Sustainability-related disclosures
2. No sustainable investment objective
The Feeder Fund promotes environmental or social characteristics but does not have as its objective sustainable investment.
3. Environmental or social characteristics of the financial product
The Feeder Fund promotes environmental and/or social characteristics by virtue of investing substantially all of its assets in the Fund, which the AIFM has determined promotes environmental or social characteristics within the meaning of Article 8 of the SFDR.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
Environmental characteristic
- In June 2021, Vista became a signatory to the Net Zero Asset Management (“NZAM”) initiative, which serves as a commitment to reducing portfolio company greenhouse gas (“GHG”) emissions by 50% by 2030 to achieve net zero by 2050 or sooner. KPI: Greenhouse gas emissions (in tonnes of CO2 equivalent) in the overall portfolio of the Fund.
Social characteristics
Founded, led and controlled by a person of color, Vista is dedicated to improving and encouraging diversity within the Firm as well as throughout the software industry and beyond. Vista actively works on and supports diversity and inclusion in its portfolio companies, from board composition to workforce management and programs. In this area, Vista aims to support gender and racial diversity and a reduction in inequality and will monitor improvements with the following KPIs:
- KPI: Percentage of boards of portfolio companies of the Fund that are controlled by Vista with at least one female director.
- KPI: Percentage of boards of portfolio companies of the Fund that are controlled by Vista with at least one director who is a person of color.
4. Investment strategy
The Feeder Fund invests substantially all of its assets in the Fund.
As part of its review prospective underlying fund investments, the Investment Advisor’s operational due diligence teams assess good governance at both the level of the underlying fund manager and the underlying fund. At the manager level, the operational due diligence teams review the manager’s decision-making function, including the composition of any management committees (such as the board of directors) and the coverage and responsibility of such committees along with their voting structures. At the fund level, the operational due diligence teams assess the responsibilities of the fund’s governing body (such as the investor advisory committee), any conflict of interests, oversight of portfolio management, and other compliance related issues including sound management structures, employee relations, remuneration of staff and tax compliance.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
Investment strategy used to meet the characteristics
The Fund’s primary investment strategy is to acquire controlling interests in upper middle-market and “large cap” enterprise software, data and technology-enabled solutions companies with significant value creation opportunities. Vista seeks to invest in opportunities in which Vista believes it can drive operational change.
Once Vista decides to proceed with a potential investment, the deal team prepares an in-depth investment analysis that includes the operational issues and opportunities inherent in the company and a specific post-acquisition operating plan. A critical part of the underwriting process is delivering an assessment of the architecture and code of the software, the management team, security and ESG risks and opportunities inherent to the potential investment.
Once a company has been acquired, the investment team and the value creation team will begin to prioritize and deploy the proprietary Vista Best Practices. The Value Creation Plan, which is created during diligence and finalized post-acquisition, takes into account the highest priority and anticipated most effective Vista Best Practices tailored to the investment thesis and business-specific dynamics currently in play. Vista will include specific actions related to achievement of the environmental KPI in the 100 days list. With respect to the social KPIs, Vista will expect that the external board member appointment timeline and process will be established, and profile(s) identified within the first 100 days.
Good governance
Vista engages with its portfolio companies to encourage strong corporate governance including sustainable supply chain management, legal compliance, business ethics, fair tax practices and whistleblowing systems. Vista expects portfolio companies to work proactively against corruption in all its forms and to maintain policies and practices that support employee relations. In addition, Vista will provide the portfolio companies in this Fund with guidance on how to create an ESG policy and ESG committee in order to operationalize and govern ESG risks and opportunities.
5. Proportion of investments
The Feeder Fund invests substantially all of its assets in the Fund.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
The Fund will seek to apply the environmental and social characteristics outlined above to all of its investments, but there can be no guarantee or assurance that the Fund will be able to implement the characteristics with respect to 100% of investments. No investments are made in environmentally sustainable economic activities because the existing approach has been adopted on the basis that such investments are not considered a material part of the Fund’s investment strategy.
