Closed-end funds and Permanent Capital Vehicles
With a strong emphasis on stewardship, and close contact between the GP, the company management and the underlined assets, closed-end and permanent Alternative Investment Funds contribute to the long-term financing and growth of strategic asset classes that will ensure sustainable long-term prosperity to our economies.
Thanks to the key distinguishing characteristic of a closed-end structure, a fixed amount of capital not redeemable from the fund, closed-end and permanent capital funds represent the most appropriate structures for pooling together capital raised from private investors (retail, professional or institutional) to be addressed to certain categories of asset classes in accordance with a determined and fixed investment strategy.
Some of the most frequent investment strategies are naturally suited to responsible investments, both for the type of investment strategies they pursue or more broadly for the ESG due diligence they apply to their underlyings: financing SMEs (i.e. Small Caps, Private Equity, Mini-Bonds, Private Debt, Venture Capital), new technologies (i.e. Corporate Venture Capital, industry-specific venture & growth capital, renewable energy, fintech), real assets (i.e. infrastructure, social housing). A systematic and informed approach to identifying and managing ESG issues across the underlined assets will protect, and can significantly enhance, long-term value. The GP will need to monitor the portfolio companies to assess whether its ESG goals are being met, and may be required to report to LPs on whether ESG issues are being managed properly. Meeting and site visits can reveal the extent of the company’s ESG activities and projects, verify reported information and demonstrate commitment from the GP.
In order to attract a wider and diversified base of investors, to increase the total Asset Under Management and to provide to investors a liquidability option while waiting for the long-term expiration date, closed-end funds and permanent capital vehicles could decide to go public on MIV, the Italian regulated market operated by Borsa Italiana supporting the fundraising needs faced by promoting teams (at IPO and with Follow on deals) and the transparency and the liquidity needs faced by investors.
Sustainable development goals
The 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015, provides a shared blueprint for peace and prosperity for people and the planet. At its heart are the 17 Sustainable Development Goals (SDGs), which are an urgent call for action by all in a global partnership.
Entrepreneurs and enterprises are called to contribute as well. The implementation of sustainable development will depend on the active engagement of both the public and the private sectors, with enterprises that are called to develop responsible business practices, such as those promoted by the United Nations Global Compact.
How to identify material ESG
Issuers should explain which ESG issues they see as most relevant or material to their business. They should then explain how these impacts may affect business strategy and financial and operational performance, demonstrating resilience to risks and readiness to explore market opportunities.
When presenting this information to investors, it is important to understand what information and data your investors are looking for. Consistent global frameworks provide an essential tool to allow investors to analyze and compare ESG risks across companies and sectors.
The adoption to global standards and frameworks will help you to move sustainability into your mainstream dialogue with investors, making information more available, consistent and reliable.
Here following you will find a list of international reporting standards and initiatives you could refer to.