Portfolio Summary - Polaris Private Equity
The work with sustainability at portfolio level
The work with sustainability throughout Polaris’ private equity portfolio is aligned with Polaris Sustainability Program, either through a direct implementation of the program together with Polaris recommended advisors or through comparable and fundamentally aligned processes, yielding similar outcomes and including the same mandatory components. We aim to implement this structure as soon as practically possible and preferably within 12 months after the closing of an acquisition. For the program to be successful and drive real change it is however critical that the project is firmly anchored in the management team and Board of Directors and can be supported by sufficient resources and a sustainability responsible in the company. The implementation of the program might therefor sometimes need to be postponed beyond our target of twelve months until these factors are in place.
As Polaris Sustainability Program was launched during 2020, we are still working to include all our private equity portfolio companies and at the end of 2024, twelve of our sixteen private equity investments had implemented the program with the remaining companies mainly those acquired during 2023-2024[1] Completion of the program is achieved gradually as the various components are added in different processes and supported by different advisors. A company might therefore have a high degree of maturity even though it has not yet achieved full implementation status. Since our last report, Distriktstandvården and Vikingbus have both made great progress. The newer portfolio companies Micropower, Vinnergi and 7N entered Polaris portfolio with a high degree of maturity and we have therefore classified them as being aligned with only few components missing.
[1] Salfarm is excluded from this sustainability report as it was only acquired on Dec 30 2024.
Portfolio company impact on the Sustainable Development Goals - the SDGs
Our work with mapping the portfolio companies’ impacts, positive as well as negative, to the SDGs is used as a way to prioritize, focus our actions and communicate on progress. As mentioned earlier we have chosen to focus especially on three SDGs that we work with and report on across all portfolio companies: Climate Action, Gender Equality and Employer Responsibility.
Implementation status of Polaris Sustainability Program
Climate Action in Polaris’ portfolio
Our focus on Climate Action is based on measuring and tracking the CO2e emissions of our portfolio companies on an annual basis. By doing this we create transparency and ensure that the footprint of the portfolio companies can be addressed, and our portfolio companies actively can work towards reducing their CO2e through identification and implementation of relevant reduction initiatives. We are encouraging and supporting our companies to set reduction targets in-line with the Paris Agreement through ScienceBased Targets (SBTs) approved by the Science Based Target Initiative (SBTI). As a fund manager, we at Polaris have our own Science-Based Target, which was submitted to the SBTI for approval in June 2025. The target for our private equity investments is to ensure that 100% of our private equity portfolio companies have their own SBTs approved by the SBTI by the end of 2030. This Portfolio Coverage Target is calculated as the % of the Invested Capital of companies with their own SBT approved by the SBTI of the total Invested Capital, which includes all portfolio companies owned for more than 24 months.
Climate action
Since the last report, all portfolio companies that we have owned for more than two years are now measuring their CO2e emissions on Scope 1, 2 and 3 in accordance with the GHG protocol and only three of the five most recent acquisitions have yet to implement measurements. As in previous years, the CO2e measurements develop continuously among our portfolio companies as they improve their estimates by transitioning from spend based to activity based and to supplier provided emissions and add additional categories. Acquisitions, expansions and changes in the product portfolio also impact the data. This means it is still difficult to identify real reductions or real increases with certainty based on the data. This issue is inherent in the measurement process but will improve over time. All companies measuring their emissions have however started initiatives to reduce their emissions that should result in emission reductions. A few of these have also set Science-Based Targets (SBTs) for their emission reductions approved by the Science Based Target Initiative (SBTI). Others are also in process of doing the same. Because of our own SBT at Polaris and sub-target for all of our private equity companies to have their own SBT, we work to support and accelerate this process.
Our total emissions for Fund IV increased slightly in the period, driven by increases in Link Logistics, in turn driven by a changed product mix. The overall emission intensity for the fund did however remain fairly constant at 30 tCO2e/mDKK revenue. The emissions in the fund are still driven by the transportation & logistics sector and Link Logistics and Vikingbus with 92% of total emissions.