6. Monitoring of environmental or social characteristics
The Feeder Fund relies on the Fund’s monitoring of the environmental or social characteristics for the Fund.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
In the post-investment and stewardship phase, Vista seeks to engage its private equity portfolio companies on ESG matters. For a fund’s investments, within approximately 100 days after the closing of the acquisition of a new portfolio company, Vista will seek to engage with and conduct a baseline ESG assessment for such portfolio company, during which it seeks to gather an initial understanding of the investment’s existing ESG and Diversity, Equity and Inclusion (“DEI”) initiatives and practices (an “ESG Assessment”). Specifically, the ESG Assessment is an annual, self-reported assessment of ESG and DEI questions. The questions seek a combination of quantitative and qualitative responses to evaluate portfolio companies’ ESG initiatives and performance. The results of the ESG Assessments are then evaluated and scored by Vista’s dedicated ESG team, who also seek to identify key opportunities for improvement for the portfolio companies.
During the initial on-boarding process and thereafter annually, Vista will specifically seek to establish a quantitative baseline measurement of the key performance indicators (“KPIs”) discussed below for all investments in the applicable fund. Detailed information on how the KPIs are set, assessed and monitored will be included within Vista’s standard investor reporting platform.
The following sustainability indicators are used to monitor progress:
- GHG emissions (in tonnes of CO2 equivalents) in the overall portfolio of the Fund.
- Percentage of boards of portfolio companies of the Fund that are controlled by Vista with at least one female director.
- Percentage of boards of portfolio companies of the Fund that are controlled by Vista with at least one director who is a person of color.
In respect of monitoring and tracking GHG emissions specifically, Vista expects portfolio companies will measure their GHG emissions annually and track year-on-year performance via software tools. With respect to monitoring and tracking performance against the board diversity targets, Vista will track a company’s board diversity of the Vista executives and appointed external board members. This monitoring is done on a quarterly basis.
7. Methodologies
The Feeder Fund invests substantially all of its assets in the Fund.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
In the post-investment and stewardship phase, Vista seeks to engage its private equity portfolio companies on ESG matters, including the implementation of the environmental and social characteristics promoted by the Fund.
Environmental characteristic
To complete GHG emissions measurement, Vista provides portfolio companies with access to a GHG measurement software tool (currently Greenstone). The Greenstone GHG Wizard tool provides portfolio companies with a pre-defined set of questions to calculate GHG emissions in alignment with the GHG Protocol Standard. Where available, the company will input actual consumption or emissions data. If actual data is not available, the company can input proxy data (e.g., floor area of facilities for energy use or spend for business travel) from which the Greenstone GHG Wizard tool will automate estimates.
Companies also have access to a toolkit of supporting resources, including dedicated webinars, a data collection template, best practices for GHG measurement and reporting, and individual support from Vista’s ESG team. The result of the GHG inventory is a summary of GHG emissions by business activity and scope. The data measured includes all portfolio company activities related to energy consumption and business travel (i.e., all scope 1, 2, and scope 3 category 6: business travel GHG emissions).
After companies establish a baseline GHG footprint, Vista is focused on enabling them to set short-term, science-based emission reduction targets within two years of Vista’s investment. Vista’s goal is to fast-track decarbonization, embed the reduction of GHGs as a KPI at companies and encourage continuation after divestment by including their GHG data within the exit documentation and data room.
To catalyze GHG reductions, Vista has developed a best practice guide for developing a GHG reduction target and corresponding strategy for enterprise software companies. The implementation guide seeks to outline relevant decarbonization tactics such as procuring renewable energy, developing procurement standards and reducing business travel.
Vista portfolio companies also have access to a portfolio of vetted offset projects to offset their annual GHG emissions. Companies are encouraged to invest in offsets to compensate for GHG emissions that have not yet been reduced. By putting a price tag on GHG emissions, we hope to accelerate decarbonization efforts.
