A responsible investment approach

Greenome Capital A/S is a private markets investment management firm, where the collective team invests on behalf of clients in investment opportunities (“Portfolio funds”).

At Greenome Capital, we are committed to investing our clients’ capital in a responsible way and have integrated ESG factors, alongside commercial and financial factors, during investment due diligence and ownership. We have, as a signatory of the UN Principles for Responsible Investment, used the six RI principles as a framework to develop our ESG policy across all our investment activities.

We are driven by the belief that addressing ESG issues often is a crucial part of investment risk management, and effective mitigation of these issues may have a material impact on value creation in private equity, infrastructure, and real asset investments. We believe that mitigating ESG risks may strengthen downside protection for investment returns and enhance investor reputations, which can also lead to value creation. When considering a new fund commitment, we are committed to understanding the Portfolio fund manager’s willingness to adhere to sound ESG practices. Our primary due diligence process must thus identify how the Portfolio fund manager assesses and manages ESG risks.

We acknowledge and take into account, where necessary, that as an investor in primarily US based companies, a number of the challenges faced by its fellow global citizens, do not necessarily apply to all portfolio companies, given that compliance with local legislation rule out certain behavior. Furthermore, as a limited partner, Greenome Capital does not have direct interactions with the management of the underlying portfolio companies, invested in by the Portfolio funds. Nevertheless, we are committed to use our influence where relevant, both when investing as well as in our own operations.

Greenome Capital's overarching responsible investment objectives include that we must:

• Ensure that our Portfolio managers will endeavor to take account of ESG issues as part of the investment process, with the results forming a key element of the overall analysis on investment opportunities,
• Engage with the Portfolio managers to promote the importance of ESG issues, and assess how they factor ESG risks into their investment process,
• Provide training to Greenome Capital's investment professionals on the ESG elements in the due diligence process and the importance of factoring these into the overall investment approach,
• Maintain ESG risk monitoring post-investment,
• Follow a policy of active portfolio management, highlighting Greenome Capital's interest in ESG through routine interactions with Portfolio fund managers, and
• Continue to develop and enhance our ESG approach to maintain a leading position in the industry.

Due Diligence: At Greenome Capital, we incorporate ESG factors into our investment due diligence process, as it can be crucial to harnessing the potential for value creation through effective ESG procedures, as well as in protecting the interests and reputations of Greenome Capital and our clients. The ESG due diligence findings are formally documented as part of the final investment recommendations, with potential concerns flagged for consideration by the investment committee.

The ESG due diligence covers our potential business partners and projects on broad risk factors concerning Environmental, Social and Governance pillars. In the ESG DD, we pay particular attention to the governance pillar and screens the following three key risk areas at the portfolio fund managers:

• The commitment to ESG policies
• Incorporation of ESG into decision making
• History of responsible business conduct

To determine and cover the above-mentioned ESG key risk areas, we assess the following factors at the portfolio fund managers:

• Signatory to standard
• Inhouse ESG policy
• ESG in investment decision
• Enforcement of ESG on portfolio companies
• Reporting, and
• Responsible conduct

Our ESG due diligence is based on the ethical policy, the ESG policy as well as other information from our potential business partners. Due to our status as a fund-of-funds manager, it falls beyond our rights to monitor ESG-compliance on portfolio level, but we will perform our own risk assessment of ESG risks based on provided information from the Portfolio managers.

Primary and secondary fund investing: ESG risk management forms an important component of the operational risk assessment conducted on each manager as part of our primary due diligence process and each manager is rated for its ESG approach. Therefore, it represents a formal and documented part of the due diligence and covers the following areas:

• Whether the Portfolio fund manager has a formal approach to integrating ESG factors into the due diligence process,
• How the Portfolio fund manager engages with portfolio companies on ESG issues, and
• That the investment policy of the Portfolio fund is not in conflict with our Ethical Policy.

As part of our due diligence process, the focus is also on examining the potential for fraud, rogue activities, and other unethical behavior by the Portfolio managers as part of referencing and internet searches. The extensive cross referencing of Portfolio managers prior to investment, including both on-list and off-list referencing through our vast network, is an indication of how we make sure to make every effort to invest only in Portfolio managers that are of institutional quality and in Portfolio managers that understand the importance of reputation in the marketplace.

We assess and monitor financial sustainability risks during investment processes. The ESG DD has significant relevance to the assessment, determination, and monitoring of financial ESG risks.

Post-investment monitoring: ESG risks must be monitored as well as the portfolio funds’ exposures across portfolios.