In Fund V, the addition of new portfolio companies increased the emissions but decreased the overall emission intensity of the fund. Cepheo and Awardit do not yet measure their own emissions so these are based on top-down estimates. The fund emissions are driven by Micropower with 77% of the total and a very high intensity of 235 tCO2e/mDKK revenue. This is driven by the inclusion of the life-time emissions expected from the rechargeable batteries sold during the period. The emission intensity of Fund V excluding Micropower would be 16 tCO2e/mDKK revenue.
There continues to be a large spread of emissions and emission intensity among the companies in our private equity funds and we expect this to continue. We will not exclude companies with high emissions on principle as long as we believe it can be responsibly managed and that we can support decarbonization.
Table overview of all absolute emissions (tCO2e)
Gender Equality in Polaris’ portfolio
With Gender Equality as a focus area for our work, the share of women in the board of Directors and the management team has been chosen as a cross-portfolio KPI for Polaris and we also provide information on the gender balance of each organization as a whole. Thus, all portfolio companies are reporting annually on the gender balance across their organization and Polaris will report on this KPI for each fund and the portfolio as a whole. The work is focused on ensuring a balanced workforce and increase the share of the underrepresented gender.
Gender equality
Our portfolio companies all report on their gender distribution and they are increasingly establishing strategy & targets for their gender equity efforts as well as defining initiatives to improve. This supports our ambition to reach a 40/60 gender balance across our portfolio companies for management teams and boards over time. Our portfolio companies also calculate and report on their Unadjusted Gender Pay Gap according to EU regulations. The reporting of these indicators help drive focus on gender diversity at the portfolio company level and provides a basis for discussion in management teams and board.
During the period, their female board representation in Fund IV decreased slightly due to a replacement of a female board member. There were slight improvements at board level in Fund V driven by the addition of new portfolio companies with an average female board representation of 21%. We continue our focus on this area in the recruitment of board members. This is a long-term process as future potential board members are generally onboarded already in the very early stages in each of the large number of investment processes we are involved with on an on-going basis.
The gender distribution at the management team level was basically maintained at the company level but slightly diluted from the inclusion of new portfolio companies in Fund V. We expect to be able to improve over time towards our overall target of >40%.
We continue to recognize that we have some way to go in this area and will continue to work to improve internally and towards our portfolio companies.
Employer Responsibility in Polaris’ portfolio
Being good employers through respect for and protection of labor rights and providing safe, secure and healthy working environments for all employees is not only the right thing to do, but also key to value creation in our portfolio companies as it supports attraction and retention of talents and resources.
Employee turnover
All Polaris' private equity portfolio companies focus on creating a good and safe working environment for their employees. Measuring and monitoring their Employee-initiated employee turnover is a part of this work which is often complemented by a range of other measures. Since 2022, we gather data on a range of additional indicators related to working environment and health & safety, such as employee satisfaction, absenteeism, accident rates, policies, training among others. As of the start of our next private equity fund, we will start to report publicly on employee satisfaction, absenteeism as well as Total Recordable Incident Rate (TRIR) and Lost-Time Injury Frequency Rate (LTIFR) in relevant cases.
As before, employee-initiated turnover continues to be an important and relevant indicator to follow for our portfolio companies. It does, however vary greatly between companies and over time, driven by structural differences and impacts from organizational restructurings. We can however note that the overall levels have decreased across the portfolio to a normalized level that seems to lie somewhere between 10 to 20%. We remain confident that the employee turnover, together with other related metrics, are managed responsibly by each portfolio company.
Overview of portfolio impact on the SDGs
As part of Polaris Sustainability Program, our portfolio companies map their material positive and negative impacts of our portfolio related to the UN’s Sustainable Development Goals (SDGs). Our ambition is for the impacts to the SDGs should be linked to the sub-goals and related business actions formulated by the Global Reporting Initiative (GRI) for each company to make the work as concrete and actionable as possible. Subsequently the portfolio companies should formulate initiatives to increase positive and minimize negative impacts. For our newest portfolio companies, the detailing of their SDG impacts might not yet have been performed.
Portfolio company sustainability reporting
- Fund IV: Four of six companies publish sustainability reports. Distriktstandvården and Vikingbus do not yet publish reports but plan to do so as of the year 2025. Configit and Futur published reports for 2023 and plan to publish the next report for the year 2025.
- Fund V: Eight of ten companies publish sustainability reports. Cepheo and Awardit do not yet publish reports. Stronger is in process of publishing their 2024 report.
