SFDR Statement

Below is a brief summary of information pertaining to the Sustainability-related Financial Disclosures Regulation (“SFDR”). Links to further information on our approach and impact assessments are provided.

Summa Equity AB

Summa Equity AB (“Summa”) invests to solve global challenges. We invest solely in companies whose core business contributes positively to one or several sustainability factors. To enable this, sustainability factors are integrated as tools for value creation in all stages of the investment lifecycle, from finding suitable investments (“sourcing”), to screening and evaluation (“due diligence”) through the ownership period and eventually the sale of the company (“exit). Sustainability risk assessment and follow-up is integrated across all funds managed by Summa.

"Sustainability factors" is defined within the SFDR as environmental, social and employee matters, respect for human rights, anti-corruption, and anti-bribery matters. Summa will in addition consider other sustainability factors where material (e.g. data security, privacy issues etc.).

Sourcing methodology: Finding the right companies to invest in

Summa Equity takes a thematic investment approach, focusing on industries within Resource Efficiency, Changing Demographics and Tech-Enabled Businesses where we see strong tailwinds from global megatrends like population growth, resource scarcity, ageing population, energy transition, and innovation.

Potential investments that are determined to be a good thematic fit are screened against the United Nation’s 17 Sustainable Development Goals (“SDGs”). One of Summa Equity’s main investment criteria is that the company delivers a product or service with a meaningful contribution to one or more of the SDGs. Only companies with positive social, governance or environmental impact, according to this criterion, will progress from the sourcing stage. The investment teams responsible for the sourcing effort will map each company’s material positive impacts, to one or several of the 169 sub targets associated with the SDGs. Once identified, the main impacts are assessed using the Impact Management Project’s five “Impact Dimensions”; What, Who, How Much, Contribution & Risk.

EU Taxonomy alignment will in the future be used as an additional way to assess positive environmental contribution. This will however not be used as an absolute criterion, as there may be relevant impacts that are not covered by the taxonomy, due to not contributing specifically to either of the six EU-specific environmental goals.

Post-investment methodology related to measurement and monitoring is discussed in the information specific to each Fund.

Due Diligence: Assessing the sustainability risks

Sustainability risks are initially assessed alongside other types of risk as part of a rigorous process of due diligence, involving e.g. interviews with management, industry research, review of performance history, environmental and HR data and organizational and strategic evaluations We typically work with external consultants and experts when we carry out these assessments. Different environmental, social and governance issues are prioritized in the due diligence depending on materiality to the business, materiality to the broader set of stakeholders and the level of impact.

The output from the due diligence processes, including information on material sustainability risks, form part of the investment material sent to the Investment Committee (IC), which is the committee responsible for screening and evaluation of potential investments prior to making an investment recommendation to the Board of Directors. Similar to concerns about the level of financial returns, a determination that there are material adverse impacts or other sustainability risks that cannot be solved or mitigated will result in a decision not to invest.

The investment may proceed if we are confident that the risks are at an acceptable level and that they can be mitigated or solved over time, provided that the company demonstrates suitable characteristics in terms of positive impact on the SDGs, as well as having the potential for strong financial returns.

Engagement policies

The Summa Equity Engagement Policy outlines the principles for Summa’s shareholder engagement and describes how Summa integrates shareholder engagement in its investment strategy, to ensure effective, responsible, and sustainable shareholder engagement. This policy shall be applied in relation to the Funds’ investments in Portfolio Companies whose shares are listed on a regulated market. In relation to Summa’s investments in other Portfolio Companies, the principles set out in the policy are followed as far as possible.

Code of Conduct

All Summa Equity employees (“Summates”) are expected to adhere to our corporate values, and high standards of ethical business conduct as outlined in our Code of Conduct. Summates are Radically Honest, Authentic, Responsible, Entrepreneurial and Respectful.

Remuneration policy

In accordance with the Summa Remuneration Policy, all Identified Staff and Investment Professionals are remunerated as employees, with a combination of fixed and Variable Remuneration.

For Summa, sustainability risks and opportunities are naturally integrated in the investment process for all Funds, since Summa’s investment thesis is based on using sustainability factors as a screening tool and, following an investment, using the same as value creation levers.

The policy seeks to ensure that the Identified Staff and Investment Professionals are encouraged to consider the long-term effects of their decisions and avoid taking short-term risks in order to achieve personal gain. This is, amongst others, achieved by ensuring that the performance assessment for the variable remuneration is based on a longer period. Considering the number of checks and steps implemented to deter Identified Staff and Investment Professionals from excessive risk taking described in the policy, the prudent balance between fixed and Variable Remuneration and the fact that ESG risk are naturally integrated in Summa’s business, ensures the promotion of sound and effective risk management with respect to sustainability risks.

