active investor, we seek at minima an observer’s seat on the governing bodies of our portfolio companies. Although we do not target majority stakes, we do encourage our portfolio entities to take initiatives that lead to reducing carbon emissions, contributing to a more sustainable, resource-efficient and circular economy and increasing diversity. In addition, we remain vigilant on the portfolio entities’ adherence to (ESG) regulations and human rights throughout the lifetime of our investments.

No consideration of sustainability adverse impacts

We are aware that our investment decisions, as well as our portfolio entities’ activities may have an impact on sustainability factors. We strive to minimize any adverse sustainability impacts that our investments may have and contribute to a more sustainable economy by carefully selecting portfolio entities for investment and paying close attention on them throughout the lifespan of our investment in relation to the ESG matters as described above.

The principles that have led TheClubDeal since its inception are consistent with our ESG policy. In order to contribute to the sustainable value creation within the entities in our portfolio, we aim to operate as a responsible organization that also functions as a responsible investor. As investors, we work closely with the participations to develop a strategic added value that addresses issues beyond the strictly financial to help solve larger socio-economic and social issues.

However, for the purpose of article 4 of the Regulation (EU) no. 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (“SFDR”), TheClubDeal does not consider the adverse impacts of our investment decisions on sustainability factors.

Because TheClubDeal is a small organization with limited resources and employees, it is not fully equipped to determine precisely what the negative effects of its investment decisions would be, based on the various criteria set forth in the SFDR and the legislation implementing the SFDR. As a result, those adverse impacts are not taken into account. Additionally, we make investments in small and medium-sized businesses that, due to their size and resource limitations, are unable to provide the data necessary to accurately assess the negative effects of our investment decisions in compliance with the SFDR and the legislation implementing the SFDR.

As a result, in compliance with article 4 of the SFDR, TheClubDeal is now unable to take into consideration negative effects of investment decisions on sustainability considerations in the future.