Polaris Sustainability Report 2022

During 2022, we on-boarded all of the recent private equity acquisitions Stronger, North, G&O Maritime and Esoft onto ‘Polaris Sustainability Program’. This includes measurement of CO2 emissions on Scope 1,2 and 3.

As part of the foundation of ‘Polaris Sustainability Program’, we help our companies implement the management system for managing impacts and conducting sustainability due diligence according to the UN Guiding Principles and OECD Guidelines for Multinational enterprises. This is the process referenced in the new EU regulations SFDR, CSRD, and the upcoming CSDDD. It also qualifies as ‘Minimum Safeguards’ in the EU Taxonomy. We started this process in 2016 and continuously work to on-board our new portfolio companies and at the end of 2022, ten of our fourteen portfolio companies had implemented this structure as part of ‘Polaris Sustainability Program’. We are also following up quarterly with all our portfolio companies on any incidents or material adverse impacts in relation to this standard and report back to our investors.

As we operated two complementing investment strategies during 2022, we could clearly see how we could leverage our sustainability infrastructure to support both of these in an efficient way through sharing of resources, competencies and standards. We will continue to collaborate across investment strategies on sustainability as we move forward.

On January 1, 2023, the Level 2 of the EU regulation SFDR which regulates Polaris as a fund manager came into force. During 2022, we spent considerable time in preparing for this implementation which included the decision to include Principle Adverse Impacts on sustainability factors (PAIs) into our investment process. This means that we also started to prepare to issue a full PAI statement before the 30th of June 2023. We also decided to retroactively make all necessary documentation available for all of our active funds even though they were not longer fund raising. Even though a lot of this work might have been possible to avoid, we believe our decisions are in-line with the underlying intention of the regulation to ultimately improve transparency on sustainability.

Following their comprehensive work with integrating sustainability in their strategy as a "Must Win Battle” and in their operations, Link Logistics won Polaris Sustainability Award for 2022. The company is now able to deliver CO2e data per shipment to their customers and is starting to help them make reductions. In addition, they have implemented the ‘Green Runners’ throughout the organization to support execution: “The Green Runners are local representatives from all countries and locations who have committed to help implement and communicate sustainability across the organization.”.

During 2022, Polaris made one new private equity investment through the acquisition of Esoft. As before, sustainability was an integrated part of the investment evaluation process and final due diligence phase. Sustainability Due Diligence was also completed for those transactions that did not in the end materialize and was a fully integrated part of these investment evaluations. During the year we also completed the divestments of SSG and Designers Company (MENU Design). Our sustainability work during our ownership period together with both SSG and Designers Company was also an important part of their exit processes and helped increase the value of both investments. SSG could show how they had leveraged their extensive work with sustainability to win tenders and improve talent attraction and retention of staff. Designer Company could show how they had improved their value proposition through their new product level CO2 emission estimates which helped customers make more sustainable choices.

We are facing increasing demands from investors to report on sustainability related indicators relating to us at Polaris but also at the fund and portfolio company level. We want to support this process and be as transparent as possible. For the year 2022, we therefor created one consolidated portfolio company assessment which help us to report on a number of sustainability reporting standards/templates such as the PAI Tables 1,2 and 3, EDCI, Invest Europe, France Invest and Efront. At the same time it minimized the efforts for the companies. This allowed us to complete our mandatory PAI Statement reporting and reporting to the EDCI (ESG Data Convergence Initiative) but also to be able communicate the underlying detailed company level data to all our investors. We received very positive feedback for this effort from many investors.