Our Scope
We are applying our sustainability strategy for all our private equity investments in all active funds in this strategy, Fund IV and V. These two funds constituted 87% of our total invested capital in Polaris and included sixteen portfolio companies at the end of 2024. This includes all companies acquired by Polaris Private Equity that remained in our ownership at the end of the period, of which the earliest was acquired in 2016.
We align our work with established standards and frameworks.
Our sustainability program is based on international standards and frameworks to ensure that the way we work and report is in alignment with best practices in the field. By this we also seek to support quantitative and concrete approaches with a focus on materiality. The standards and frameworks used are described throughout this section along with how the work is conducted.
Methodology for CO2e accounting
Process
Our efforts of calculating CO2e baselines for our private equity portfolio companies and Polaris Management A/S were initiated in 2020. Our standard process is supported by external advisors and the calculations are made according to the Greenhouse Gas (GHG) Protocol and are built as line-by-line bottom-up exercises which we believe is necessary to properly support reduction initiatives and build understanding and ownership of the estimates in the organisations. At any given time, some of our portfolio companies might not yet have been onboarded onto our CO2e emissions calculation process. In order to be able to provide an estimate of the complete emissions for our private equity funds, we estimate the emissions of these companies with the help of external benchmarks. We are also continuously working to onboard new companies that have not yet measured their CO2e emissions and our ambition is to complete this within the first twelve months after closing.
Boundary setting and consolidation approach
For the organizational boundary setting, Polaris uses the 'Operational Control' approach. We do this because our investment strategy typically includes us exercising majority control through taking majority ownership. In doing so we acknowledge that we have the mandate to introduce and implement operating policies in our portfolio companies, and we therefore also take full responsibility for the emissions thereof in our CO2e baseline. Although we do not technically have majority ownership in all portfolio companies, the consolidation approach is taken for all portfolio companies, acknowledging the influence we have across all the companies, nonetheless.
Consequently, when consolidating CO2e emissions, we do this first by including the portfolio companies’ emissions per relevant private equity fund and then for Polaris Private Equity as a whole, where we also include Polaris Management’s own emissions although these should also be allocated to some extent to Polaris’ other investment strategies.
Quality and comparability
While emissions are consolidated across-portfolio companies to estimate the full Polaris private equity emissions (including Polaris Management and all private equity portfolio companies), we acknowledge that the baselines individually are not directly comparable.
For the companies that have been through our process, these may still vary greatly with respect to complexity, both with regard to the type of operations, but also with regards to procurement and reporting being more decentralized in some companies compared to others. This means that the data available for some companies may not be as readily available for others, why the same activity may have been estimated with a different calculation method across- portfolio companies, or may not have been included in the base year for some companies due to lack of available data. While these portfolio companies have defined their own organizational boundaries, to ensure it reflects their operations and business model, all companies have selected the operational control approach. They have also gone through all the Scopes and categories of the GHG Protocol and assessed their relevance and feasibility based on the principles of relevance, completeness, accuracy, consistency, and transparency.
We have mainly used one specialized advisor to support our portfolio companies in setting up their CO2e emission calculations and they supported nine of our sixteen private equity portfolio companies with the calculations for 2024 and their methods are described below. Other specialists support five of the remaining companies and have also generally followed the same methodology although there might be variations. Two companies did not perform their own calculations (Cepheo and Awardit) and for these, we made top down estimates of their Scope 1, 2 and 3 emissions based on external benchmarks.
In our process, the CO2e emissions have been calculated through a combination of calculation approaches, hereunder the activity-based method (based on activity data such as total weight of a product, total passenger-kilometers flown or other relevant metrics), the spend-based method (based on spend on a specific activity or category) and the supplier-specific method (based on actual emissions per SKU or supplier provided data).
Each baselining process has been initiated with establishing a spend-based baseline, which has been used to prioritize further data collection efforts with the aim of increasing accuracy through moving towards more detailed calculation methods.
Data has been extracted from the respective ERP-systems, invoices and collected from key suppliers when relevant (especially purchased energy services, logistics services, waste management services etc.). Where data for applying these methods have not been available, emissions for selected categories have been estimated based on proxy data. For example, for selected portfolio companies, where actual energy consumption was not available, the energy consumption has been estimated based on the size of facilities and average annual national energy consumption per square meter for a specific facility type (such as office spaces).
