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Responsible Investment

Our Commitment

As an early adopter of ESG principles in the private markets, Capital Dynamics recognizes the important role that alternative asset managers like us can play in leading the transition to a Net Zero economy. In leading this transition, it is our belief that we can both benefit a broader set of constituents which will be impacted by environmental change and generate enhanced long-term investment returns for our clients.  As climate change accelerates, setting a clear focus on greenhouse gas reduction targets in line with the 1.5°C objective will play a critical role in minimizing environmental-related financial risk to our portfolio companies. Companies which take these issues seriously are also likely to represent attractive investment targets for financial and strategic buyers in the future as the world collectively accelerates towards net zero goals over the next two to three decades. It is for these reasons that we are committed to taking immediate action in the advancement of Net Zero ambitions at the fund, asset, and operational levels of Capital Dynamics. Many, if not most, of our clients share these same concerns and goals. This is why we offer our clients a myriad of bespoke and customizable investment solutions to capitalize on the emerging frontier of Net Zero investment solutions and help us all drive towards an equitable lower carbon world.

Our Approach

We believe responsible investment leads to enhanced long-term financial returns and a closer alignment of objectives among investors, stakeholders, and society at large.

We believe the benefits of responsible investment include:

  • Risk Reduction
  • Cost Reduction
  • Positive impact on operating performance

We integrate responsible investment practices across our organization. In addition to being an early signatory of the Principles for Responsible Investment (‘PRI’) in 2008, our company is actively engaged in initiatives to improve responsible investment industry standards.

In 2020, Capital Dynamics was awarded the highest rating (A+) from the UN PRI for (i) Strategy & Corporate Governance, (ii) private equity strategy, and (iii) clean energy strategy.

Our proprietary investment rating system: R-EYE™

Based on the 17 Sustainable Development Goals (“SDGs”) identified by the UN, we created the R-Eye™ rating system in 2018, and deployed it across our business lines the following year. The proprietary rating system makes use of ten to twelve criteria, depending on the investment strategy, which are included in a scorecard and the responsible investment evaluation process. By scoring a potential investment against these criteria, we can make an informed decision whether to proceed with the due diligence or refer it to our Responsible Investment Committee for further review prior to the final investment decision. After an investment is made, this R-Eye™ rating is actively monitored and updated during the holding period of an investment. Any change in the rating is reported to our investors and protocols are in place to respond quickly and thoughtfully where any material ESG issues are identified.

[1]Capital Dynamics – in-house illustration. The R-Eye™ scorecard for each strategy will vary. Only investments beginning in 2019 are evaluated based on the R-Eye™ framework. Specific investment processes may vary depending on investment vehicle and asset class

 

Responsible Investment Committee

Our RI Committee includes representation from each investment strategy, investment risk functions, and senior client and business professionals.

The Committee works closely with each investment team as well as the organization as a whole to make sure our RI philosophy runs through our entire business. 

The Committee:

  • Votes on items such as RI policy and UN PRI submissions
  • Advises Investment Committees on RI best practice
  • Evaluates potential RI alerts within our investment portfolios
  • Sets the agenda for RI training, community involvement and the advancement of RI thought leadership

Five RI Committees focusing on key topics

In 2019, the firm formed five Sub-Committees to focus on key areas of Responsible Investment ("RI") within the business.

RI Sub-Committees

EU Sustainable Finance Disclosure Regulation

The Sustainable Finance Disclosure Regulation (“SFDR”) applied from 10 March 2021. The SFDR requires financial market participants such as Capital Dynamics to provide information to investors with regards to the integration of sustainability risks, the consideration of adverse sustainability impacts, the promotion of environmental or social characteristics, and sustainable investment.

Our policies required by the SFDR can be found at the following links:

Our disclosures required with respect to strategies with sustainable investment objectives can be found here.

ENVIRONMENTAL BENEFITS GENERATED BY OUR CLEAN ENERGY ASSETS*

2,146,050 Metric tons of greenhouse gas emissions avoided

CO2 emissions equivalent to:

  • 1,512,396 homes' electricity use for one year
  • 1,841,332 passenger vehicles driven for one year
  • Artboard 1
    Tanker Truck Created with Sketch. 114,810 tanker trucks worth of gasoline avoided
  • Oil Barrel Created with Sketch. 20,079,074 barrels of oil otherwise consumed
* Please see bottom of this webpage for further disclosures.

“Incorporating ESG best practices into our firm’s investment process is a top priority. This is no longer considered a ‘nice to have’ but something our clients expect from us.”

Bryn Gostin
Managing Director
Head of Product Development & Strategy, Chair of Responsible Investment Committee

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Source: Capital Dynamics, as at December 31, 2019. Information since inception of Clean Energy in 2010. Environmental benefits to December 31, 2019 are calculated using actual generation of CE assets and based on US Environmental Protection Agency Greenhouse Gas Equivalencies Calculator. Environmental benefits from January 1, 2020 are calculated using budgeted generation of Clean Energy assets and based on US Environmental Protection Agency Greenhouse Gas Equivalencies Calculator. Information is adjusted for actual CE portfolio generation annually.