Skip to content

Sustainability Policies Objectives

The objective of this section is to clarify what SOFIAC aims to achieve with its sustainability policies and how these relate to its business model.

SOFIAC aims to generate both positive financial and environmental impact returns through the implementation of energy efficiency projects in private sector facilities (commercial, industrial and multi-residential). On top of generating such important benefits, SOFIAC has designed and embedded a comprehensive sustainability approach within its business model to ensure it maximizes its global impact through the realization of its projects. The approach is based on the following:

  • Managing financially material ESG risks and opportunities
  • Financial viability: Solutions need to be financially viable to ensure our ability to deliver impact in the long run.
  • Managing system-wide materiality risks and opportunities: Minimizing negative externalities (“Do No Significant Harm”) on the natural environment and people, and seeking to maximize positive externalities (“Doing Good”).
  • Achieving sustainability goals by contributing to solutions: Managing for specific intended environmental impact.

Sustainable sub-policies

SOFIAC has three sustainability sub-policies related to the overarching sustainable goals:

  1. Absolute exclusions to minimize the risks of doing harm / managing system-wide risks: The objective of this policy is to refrain from doing business in specific sectors or with companies with business practices that are not aligned with SOFIAC’s shareholders and lenders sustainability goals and values. SOFIAC may exclude sectors due to system/impact material risks. For instance, the absolute exclusions constitute the first sustainability-related screening of the client and ESCO selection process, thus being a “first line of defense”.
  2. ESG Integration: The objective of this policy is to outline the process of integrating ESG issues into business analysis and processes across the SOFIAC value chain. ESG integration tools will help manage ESG risks both from a financial and impact perspective. The ESG integration analysis aims to minimize such risks proactively. SOFIAC will use ESG analysis tools based on thresholds and market best practices.
  3. Delivering energy efficiency: The objective of this policy focuses on estimating ex-ante and monitoring the positive environmental impacts generated by the energy efficiency projects implemented, by monitoring performance and providing evidence of the impact achieved.

Key stakeholders and Sustainable activities

SOFIAC has two key external stakeholders within the value chain of its business model:

  • Facilities owners (Clients): SOFIAC seeks to ensure its clients manage their risks of doing harm by ensuring there is no exposure of activities to the exclusion list, and applying performance thresholds which vary depending on the sector the clients operate in.
  • ESCOs (Key partners): They deliver the energy efficiency solutions for the facilities. SOFIAC pre-approves them and seeks to ensure they manage their risks of doing no harm. SOFIAC also aims to consider the positive ESG practices of the ESCOs as part of the selection process.

1. Sub-policy 1: Exclusion policy

The objective of this policy is to refrain from doing business in specific sectors or with companies with business practices that are not aligned with SOFIAC’s and its shareholders' sustainability values.

Addressing systemic issues related to society and the environment is at the heart of the business activities of SOFIAC. SOFIAC therefore applies the following exclusion list to all parties it engages with:

  • Illegal activities: Production or trade in any product or activity deemed illegal under host country laws or regulations or international conventions and agreements, or subject to international bans.
  • Adult entertainment / exploitation: Pornography, prostitution or businesses that offer products, services or entertainment, or otherwise engage in the sale, marketing or production of services, of a sexually exploitative nature, that are inconsistent with generally accepted community standards of conduct and propriety.
  • Gambling: Gambling, casinos and equivalent enterprises where gambling activities are not merely incidental to other activities and legal tender currency can be won or lost.
  • Tobacco: Production or trade in tobacco and tobacco-related products.

In addition, SOFIAC aligns with the EU Taxonomy’s Minimum Social Safeguards (covering Human Rights, Bribery and Corruption, Taxation and Fair Competition). SOFIAC will not engage in any activity with businesses that, to the best of its knowledge and after due enquiry, fail to respect:

  • The UN Global Compact’s Ten Principles in the areas of human rights, labour, the environment and anti-corruption;
  • The General Policies of the OECD Guidelines for Multinational Enterprises in the areas of human rights, labour, the environment and anti-corruption;
  • The eight ILO Conventions on Fundamental Principles and Rights at Work;
  • The United Nations Guiding Principles on Business and Human Rights (UNGPs) or the UN’s Universal Declaration of Human Rights.