Similarly, emissions from employee commuting have been based on central assumptions, publicly available data on local commuting patterns and in some cases on company specific employee survey data.
CO2e intensity is calculated based on revenue when consolidating the baseline across-portfolio companies or otherwise in accordance with industry standards on portfolio company level to allow for comparisons against competition to the greatest extent possible – knowing that a complete “apples to apples” comparison is not possible due to differences in especially Scope 3 coverage and methodology between different companies.
CO2e intensity and totals are calculated as the total of Scope 1, Scope 2 (location-based) and Scope 3 emissions. Polaris has chosen the location-based approach as the main approach in alignment with the GHG Protocol’s guidance. If any companies purchase energy attribute certificates it will be accounted for in the market-based emission calculations, which is also communicated in this report in alignment with the dual Scope 2 reporting requirement.
For each portfolio company that have completed our standard process, the baselining process has been concluded with the development of a CO2e road map. We acknowledge that the quality of each companies' baseline will improve over time and there will be uncertainties and gaps in the baseline due to lack of sufficient data. We strive to have more and more complete and accurate GHG inventories over time, and so, the roadmap includes plans for improving the breadth and depth of the data gathered in the coming years. This includes integrating categories that have been deemed to be significant in terms of the size of emissions, but where sufficient data is not yet available.
Further, the road maps include a plan for the initiatives that are to be launched to reduce CO2e emissions. At Polaris we request that the road map, together with the baseline itself, is approved by the Board of Directors of the portfolio company to ensure commitment to and accountability of the efforts planed. We encourage and support our portfolio companies to set reduction targets in-line with, and approved by, the Science Based Target Initiative (SBTI).
Emission factors have been collected via supplier specific environmental product declarations (EPDs), research-based Life-Cycle-Analyses (LCAs), from the UK Department for Environment, Food & Rural Affairs (DEFRA), International Energy Agency (IEA) or otherwise known and qualified emission factor databases. To the extent possible we have gathered multiple datapoints for each emission factor to validate the sources used.
When working with the spend-based DEFRA database the following steps have been taken to adjust for VAT, inflation (since the DEFRA database is from 2011) and currency: 1. Exclude VAT from the DEFRA factor, 2. Converted from GBP to local currency (exchange rate in the year of the emissions factor) and 3. Adjust for inflation based on local inflation rates.
For Scope 2 electricity calculations, for Danish electricity consumption we have used Energinet’s (the Danish Transmission System Operator) emission factor based on consumed electricity from the grid, while we for all other countries have used IEA’s database and emission factors for produced electricity within the respective countries. The decision to select a more accurate emission factor for Denmark is driven by the fact that most portfolio companies have facilities located in Denmark, and as such we see it as a means to improve the accuracy of the GHG inventory across the portfolio.
We calculate our CO2e emissions on Scope 2 using the 'Location-based' approach but also disclose the results based on a 'Market-based' approach.
- Scope 2 (location-based) approach is calculated based on average emission factors for each country
- Scope 2 (market-based) approach takes the green power purchased into account and assumes that the non-green power is delivered as residual power where the green part has been taken out
At Polaris we recognise that we will continuously improve our understanding of our emissions and we will over time both refine and adjust our Scope and calculation method to increase the accuracy of our calculations and in turn our CO2e baseline. Furthermore, given the nature of our operations, the composition of our portfolio will change over time as new companies are acquired and current companies are exited. As such, we have defined a recalculation policy in line with the GHG Protocol.
The Recalculation Policy states that, in the case of structural changes, for example, acquisitions, divestments, mergers, outsourcing or insourcing, we will clearly indicate in the report added or subtracted parts of the baseline, which can then not be used for year-on-year comparisons. The same applies to the inclusion of more Scope 3 categories. In the case of methodological change, for example, a change in emission factors, data accuracy, discovery of a significant error (or similarly, a number of cumulative errors that collectively have a significant impact on the CO2e baseline), it will trigger a recalculation of the previous 2-3 years to ensure CO2e baselines are comparable over time.