Social characteristics
One way Vista aims to meet its identified goals in relation to Gender Equality and Reduction of Inequalities is with diversity initiatives associated with its External Board Program. The External Board Program aims to formalize the recruitment, placement, and experience of external directors with a view to broadening representation across gender and race in its portfolio company boards. Vista partners with external organizations such as Diligent, Board Challenge, HimForHer and Board Diversity Action Alliance to further the External Board Program’s commitment to diversity, equity, and inclusion. As an example of these initiatives, Vista has partnered with the National Association of Corporate Directors (“NACD”) to launch two pipeline efforts that identify and develop high performing minority professionals with an interest in either Audit Committee preparation or Compensation, Nomination and Governance preparation.
More broadly, Vista focuses on creating best practices and achieving scale across its portfolio companies by modeling how companies can effectively build and foster diverse workforces and inclusive cultures. Vista provides portfolio companies with a DEI Board reporting template that facilities company management to report quarterly to their Board of Directors on the status of their DEI initiatives. In addition, Vista’s diversity, equity, and inclusion initiatives are promoted through its Best Practice Sharing Summits (“BPSS”), which are portfolio wide events targeted at the practice discipline level.
8. Data sources and processing
The Feeder Fund relies on the Fund’s approach to data sources and processing for the Fund.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
- Data sources used to attain the Characteristic:
- Environmental characteristic: Vista’s portfolio companies are expected to utilize a software platform (currently Greenstone) to measure and report its GHG footprint. Rather than a top-down approach whereby emissions are estimated based on industry benchmarks, Vista partners with each of its portfolio companies to measure emissions across its value chain from the bottom up.
- Social characteristics: external (non-Vista) directors of portfolio companies self-report their diversity data using a Cvent survey that is sent to them by Vista. Diversity data relating to Vista’s appointed directors of portfolio companies is contained within Vista’s HR records.
- Measures taken to ensure data quality:
- Environmental characteristic. Companies also leverage a template and an FAQ document to streamline data collection. Vista engages one-on-one with companies to facilitate the process and enhance data quality. After initial data is submitted, there is a multi-month process for quality assurance. Where data gaps or anomalies are identified, Vista’s ESG team requests additional information from the company and may use consumption estimates based on actual reported data across the portfolio of enterprise software companies. Each company receives feedback from Vista’s ESG team, detailing opportunities for improving data quality and coverage in future years. To maintain accountability, companies are expected to present and discuss the footprint results at the board level annually.
- Social characteristics: Portfolio companies are responsible for self-disclosing board diversity data to Vista in accordance with their legal obligations and/or policy commitments. Vista reviews this information and may confirm responses with publicly available information but will not verify this data.
- How data is processed:
- Environmental characteristic: The data received from Vista’s portfolio companies is processed via the Greenstone platform. The Greenstone GHG Wizard will process actual consumption or emissions data, where available. If actual data is not available, the Greenstone GHG Wizard tool will automate estimates from proxy data.
- Social characteristics: Board diversity data provided by portfolio companies is processed by Vista’s Human Resources team.
- The proportion of data that is estimated:
- Environmental characteristic: Vista compiles a GHG inventory in accordance with the Greenhouse Gas Protocol Corporate Standard. The data measured includes all portfolio company activities related to energy consumption and business travel (i.e., all scope 1, 2, and scope 3 category 6: business travel GHG emissions). The emissions are a mix of actual consumption data and estimated data from portfolio companies in Vista’s portfolio. Consumption intensity metrics, based on actual reported data from across the portfolio, may be used to develop robust, company-specific estimates for data gaps and are used to extrapolate GHG emissions for minority-controlled companies.
- Social characteristics: Real data provided by portfolio companies will be used, where available.ilable.
9. Limitations to methodologies and data
The Feeder Fund relies on the Fund’s approach to methodologies and data for the Fund.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
Limitations to the methodologies and data primarily arise because of a lack of available data by investee companies and/or a lack of infrastructure in place for the collection and processes of relevant data by investee companies. In some cases, investments are made in early or growth-stage businesses, who have not yet developed adequate data collection processes.
