ADM Capital Sustainability

For over two decades, ADM Capital has witnessed Asia’s profound economic transformation and the progress out of poverty for many millions. The dramatic shift to production in Asia has put immense strain on our ecosystems, depleted our natural resources and pushed planetary boundaries beyond levels deemed safe.

Changes to our increasingly erratic and warming climate have been recorded and these are, in part, driven by human actions, according to the scientific community. This was most recently made abundantly clear in a 2018 Intergovernmental Panel on Climate Change (IPCC) report, which indicates that greenhouse gas (GHG) emissions are at historically high levels and are “extremely likely” to be the dominant cause of changes to the climate. The report continues that, if left unchecked, the impacts to our economy, environment and society may be significant, representing a global risk to markets and communities. Consequently, as a firm, we support the  objectives of the Paris Agreement on climate change.

At ADM Capital we view Environmental, Social and Governance (“ESG”) integration as part of our fiduciary duty and believe that as a fund manager, we have an important role to play in supporting our portfolio companies’ social and climate outcomes. Integration can mitigate potential environmental and social risks that would otherwise reduce an investee company’s financial viability and also identify environmental business opportunities that would enhance an investee company’s financial viability. Our ESG integration is embedded in our business and governance processes through the Environmental and Social Management System (ESMS), which is central to our overall risk management framework. The ESMS guides the investment decision-making approach from concept note through to exit and lays out the process by which we assess and control the risks associated with a financial transaction.

Company growth benefits job creation, employee retention & improved training budgets, all of which help to develop human capital.

Our Journey

Major Milestones

  1. ADM Capital established amid debt crisis

  2. The partners of ADM Capital establish the ADM Capital Foundation with the objective of working to address some of Asia’s most intransigent environmental and social challenges.

    With programs underpinned by research, the impact-driven foundation works toward specific systemic change objectives.

  3. ADM Capital becomes the first Asian investment manager ex-Japan to sign up to the Principles for Responsible Investment (UNPRI)

  4. IFC cornerstones ADM Capital’s ASLF I.  ADM Capital starts ESG due diligence based on the IFC Performance Standards

  5. ADM Capital co-founds the Tropical Landscapes Finance Facility for Indonesia with UN Environment, BNP Paribas and the World Agroforestry Centre

    ADM Capital launches the Cibus Fund which invests in “food for our future”

  6. The Tropical Landscapes Finance Facility (TLFF)  announces its inaugural transaction, a landmark US$ 95 million Sustainability Bond to help finance a sustainable natural rubber plantation on heavily degraded land in two provinces in Indonesia.

    The project incorporates extensive social and environmental objectives and safeguards. Planted areas will serve as a buffer zone to protect a threatened national park from encroachment.

  7. ADM Capital joins the Hong Kong Green Finance Association

    ADM Capital includes ADM Capital Foundation’s CEO on the Investment Advisory Committee as an ESG advisory and observer

    ADM Capital Foundation designs an ESG  toolkit to provide ADM Capital investment team with sector-specific knowledge of ESG risk and opportunity factors.  The Toolkit is based on the Sustainability Accounting Standards Board’s (“SASB”) industry standards, in-house research and MSCI’s ESG ratings methodology

  8. ADM Capital creates an ESG committee of investment analysts and other staff to help support ESG integration, promote training and review and establish ESG policies and procedures, where necessary. The ESG Committee reports to ADM Capital’s Executive Committee

    In July, PRI granted ADM Capital an A+ rating for Strategy and Governance and an A rating for Fixed Income – Corporate Non-Financial. This score is an independent recognition of ADM Capital’s attention to sustainable investing and its Environment, Social and Governance (ESG) integrated investment process

    ADM Capital introduces fund-level Key Performance Indicators (KPIs)

Our Approach & Sustainability Governance

ESG considerations are woven into our investment process

Our investment process integrates ESG aspects from the Investment Advisory Committee Concept Note stage through to the final deal exit, with sustainability governed by the firm’s ESG policy. The ADM Capital ESMS also includes policies on climate, modern slavery, and Stewardship & Engagement.

Over the years, we have continued to enhance our Environmental and Social (E&S) due diligence processes and placed the monitoring and supervision of Environmental and Social Action Plans (ESAPs) throughout an investment’s lifecycle as a strategic priority. To capture our E&S value-add we have introduced E&S Key Performance Indicators (KPIS) across the latest deals in our portfolio and as of 2020, at the fund level.

