This page describes how Morgon Equity Partners takes sustainability risks into account in its investment activities. The information is published in accordance with the EU Sustainable Finance Disclosure Regulation (SFDR, EU 2019/2088).
Morgon Equity Partners Oy (“Morgon”) is an active and responsible private equity investor that also takes sustainability risks into account in its investment decisions. A sustainability risk means an environmental, social or governance (ESG) event or condition that, if it occurs, could have a negative impact on the value of the investments. Morgon has assessed that sustainability risks are relevant to its activities.
Sustainability risks are assessed as part of the investment process and due diligence. The assessment covers, among other things, the target company's industry, supply chain, energy intensity, the position of its employees and its governance practices. The risks are considered as part of the overall assessment of the investment's risk–return profile. We use both internal and external ESG tools in our analysis, and our team members are trained in the systematic assessment of sustainability factors.
If a portfolio company of the fund operates in an energy-intensive industry, we may assess the potential effects of climate policy changes, such as a rise in the price of emission allowances, on the company's cost structure and competitiveness.
Although the fund does not promote sustainability objectives under Articles 8 or 9 of the SFDR, we consider the integration of sustainability risks to be part of prudent risk management and long-term value creation. In our investment decisions we avoid targets where sustainability risks are evident or difficult to manage. We address the risks thoroughly during due diligence and, where necessary, require corrective measures before completing the investment or during the holding period. If the risks are material and cannot be remedied, we do not make the investment.
Together with our portfolio companies we build long-term value that combines financial performance, good governance, employee wellbeing and environmental responsibility. Our investments are Finnish SMEs whose businesses are developed holistically through digitalisation, artificial intelligence, leadership culture and sustainable growth.
One member of our team is responsible for monitoring and developing ESG topics, and we report on the subject regularly as part of our investor communications.
Examples of how environmental, social and governance risks can show up in investment returns.
Tightening of CO₂ emissions regulation
Potential impact on returnsRising costs, weaker profitability
Dependence on fossil energy
Potential impact on returnsExposure to price volatility and supply disruptions
Inadequate waste or chemicals management
Potential impact on returnsFines, revocation of environmental permits, reputational damage
Occupational safety gaps in the subcontracting chain
Potential impact on returnsProduction interruptions, damages claims
Weak equality or discrimination risks
Potential impact on returnsRecruitment challenges, staff turnover
Product safety issues
Potential impact on returnsLegal risks, loss of customers, brand damage
Conflicts of interest between owners and management
Potential impact on returnsStrategic uncertainty, harder exit
Lack of ESG reporting or weak transparency
Potential impact on returnsLoss of financier confidence, lower valuation
Cybersecurity gaps
Potential impact on returnsGDPR fines, loss of customer trust
Although we do not currently consider the adverse impacts of investment decisions on sustainability factors (SFDR Article 4(1)(a)) due to insufficient data, we actively monitor the situation and our aim is to take these impacts fully into account in the future.
Morgon's remuneration policy is consistent with the integration of sustainability risks.
The Firm does not structure remuneration in a manner that would encourage excessive risk-taking with respect to environmental, social or governance factors.
Sustainability considerations form part of the broader governance and risk management framework within which performance is evaluated. Remuneration structures are designed to support long-term value creation and do not incentivise excessive risk-taking with respect to sustainability factors.
The fund is a financial product under Article 6 of the SFDR. It does not promote environmental or social characteristics (Article 8) and does not have sustainable investment as its objective (Article 9). In accordance with Article 7 of the Taxonomy Regulation (EU 2020/852), we state:
The investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.
Official Finnish wordingTämän rahoitustuotteen kohteena oleviin sijoituksiin ei sovelleta ympäristön kannalta kestäviä taloudellisia toimintoja koskevia EU:n kriteerejä.
Questions? Contact us at info@morgon.pe
All policies