The Fund makes reasonable efforts to ensure the methodologies and data do not affect the attainment of the environmental or social characteristics.
The board diversity statistics do not currently include the diversity of someone who is not the Vista board member or an appointed external board member, due to lack of data collection process for those outside of either group.
10. Due diligence
The Feeder Fund relies on the Fund’s approach to due diligence for the Fund.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
In Vista’s view, sustainability risks, particularly where unmitigated, could affect the value of investments held by the Fund and/or the ability of the Fund to dispose of investments, and hence the value of the Fund. Vista relies on its ESG Policy (the “ESG Policy”) to inform its approach to ESG management. Vista has aligned its ESG Policy with the American Investment Council’s (“AIC”) comprehensive Guidelines for Responsible Investing and with the United Nations-supported Principles for Responsible Investment (“PRI”), of which Vista became a signatory in June of 2020.
During the due diligence phase, ESG analysis is embedded into the investment process to identify opportunities and risks. Vista leverages an ESG framework to analyze material ESG risks and opportunities in potential investments.
Vista’s approach is dependent on its influence over the management of each investment which may vary depending on the investment structure and terms, and Vista’s engagement will be tailored accordingly. In cases where Vista determines it has limited ability to conduct due diligence or to influence and control the consideration of ESG issues in connection with an investment, whether at the investment or at the Fund level, Vista will only apply those elements of the ESG policy that it determines to be practicable.
At the commencement of due diligence, the ESG team collaborates with outside counsel and subject-matter experts to conduct a review of the company’s cybersecurity, privacy, diversity, equity and inclusion, and other ESG practices. Additionally, Vista engages law firms and consultants to assess the material ESG factors in a company’s industry, approach to ESG, and potential risks and opportunities. Material findings are communicated to the investment committee and management teams and are included, where material and relevant, as part of the company’s Value Creation Plan.
Vista’s current due diligence process is built upon a flexible framework that was adopted from a number of third-party sources including: the UN Global Compact, Task Force for Climate-related Financial Disclosure, Global Reporting Initiative, the PRI and the Sustainable Accounting Standards Board (“SASB”) standards for Software & IT Services. Vista has developed a process that allows for the identification of ESG issues based on this framework and communication of those results to the investment teams. Specifically, ESG findings are provided to investment teams and such findings are expected to be incorporated into the investment review process. Vista’s investment professionals receive annual training regarding Vista’s ESG commitments and investment processes, which is provided by the Vista ESG professionals and external service providers.
As Vista believes that strong ESG practices and opportunities can correlate positively with enhanced financial performance within portfolio companies, one of the key drivers behind Vista’s identification, assessment, and management of material ESG-related risks relevant to the Fund’s investments is to seek to mitigate any potential or actual negative impact on the value of such investments, as well as to support ESG-related opportunities in order to add value to the Fund’s investments.
11. Engagement policies
The Feeder Fund relies on the Fund’s approach to engagement policies for the Fund.
The Fund disclosures are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or the Feeder Fund.
In the post-investment and stewardship phase, Vista seeks to conduct its first ESG Assessment within approximately 100 days after the closing of an acquisition of a new portfolio company.
- Through the first ESG Assessment Vista will seek to establish a baseline for a new portfolio company in respect of its existing ESG and DEI initiatives and practices.
- Vista will specifically seek to establish a quantitative baseline measurement of the KPIs discussed above for all investments in this Fund.
- Thereafter, ESG Assessments are conducted annually. Portfolio companies self-report on ESG and DEI questions. The questions seek a combination of quantitative and qualitative responses to evaluate portfolio companies’ ESG initiatives and performance.
- The results of the ESG Assessments are then evaluated and scored by Vista’s dedicated ESG team, who also seek to identify key opportunities for improvement.
12. Designated reference benchmark
No index has been designated as a reference benchmark to meet the environmental and social characteristics.
