ESG Investing
Amid growing interest in corporate responsibility in the area of sustainability, it is widely recognized that incorporating environmental, social, and governance (ESG) issues into investment management operations is important for enhancing corporate value over the medium-to-long term. Polaris considers ESG to be an investment opportunity and invests with ESG as a theme.
ESG Policy
We will incorporate environmental, social, and governance matters into our investment and monitoring processes, engage in constructive dialog from the perspective of sustainability, and aim to promote ESG investment from a long-term perspective.
ESG Policy at Polaris (Summary)
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- Due Diligence
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- ・Create an initial list of ESG-related issues that are expected to be related to potential portfolio companies (“ESG issues”).
- ・Fully examine and consider the ESG issues listed in the ESG list prepared in accordance with the preceding paragraph, and record the results in the due diligence report.
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- Investment Committee
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- ・Investment Committee materials submitted to the Investment Committee will include due diligence findings on ESG issues, if applicable.
- ・After thorough consideration and discussion of the ESG issues, including those discovered during the due diligence process, a final decision will be made.
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- Deal Documentation
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- ・In order to address ESG issues related to portfolio companies, investment-related documents such as share transfer agreements shall include provisions to address ESG issues related to such portfolio companies.
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- Monitoring
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- ・Regularly monitor the business activities of portfolio companies, giving due consideration to ESG issues related to portfolio companies.
- ・Call on portfolio companies to implement proactive activities in line with ESG policies to address ESG issues.
- ・If any serious ESG issues are recognized, respond in a timely and appropriate manner to resolve said issues.
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- Exit
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- ・Give due consideration to ESG issues when selecting counterparties at the time of exit.
- ・Conduct background research on counterparties and/or their affiliates as needed in consideration of ESG issues.
- ・If the Investment Committee recommends that specific ESG provisions be included in exit documents, take appropriate action to include those provisions.
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- Reporting to Investors
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- ・Regularly report ESG-related matters to investors.
- ・If an investor requests a report on a specific material ESG issue based on reasonable grounds, respond to the request in a timely and appropriate manner.
ESG Due Diligence in Investments
When conducting due diligence on portfolio companies, Polaris reviews ESG-related issues through a checklist and fully examines and considers them. If we judge that the company has difficulty improving because it does not meet ESG standards, we will refrain from investing in it. If the problem can be improved, we will improve it with proactive support and regular monitoring after investment.
We ask portfolio companies to actively engage in activities in line with our ESG policies and work together to address ESG issues.
■Specific Cases of Due Diligence and Monitoring
| ESG | Main Items for Evaluation | Specific Cases |
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| Environmental Responsibility |
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| Social Responsibility |
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| Corporate Governance Responsibility |
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ESG Investing Cases at Polaris
In our pursuit of sustainability, we are working to make contributions, particularly in the medical and welfare fields, leveraging Polaris’s knowledge base.
Case 1: Sogo Medical
| Time of investment | March 2020 | Investment type |
Going Private / MBO |
As “a frontier company in the healthcare industry that supports the future of society and medical care (Vision 2030)”, we will reform the working style of physicians, reorganize hospitals, address uneven distribution and shortages of medical staff resources, etc. By tackling the issues facing society head on and advancing solutions that support the entire community, we aim to achieve a Japanese-style healthcare system that integrates pharmaceuticals.
■ESG Initiatives at Sogo Medical
In recognition of our efforts to promote employment of people with disabilities and create a work environment where each person can work energetically, we received the “Award for Excellence in Employing People with Disabilities” at the 2023 Employment Promotion Convention for People with Disabilities held by the Japan Organization for Employment of the Elderly, Persons with Disabilities and Job Seekers (Fukuoka Branch).
Case 2: HITOWA Holdings
| Time of investment | March 2019 | Investment type | Owner Business Succession / Secondary Buyout |
Based on a corporate philosophy of “creating new value supporting families and lifestyles, and continuing to provide ‘excitement and satisfaction’,” the company provides several services that were previously handled at home, such as house cleaning, childcare, and nursing care.
By revitalizing the working generation, the company creates a system for sustainable societal development.
■ESG Initiatives at HITOWA Holdings
We have defined the following six materiality issues and are working together as a group.
- 1. Helping people live their own way
- 2. Coexisting with local communities
- 3. Creating a desirable work environment
- 4. Staff development to support sustainable corporate activities
- 5. Promoting corporate activities that do not place a burden on the global environment
- 6. Sustainable enhancement of corporate value and strengthening of management infrastructure
