April 13, 2021 + Jessica Di Palo
3 Min read
The Sustainable Finance Disclosure Regulation (SFDR) was issued by the European Commission and came into effect on 10 March 2021. The aim of this legislative is to steer European capital towards more sustainable investments by putting in place disclosure requirements regarding sustainability objectives, risks and impacts.
These disclosure requirements will change the way managers all over the world advise and communicate on sustainable investments going forward. At MTIP, a Switzerland-based private equity fund, we are proud to be one of the first managers to comply with this new EU regulation and have achieved the dark green status.
As long-term investors in digital health innovation, we understand that value creation and social responsibility go hand-in-hand: both are critical for creating successful and sustainable businesses that improve lives. By focusing on investments in the digital health sector, we aim to enhance the lives of millions of people over the coming decade and beyond. We are committed to identifying and addressing material ESG issues during all phases of the investment process, and have published all required sustainability contents on our website.
Our Investment Manager, Danchen Zhao CFA, CAIA, led the implementation of the Sustainable Disclosure Regulation at MTIP. In the interview below, she tells us about our investment approach and the new SFDR regulation. Read her interview below.
JD (Jessica Di Palo): Danchen, could you please explain to our readers, how we do approach investing at MTIP?
DZ (Danchen Zhao): “Of course, let me start with this: at MTIP we harness the power of specialization. We focus on investing in healthtech, supporting promising solutions that improve access to quality healthcare. Our focus gives us unrivaled absorptive capacity, enabling us to quickly recognize the value of promising healthtech solutions and optimally support the selected founders in commercial scaling. The more they scale with our help, the bigger our impact on the quality and accessibility of healthcare.”
JD: Everybody is talking about ESG now. At MTIP we are following this investment approach already for many years. How do we integrate ESG into our investment process exactly?
DZ: “ESG integration can be seen in our screening, monitoring and engagement. We screen investment opportunities based on product, team, business model, financials and ESG criteria. For each portfolio company, we establish with the management team a set of operational, financial and ESG KPIs that will be included in their quarterly reports. When we notice a lack of progress on a defined KPI, which could be an ESG KPI, we engage with their management team to find the best way forward.”
JD: This sounds very promising. And to conclude, what are the biggest opportunities for companies in terms of ESG in your opinion?
DZ: “Most companies we work with want to attract talent, sign big clients, raise more money, and potentially get listed in an IPO. Good ESG performance offers opportunities to be successful on all four fronts. The brightest minds of today want to work for companies that contribute to the society and have a positive impact on the world. The biggest potential clients are multinationals that need to maintain their positive brand image and prefer to work with partners that share their values. An increasing number of our fellow investors are looking at ESG and impact of companies when doing their due diligence for a potential participation in a financing round. And any of the major consulting firms will tell you the importance of ESG matters in IPO communications. We are well equipped to support promising healthtech businesses in all aspects.”
MTIP is now one of the first Funds to have achieved the dark green status. We will tell you more about the different statuses in another Blogpost.
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