Adherence to international standards for risk integration and due diligence

Summa Equity is a signatory of the Principles for Responsible Investment. Among the principles is a commitment to integrate ESG into ownership policies and practices, as well as to seek appropriate ESG disclosures from the companies we invest in. Respect for established human rights is integrated in our policies, and we monitor that this is also integrated into the polices of our investees.  We seek to adhere to the 10 principles of the UN Global Compact. The four themes (Human Rights, Labor, Environment and Anti-Corruption) are integrated into our Code of Conduct. We are committed to utilizing internationally recognized standards for ESG Due Diligence.

Assurance & certification

We have started an application process to become a certified B Corporation. B Corporations are expected to meet the highest standards of verified social & environmental performance, transparency, and accountability.

We have also contributed to the development of the SDG Impact Standards for Private Equity through feedback rounds, and participation in their pilot project to test the standards. We will engage with the verification process to become assured against the Standards once the process is established.

Principal Adverse Impacts and prioritization

Summa considers principal adverse impacts of its investment decisions on sustainability factors. Issues are prioritized according to materiality to the individual investee company and the portfolio as a whole. This is first done during Due Diligence (pre-investment), and then reevaluated regularly during the ownership phase. Targets are typically set for the portfolio as a whole, and for individual companies in dialogue between management, BoD and Summa deal teams.

The portfolio wide principal adverse impacts are emissions of greenhouse gases (“GHG”) and supply chain biodiversity impact, while certain individual investments also generate significant amounts of waste and/or use substantial amounts of fuel and energy.

The most prominent adverse impact from our current portfolio is GHG emission, particularly from Scope 3 in our Resource Efficiency investments. While our estimates conclude that the potential GHG avoided from the relevant activities are far larger - 630k tons CO2e potential avoided emissions from recycling, waste management and energy efficiency services vs. 341k tons CO2e emitted portfolio wide in 2019 - Summa’s position is that the negative impact cannot be “netted” against the positive impact. The adverse impacts must be managed effectively and reduced over time. This will further strengthen the overall impact position of the companies in our portfolio.

Please also see our annual report for further information.

Paris Agreement and negative climate impact

Compliance with the Paris agreement means that we need to limit global average temperature to below 2 degrees Celsius above pre-industrial levels.

Our long-term goal is to align our portfolio with the more ambitious target of limiting global average temperature to below 1.5 degrees Celsius above pre-industrial levels, a so-called 1.5-degree scenario. A 1.5-degree scenario would require that we halve global emissions by 2030.

In order to align with a 1.5-degree scenario, we have so far done the following:

  1. Implemented comprehensive tracking of carbon emissions throughout our portfolio, according to standards set by the Greenhouse Gas Protocol track Scopes 1, 2 & 3. Our companies are required to submit data on their operations to a third-party for analysis.
  2. We review environmental performance results with each portfolio company on at least an annual basis. These follow-up conversations involve advice on how to reduce negative impact, where we make use of outside consultants.
  3. Where emissions are a material adverse effect of the businesses we invest in, we encourage them to dedicate time and resources to mitigate this.
  4. We have set an initial portfolio target of reducing emission intensity (emission per EUR of revenue) by 50% over the next ten years.
  5. We voluntarily contribute to a responsibly managed reforestation project to mitigate direct emissions from our portfolio (Scopes 1 and 2).

We are continuously evaluating further appropriate steps to align more closely with a 1.5-degree scenario.

Summa Equity Fund I

Summa Equity considers Fund I an Article 8-type fund under the Sustainability related Financial Disclosures Regulation (“SFDR”), meaning that the fund promotes, amongst other characteristics, environmental or social characteristics, and that the companies in which investments are made follow good corporate governance practices.

The Fund follows Summa’s strategy within three investment themes: Resource Efficiency, Changing Demographics, Tech-Enabled Businesses. Investments made within Tech-Enabled Businesses typically target solutions to governance or social issues, but may also have environmental benefits. Changing Demographics focuses mainly on social issues, and Resource Efficiency has a strong environmental focus. The level of alignment with the EU Taxonomy will be disclosed in the future.

The Fund’s Sustainability Characteristics are met under the following conditions

  1. Investments are screened against positive impact on the Sustainable Development Goals.
  2. Pre-investment sustainability due diligence and risk assessment processes utilize internationally recognized standards.
  3. We seek to understand the impact of each investment, utilizing Impact Management Project norm of assessing five dimensions of impact: What, Who, How Much, Contribution & Risk.
  4. The Board of Directors in each company is responsible in ensuring strong governance mechanisms for Environmental, Social & Governance issues.
  5. Investee companies are expected to conduct regular employee & customer surveys, to ensure engagement with key stakeholders.
  6. Investee companies are expected to adopt defined minimum policy requirements (Via Summa Compliance), and otherwise ensure compliance with all applicable local and international laws.
  7. Investee companies are expected to assess and address potential adverse impacts in terms of social, climate or biodiversity outcomes.
  8. Investee company management teams are required to establish Key Performance Indicators linking operational output with positive outcomes in terms of one or more Sustainable Development Goals. These performance indicators are referred to as “SDG KPIs” in the Summa Equity framework, although these are estimates and proxy indicators, rather than direct measurements of impact.