To enhance our E&S performance, ADM Capital recently established an ESG committee of investment analysts and other staff. The purpose is to guide ESG integration, promote staff training, and to review and establish policies and procedures, where necessary. The ESG Committee reports to ExCO.

The ADM Capital Environmental Social Management System

  • ADM Capital’s exclusion list is the initial step of our E&S due diligence process and is primarily based on IFC’s exclusion criteria.
  • For example, we will not invest in companies with significant involvement in producing, marketing or distributing tobacco, gambling, casinos and equivalent enterprises, nuclear power, pornography, firearms or military weapons.

ADM Capital Foundation designed the ADM Capital ESG Toolkit (“Toolkit”), which provides analysts with sector-specific knowledge of ESG risk and opportunity factors. The toolkit generates a simple rating system, providing appropriate due diligence questions to support the analyst through KPI setting and ESAP development with companies. The toolkit is based on the Sustainability Accounting Standards Board’s (“SASB”) industry standards, in-house research and MSCI’s ESG ratings methodology.

ADM Capital’s ESG Toolkit is designed to support Investment Team due diligence by providing broad and sector specific guidance on ESG risks and opportunities.

By adopting industry leading standards from the SASB, MSCI, IFC, and the ADMCF, it is a pragmatic tool which can be applied in the context of private lending.

ADM Capital Foundation supports ADM Capital’s ESG integration and provides strategic advisory services to ADM Capital’s Investment Advisory Committee (IAC). The CEO of ADM Capital Foundation sits on the IAC of ADM Capital as an ESG sustainability observer.

Independent E&S consultants are engaged to conduct E&S due diligence ahead of any deal acceptance. Our analysts work proactively with the consultants to understand potential E&S risks and opportunities of the potential investment.

An ESAP is constructed for each transaction following E&S due diligence that identifies any key E&S risk factors and guides sustainability mitigation or enhancement based on IFC Performance Standards.

The ESAP is broken down into identifiable and measurable timebound and budgeted actions that are required to be completed by our clients.

We believe data is integral to capturing impact and identifying ways for companies to improve. As a result, we recently introduced KPIs to capture ADM Capital’s value add at exit. We have used SASB Accounting Metrics as a guideline to be more industry specific in terms of impact and opportunities.

We are working to align our KPIs to help deliver the 2015 Sustainable Development Goals (‘SDGs’).

Established in 2015, The Sustainable Development Goals or Global Goals are a collection of 17 interlinked goals designed to be a “blueprint to achieve a better and more sustainable future for all”.

ADM Capital Foundation

In 2006, the ADM Capital partners established the ADM Capital Foundation recognising the need for innovative and replicable models of funding that would lead to impact across environmental programs such as marine, forestry, water, air, and wildlife trade. ADMCF has since invested USD32m across 60 projects in 10 Asian countries, creating five initiatives and six alliances that respond to critical challenges in Asia.

ADMCF provides advisory support to ADM Capital and developed an in-house ESG toolkit to help ADM Capital analysts identify sector-specific ESG risks and opportunities and set key performance indicators.

Tropical Landscapes Finance Facility

ADM Capital is the facility manager for the Tropical Landscapes Finance Facility for Indonesia (TLFF). TLFF is a partnership among ADM Capital/ADM Capital Foundation, BNP Paribas, UN Environment and World Agroforestry Centre, the facility launched in October 2016 with support from government ministers and other Indonesian officials.

Industry Memberships & Associations

ADM Capital became the first fund in Asia ex-Japan to sign up to UN PRI in 2008.. Public transparency and assessment reports can be found online here.

In July 2020, UNPRI granted ADM Capital an A+ rating for Strategy and Governance and an A rating for Fixed Income – Corporate Non-Financial. This score is an independent recognition of ADM Capital’s attention to sustainable investing and its Environment, Social and Governance (ESG) integrated investment process.

HKGFA was founded in September 2018 to gather industry experts and provide policy suggestions to the HKSAR Government and other regulators in developing green finance in the city. ADM Capital participates in several of the HKGFA working groups.

Chaired by the UNDP Administrator, Achim Steiner, and comprised of ten global champions and thought leaders from finance and enterprise, including Lisa Genasci of ADMCF, the Steering Group was formed to play a critical role in the global effort to authenticate Sustainable Development Goals (SDG) enabled investment.