Sustainability KPI identification
Identifying material impacts
As a starting point for sustainability strategy, action planning and KPI selection, all portfolio companies should go through a process to identify their material impacts, positive and negative, related to sustainability from both an impact and financial perspective across their value chain (so called ‘double materiality’). Recently, this has often been done through a Double Materiality Assessment (DMA) process conducted in-line with the Corporate Sustainability Reporting Directive (CSRD) guidelines. We expect this process to be established as a new standard. We also seek to establish the material impacts already in the due diligence process. This can be informed by external benchmarking and SASB Materiality Maps.
Core sustainability KPIs
Three core sustainability KPIs have been selected by Polaris as we believe these are generally material for the majority of companies. These will be reported on across portfolio companies following SASB standard reporting practices (please see below section for more information on SASB). The Core sustainability KPIs are related to our three Focus Areas:
Company specific sustainability KPIs
Each portfolio company should select at least three company specific sustainability KPIs that are relevant for their business and their identified material impacts. The primary concern is to identify an indicator which is the most relevant for the specific company but if possible, we aim to use indicators defined by international standards such as the EU regulations SFDR and CSRD, the SASB standard reporting practices or the Global Reporting Initiative (GRI).
The EU regulations SFDR and CSRD
contain a large number of sustainability indicators in the Principle Adverse Impact tables and ESRS E1-5, S1-4 and G1.
These indicators are used broadly throughout Europe by financial institutions and companies in their sustainability reporting. It is therefore advantageous for companies to align with these indicators whenever possible to facilitate understanding and benchmarking and also to prepare for future reporting requirements.
The sustainability accounting standards boards' (SASB) materiality map (part of IFRS Foundation)
is based on studies of 77 industries and more than 4000 cases to identify relevant disclosure topics across different industries and sectors.
The SASB materiality maps are used as they are a broadly accepted and well-founded standard to guide the disclosure of financially material sustainability information by companies to their investors. The approach is focused on identifying quantitative and qualitative measures that are likely to impact a company’s financial performance and at the same time provides an industry-specific lens in recognition of the fact that the issues most likely to impact financial performance vary by industry. The SASB standard can therefore provide us with market-informed material sustainability measures but also help us increase sustainability transparency towards our investors and future owners of our portfolio companies.
The Global Reporting Initiative (GRI)
is an independent, international organization that provides a globally recognized framework for sustainability reporting. It helps businesses and other organizations understand and communicate their impacts on the economy, environment, and society.
GRI's standards are widely used for organizations to disclose their environmental, social, and governance (ESG) impacts and we can use them to ensure alignment and comparability of our portfolio companies sustainability reporting.
Business reporting on the SDGs: An analysis of goals and targets
is a report developed in a partnership between Global Reporting Initiative (GRI) and the UN Global Compact with technical and strategic support provided by PwC. The report consolidates guidance on how businesses can contribute to the SDGs by providing an illustrative list of possible actions that businesses can take to
make progress towards the individual sub-targets.
The UN Sustainable Development Goals (SDGs) provide a framework for informing and communicating our work with sustainability. We use the SDGs as a way of creating transparency around our positive and negative impacts and how we are working with these. Following an impact assessment, a company can then also identify significant contributions to the SDGs.. It has been of high importance that the approach to working with the SDGs is as realistic, holistic and transparent as possible. We also want to ensure that we focus on both work towards increasing our positive impacts and on minimizing our negative impacts and being transparent in how we work towards doing so.
We are taking a conservative approach to working with the SDGs, meaning that we focus on and work with our material impact. Therefore we have encouraged our portfolio companies to rather focus on fewer SDGs and work more in depth with the areas of material impact, than falling for the temptation to claim positive impacts across a wide range of SDGs.
It is very important for us to be clear about the fact that even we are not willing and able to argue that a portfolio company is providing a direct positive impact to society through their products or services, we are taking responsibility for their negative impacts. We are focused on ensuring businesses are run in a sustainable way – both internally and externally. This realization is important and necessary for us and the portfolio companies to focus our efforts on the areas where we can achieve real impact and where it matters the most.
In order to link our work with the SDGs to actual initiatives and actions to the greatest extent possible, we have based our approach on Global Reporting Initiative’s (GRI): Business Reporting on the SDGs: An Analysis of Goals and Targets.
As a consequence, we advise our portfolio companies to address the sub-target level of the SDGs in their work. For the selected sub-targets we should assess the associated business actions of the sub-targets in order to identify where the companies can have a real impact in line with these.