2. Sub-policy 2: ESG Integration – Analysis, Measuring and Monitoring

The objective of this policy is to outline the process of integrating ESG issues (both financially material and system-wide) into business analysis and processes across the SOFIAC value chain. This applies to stakeholders that have successfully passed the first screening through the exclusions list.

2.1 ESG Analysis of Clients

As part of its credit risk worthiness process, during prospecting and due diligence, SOFIAC aims to analyze the sustainability risk profile of the facilities owners. This helps identify the most material sustainability risks and opportunities that may affect the investment’s profitability and its risk-return profile, as well as potential risks of unintended negative impacts on people and planet (system-wide). The ESG analysis aims to be in line with the requirements of the EU Taxonomy “Do No Significant Harm” criteria and the SFDR Principal Adverse Impact indicators, as relevant for each project.

2.2 Subcontractor selection process

SOFIAC works with established Energy Service Companies (ESCOs) to support and execute its activities. In alignment with the Principal Adverse Indicators (PAIs) set out by the EU Sustainable Finance Regulation, direct contractors and subcontractors of SOFIAC will be requested to provide insights around their Employment and Occupational Health and Safety practices, as well as other relevant ESG information.

2.3 Reporting

SOFIAC identifies, mitigates and annually reports to key stakeholders all material topics to SOFIAC’s business.

2.3.1 EU Taxonomy Reporting

SOFIAC commits to annually report its alignment to the EU Taxonomy and the Principal Adverse Indicators (PAIs) as per the SFDR reporting requirements.

Note: As of September 2023, this includes alignment percentages of revenues, Capex, and Opex from Energy Performance Contracts fulfilling EU Taxonomy criteria.

2.3.2 SFDR Reporting Requirements

On an annual basis, SOFIAC will report on its ESG performance to its investors via the mandatory Principal Adverse Indicators (PAI) reporting template. The PAIs incorporate both financially material and system-wide ESG considerations. As SOFIAC operates in a service industry with little direct external impact, much of its exposure to the PAIs is negligible.

3. Sub-policy 3: Delivering and reporting Energy Efficiency

For each project, SOFIAC commits to report on actual energy savings and GHG emissions, verified by a third party and recognized methodology. On an annual basis, SOFIAC will aggregate the impact data at the portfolio level and report this to its shareholders and any other relevant stakeholders.

4. Values and Business Practices

SOFIAC commits to:

  • Minimize significant harm: SOFIAC seeks to operate while minimizing risks of doing significant harm (DNSH).
  • Respect human rights: Our stakeholders are expected to respect human rights as defined by the United Nations’ Universal Declaration of Human Rights (UDHR), and especially protect vulnerable groups which are at higher risk of having their human rights violated.
  • Adherence to best practices: Using standardized ESG and impact measurement frameworks where possible (e.g., ILPA & IRIS+), as well as other relevant sustainability standards and principles.
  • Transparency: This includes, but is not limited to, being transparent on formulas and frameworks used to calculate data where relevant, acknowledging gaps or data limitations (especially in ESG & impact reports), and sharing lessons learned, including both successes and challenges. Where possible, SOFIAC will also facilitate the verification of sustainability data and practices.
  • Diversity and Inclusion: SOFIAC believes that incorporating diversity helps to boost innovation, efficiency and makes the company more resilient and future-proof. It commits to fostering an inclusive environment for all stakeholders, and therefore prohibits discrimination and harassment of any kind. In addition, SOFIAC has a zero-tolerance policy for discrimination or harassment.
  • Stakeholder engagement: As SOFIAC activities are executed by counterparties, these are screened on their policies to manage impacts on stakeholders. This is an ongoing process involving stakeholder analysis, disclosure of information, consultation, and participation. SOFIAC encourages open communication and engagement with its stakeholders.

5. Non-Compliance

In the event of non-compliance with any of the policies:

  1. It must be flagged by the manager, who will first attempt to rectify the situation through engagement activities.
  2. All breaches of policies require a written report and a MEL plan (Monitoring, Evaluation & Learning).
  3. In the event that further engagement is unsuccessful, the manager may choose to implement an escalation procedure in line with SOFIAC governance.