Methodology on measurement & Monitoring

  1. Investee companies are required to submit SDG KPIs data along with financial performance data on at least a quarterly basis. These indicators of positive impact are individual to each company the Fund has invested in, as they are tied to the unique business model of each company.
    1. Performance according to the determined SDG KPIs is assessed internally in our quarterly Portfolio Review.
    2. The SDG KPI data is reported to the Fund Investors on a quarterly basis, alongside Financial performance analysis.
  2. Investee companies are required to submit operational data for an annual analysis and review of environmental, social and governance issues. This process addresses potential adverse impacts, as well as positive.
  3. Key results of the annual review are published in our annual Portfolio Report (Statistics are aggregated for both Summa Equity Fund I & II investments, not weighted by ownership share).
  4. The methodology and rationale behind Summa Equity’s SDG/ESG scorecard is explained here
  5. Page 56 in our 2019 Portfolio Report gives an overview of the main environmental and social outcomes, including GHG emissions, harmful ecological impact, employee wellbeing and gender diversity on several organizational levels.
  6. Page 18 in our 2019 Portfolio Report sets out key resilience targets for the Summa Equity portfolio as a whole (applies to Summa Equity Fund I and Summa Equity Fund II):
    1. 33% gender diversity in portfolio company boards.
    2. 50% carbon intensity reduction in the Summa portfolio from 2020 to 2030.
    3. 100% of portfolio companies to have operationalized Via Summa Compliance standards.

Summa Equity Fund II

Summa Equity considers Fund II an Article 8-type fund under the Sustainability related Financial Disclosures Regulation, meaning that the fund promotes, amongst other characteristics, environmental or social characteristics, and that the companies in which investments are made follow good corporate governance practices.

The Fund follows Summa’s strategy within three investment themes: Resource Efficiency, Changing Demographics, Tech-Enabled Businesses. Investments made within Tech-Enabled Businesses typically target solutions to governance or social issues, but may also have environmental benefits. Changing Demographics focuses mainly on social issues, and Resource Efficiency has a strong environmental focus. The level of alignment with the EU Taxonomy will be disclosed in the future.

The Fund’s Sustainability Characteristics are met under the following conditions

  1. Investments are screened against positive impact on the Sustainable Development Goals.
  2. Pre-investment ESG due diligence and risk assessment processes utilize internationally recognized standards, including the IFC's Environmental and Social Performance Standards.
  3. We seek to understand the impact of each investment, utilizing Impact Management Project norm of assessing five dimensions of impact: What, Who, How Much, Contribution & Risk.
  4. The Board of Directors in each company is responsible for ensuring strong governance mechanisms for Environmental, Social & Governance issues.
  5. Investee companies are required to conduct regular employee & customer surveys, to ensure engagement with key stakeholders.
  6. Investee companies are expected to implement a list of minimum policy requirements (Via Summa Compliance), and otherwise ensure compliance with all applicable local and international laws.
  7. Investee companies are expected to assess and address potential adverse impacts in terms of social, climate or biodiversity outcomes.
  8. Investee company management teams are required to establish Key Performance Indicators linking operational output with positive outcomes in terms of one or more Sustainable Development Goals. These performance indicators are referred to as “SDG KPIs” in the Summa Equity framework, although these are estimates and proxy indicators, rather than direct measurements of impact.

Methodology of Measurement & Monitoring

  1. Investee companies are required to submit SDG KPIs data along with financial performance data on at least a quarterly basis. These indicators of positive impact are individual to each company the Fund has invested in, as they are tied to the unique business model of each company.
    1. Performance according to the determined SDG KPIs is assessed internally in our quarterly Portfolio Review.
    2. The SDG KPI data is reported to the Fund Investors on a quarterly basis, alongside Financial performance analysis.
  2. Investee companies are required to submit operational data for a comprehensive annual analysis and review of environmental, social and governance issues. This process addresses potential adverse impacts, as well as positive.
  3. Key results of the annual review are published in our annual Portfolio Report (Statistics are aggregated for both Summa Equity Fund I & II investments, not weighted by ownership share).
  4. The methodology and rationale behind Summa Equity’s SDG/ESG scorecard is explained here.
  5. Page 56 in our 2019 Portfolio Report gives an overview of the main environmental and social outcomes, including  GHG emissions, harmful ecological impact, employee wellbeing and gender diversity on several organizational levels.
  6. Page 18 in our 2019 Portfolio Report sets out key resilience targets for the Summa Equity portfolio as a whole (applies to Summa Equity Fund I and Summa Equity Fund II):
    1. 33% gender diversity in portfolio company boards.
    2. 50% carbon intensity reduction in the Summa portfolio from 2020 to 2030.
    3. 100% of portfolio companies to have operationalized Via Summa Compliance standards.