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Voluntary Principal Adverse Impact Indicators
If you have decided to opt-in for the Principal AdverseImpact (PAI) framework, you need to report on how you and your portfolio companies monitor and address their Principal Adverse Impacts.
These indicators aim to measure the negative effects an investment decision might have on sustainability. In the scope of thisRegulation, sustainability relates to environmental and social factors, but also employee and human rights matters, as well as anti-corruption and anti-bribery.
Currently, there are 14 mandatory and 35 voluntary indicators. To comply with the Regulation, you need to monitor and report on all mandatory and two or more additional indicators.
ℹ️ For a list of the mandatory PAIs, see our other article.
ℹ️ You are allowed to choose as many more voluntary indicators than the minimum (i.e., two) as you deem relevant.
How can I choose the right additional indicators?
Step 1: Carefully go through the list below.
Step 2: Think about which indicators might be easiest to measure in more than one of your portfolio companies.
Step 3: Choose those indicators that you believe most of your portfolio companies have in common.
Additional Environmental Indicators
Emissions of inorganic pollutants
Inorganic pollutants are mostly caused by inorganic chemical waste (water).
Emissions of air pollutants
Air pollutants are direct sulphur dioxides emissions, direct nitrogen oxides emissions, direct non-methane volatile organic compounds emissions, direct particulate matter, direct ammonia and direct total heavy metals emissions.
Emissions of ozone depletion substances
These substances are defined in the Montreal Protocol on Substances that Deplete the Ozone Layer.
Investments in companies without carbon emission reduction initiatives
Do you have carbon emission reduction initiatives that are aimed at alignment with the Paris Agreement?
Breakdown of energy consumption by type of non-renewable sources of energy
What non-renewable energy source do you use in your company? Per source, indicate your energy consumption in GWh.
Water usage and recycling
This indicator refers to the average amount of water consumed and reclaimed by your company
Investments in companies without water management policies
Do you have water management policies (guidelines for the collection, preparation, use, disposal and protection of water resources) in place?
Exposure to areas of high water stress
Do you operate in areas of high water stress? These are regions where the percentage of total water withdrawn is high (40-80%) or extremely high (greater than 80%) in the World Resources Institute’s (WRI) Water Risk Atlas tool “Aqueduct”. If so, do you have adequate water management policies for those areas?
Investments in companies producing chemicals
Do you manufacture pesticides and other agrochemical products?
Land degradation, desertification, soil sealing
Do your company's operations lead to land degradation, desertification or soil sealing (the diminishing capacity of the soil to provide ecosystem goods and services as desired by its stakeholders)?
Investments in companies without sustainable land/agriculture practices
Do you have sustainable land and agricultural practices in place?
Investments in companies without sustainable oceans/seas practices
Do you have sustainable ocean and seas practices in place?
Non-recycled waste ratio
A sum of all the waste that is recyclable.
Natural species and protected areas
Do your operations affect threatened species (listed in the European Red List or the IUCN Red List)? Do you have a biodiversity protection policy covering operational sites owned, leased, managed in, or adjacent to, a protected area or an area of high biodiversity value outside protected areas?
Deforestation
Do you have a deforestation (the human-induced conversion of forested land to non-forested land) policy in place?
Additional Social Indicators
Investments in companies without workplace accident prevention policies
Do you have a workplace accident prevention policy in place?
Rate of accidents
Number of days lost to injuries, accidents, fatalities or illness
Lack of a supplier code of conduct
Do you have a code of conduct against unsafe working conditions, precarious work, child labour and forced labour in place?
Lack of grievance/complaints handling mechanism related to employee matters
Do you have a grievance/complaints handling mechanism related to employee matters in place?
Insufficient whistleblower protection
Do you have a policy on the protection of whistleblowers in place?
Incidents of discrimination
How many incidents of discrimination were reported and how many led to sanctions?
Excessive CEO pay ratio
What is the average ratio of the annual total compensation for the highest compensated individual to the median annual total compensation for all employees (excluding the highest -compensated individual)?
Lack of a human rights policy
Do you have a human rights policy in place?
Lack of due diligence
Do you have due diligence processed to identify, prevent, mitigate and address adverse human rights impacts in place?
Lack of processes and measures for preventing trafficking in human beings
Do you have prevention policies against human trafficking in place?
Operations and suppliers at significant risk of incidents of child labour
Are your operations and suppliers at significant risk of incidents of child labour exposed to hazardous work in terms of geographic areas or type of operation?
Operations and suppliers at significant risk of incidents of forced or compulsory labour
Are your operations and suppliers at significant risk of incidents of forced or compulsory labour in terms in terms of geographic areas and/or the type of operation?
Number of identified cases of severe human rights issues and incidents
Lack of anti-corruption and anti-bribery policies
Do you have anti-corruption and anti-bribery policies (consistent with the United Nations Convention against Corruption) in place?
Cases of insufficient action taken to address breaches of standards of anti-corruption and anti-bribery.