Our ambition is for each identified area of material impact the company has identified, it also documents the associated concrete initiatives that they have launched or will launch to increase their positive impacts or minimize their negative impacts. These initiatives should then be sequenced and included in the sustainability road map for the portfolio company, which is approved by the individual Board of Directors. Impact tracking on the initiatives will be followed up upon in the Board meetings and status on the initiatives will be included in each companies sustainability reporting.
How we are assessing climate risks and opportunities
Our approach to assessing the impact of climate change on our portfolio companies from a risk/opportunity perspective is based on the Task Force on Climate- related Financial Disclosures’ (TCFD) risk and opportunity framework.
We are using TCFD as a structured approach to work with climate-related risks and opportunities.. To prioritize efforts we conduct a high-level assessment of each of the portfolio companies included in this report and prioritized the companies according to estimated exposure to climate changes and identified those we believe most exposed. It is our ambition that these companies should then conduct a TCFD analysis. The result of this high-level assessment can be seen in the TCFD prioritization matrix below where the companies initially prioritized for the TCFD analysis are to be found on the right hand side of the matrix.
For the portfolio companies that have gone through the climate risks and opportunity assessment, the process has been initiated by a high-level assessment of each risk and opportunity topic followed by a prioritization of where to conduct deep-dive analyses to increase depth of analyses and increase the transparency of the impact on the company. As part of the TCFD analyses the companies have conducted analyses of e.g. expected CO2e tax scenarios based on their calculated CO2e baselines and the carbon tax recommendations put forward by the Danish Climate Council and IMF in relation to a 1.5 and a 2 degree scenario. Following the analyses, initiatives to address the key risks and opportunities identified have been formulated. These initiatives have been prioritized and aligned with the overall strategy of the company and other organizational priorities and presented as part of the consolidated sustainability roadmap for Board approval. Each portfolio company should revisit their TCFD analysis regularly to ensure continuous focus on climate-related risks and opportunities and identify any relevant changes in relation to these.
TCFD prioritization matrix
Polaris sustainability principles define responsible business conduct
based on the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. These Principles are the foundation for making the ten principles
of the UN Global Compact operational and constitute a global minimum standard for responsible business conduct.
Our Sustainability Principles - the Principles of Responsible Business Conduct in our private equity strategy
The ambition for all the portfolio companies in Polaris Private Equity is to align their work with the global minimum standard for responsible business conduct. This work is initiated in a 5-day onboarding process which we aim to initiate within 12 months post the closing of each acquisition as part of 'Polaris Sustainability Program'. The process generates the following content and output, which forms the basis for the formulation of the companies' sustainability strategy:
Impact Assessments/Capacity Development process (5-day onboarding)
- Introduction: Introduction to the global minimum standard for responsible business conduct
- Definition of sustainability: Introduction to the key fundamental elements of sustainability through 84 potential impact areas:
- Environmental impact - 20 areas
- Social impacts - 48 areas (human and labor rights)
- Economic impacts - 16 areas
- Policy commitment: Formulation of a sustainability policy and a formal commitment to the minimum standard for responsible business conduct
- Impact Due Diligence: Implementation of due diligence processes and completion of the first assessment including:
- Identification of potential negative impacts
- Assessment of risk levels, existing actions and additional actions to prevent or mitigate the risks identified, and indicators to measure effectiveness of actions
- Action plans: Listing of coming actions to prevent or
mitigate impacts, estimate of resources and person responsible
- Business relationships: Construction of a Code of Conduct for Business Relationships
- Grievance mechanisms: Outlining the basis for establishment of grievance mechanisms in the company
- Cloud-based tool: The documentation of the outcome and follow-up of the Impact assessments (due diligence) are managed in a dedicated cloud-based tool: SEE Impacts (by Global CSR)
The resulting sustainability policy, business relationship Code of Conduct, impact assessments as part of a management system (due diligence process and governance, action plans and grievance mechanisms) are approved by the company Board of Directors after which the company applies for membership in UN Global Compact.
Following the process, the portfolio company is also able to comply with the EU regulations that directly reference our Sustainability Principles: the SFDR, CSRD, the EU Taxonomy (Minimum Safeguards) and the upcoming CSDDD.
