APPROACH FOR A RESPONSIBLE ESG MANAGEMENTThis approach is based in particular on international standards, such as the UN Principles for Responsible Investment (UNPRI) and the Equator

APPROACH FORA RESPONSIBLE ESG MANAGEMENT

INTRODUCTION

INFORMATION ABOUT MERIDIAM

General ESG approach

Investor information

INFORMATION ABOUT THE MERIDIAM FUNDS

List of funds

ESG charter, code or label

ISO 9001 certification, version 2015

External ESG Audits

PRI Signatory

Certifications within the project companies

MERIDIAM’S ESG ANALYSIS PROCEDURES

Main ESG criteria

Internal ESG analysis and monitoring

Analysis methodology

Integration in the investment process

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TABLE OF CONTENTS

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INTRODUCTION

Socially responsible investment is an essential part of the strategic positioning and management of Meridiam funds. Since its creation in 2005 and the launch of its first fund, Meridiam has ensured that its investments achieve the highest environmental, social and governance (ESG) objectives. This document outlines how ESG criteria are taken into account in Meridiam’s investment and asset management process.

More specifically, this document demonstrates how the Meridiam funds also comply with the regulatory requirements for the application of ESG criteria in France(1).

INFORMATION ABOUT MERIDIAMGENERAL ESG APPROACH

Meridiam places consideration of environmental,

social and governance quality issues (ESG) at

the heart of its activities, due to the very nature

of its investments, and their sustainability. As

rigorous risk identification is a fundamental

step in the project evaluation process, Meridiam

commits itself only when these are in line with

its commitments and the general interest of the

communities for which they are intended.

Since its creation, Meridiam has therefore

placed the consideration of ESG issues at the

heart of its priorities by adopting a Charter on

Sustainable Development focused on these

issues. In particular, the Charter on Sustainable

Development commits Meridiam to:

• Apply the rules of good governance

• Protect the environment

• Respect fundamental rights and develop

human capital

• Meet the expectations of the community

• Value the human capital of Meridiam

This global responsibility is also central to

Meridiam’s commitment to policy makers and

public institutions to promote and encourage

long-term investment.

These ESG priorities are translated into

operational terms by an ESG approach developed

by Meridiam and on the basis of which all

investment opportunities are analysed and

monitored. This approach is based in particular

on international standards, such as the UN

Principles for Responsible Investment (UNPRI)

and the Equator Principles, and takes into account

the ESG criteria of major development financial

institutions such as the International Finance

Corporation (IFC), the World Bank, the European

Investment Bank (EIB) and the European Bank

for Reconstruction and Development (EBRD). In

practice, Meridiam’s ESG approach to selecting,

analysing and monitoring investments enables

public authorities to better carry out and manage

their infrastructure projects. This approach, which

is part of Meridiam’s ISO 9001 system, includes

the following major steps:

• Identification of infrastructure projects

according to immediate and long-term needs;

• Global analysis of risks, whether financial,

operational, social or environmental, including

the exclusion of investments that do not meet

the requirements and performance criteria

established in the investment procedures;

• Development and implementation of ESG risk

management plans;

• Creation and management of companies

created specifically to manage projects called

project companies;

• Coordination of the development and

construction phases of projects;

• Long-term management of infrastructures with

and on behalf of the public authorities.

In addition, Meridiam applies strict compliance

and the principle of professional integrity to

the conduct of all projects, in accordance with

regulatory requirements. To this end, each

employee of Meridiam subscribes to the Code

of Ethics which includes strict reservations/

clauses on the issue of conflicts of interest.

Moreover, Meridiam ensures that all partners apply

zero tolerance to corruption issues,

in line with its anti-corruption policy.

(1)Decree No. 2015-1850 of December 29, 2015 applying Article 173 (paragraph VI) of the LTECV of August 17, 2015.

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Investor information

Investors are aware of Meridiam’s approach

to ESG procedures for the conduct of all of its

activities, as well as key ESG issues related to the

investments themselves. In addition, Meridiam’s

ESG commitments are public and accessible on

the website www.meridiam.com.

Meridiam takes into account investor concerns

in determining ESG criteria for its investment

and asset management process. Meridiam

ensures compliance with their requirements for

the production of follow-up reports, whether

these requirements are ESG indicators to be

documented or the frequency with which

information is disseminated.

In general, Meridiam issues a number of reports

at predefined frequencies, by which investors

are informed of the ESG indicators that are

monitored:

• A quarterly report is sent to investors, which

includes a specific note on ESG issues for each

asset.

• An annual ESG report is produced; called the

«Impact Report», which includes a presentation

of Meridiam’s approach and policy on these

aspects and an analysis of selected qualitative

and quantitative indicators (29) with a

monitoring of performance over time.

Other ESG monitoring reports are prepared

according to the requirements of certain

investors and for specific funds, as is the case for

the Meridiam Infrastructure Africa Fund. The ESG

performance of each project is presented, as well

as the ESG performance of the fund as a whole.

(2)Fund subject to Decree No. 2015-1850 of December 29, 2015 applying Article 173 (paragraph VI) of the LTECV of August 17, 2015.(3)Ibid .

MeridiamInfrastructure

SICAR2


Europe II3

Meridiam Infrastructure Africa Fund


Europe III

Meridiam Transition

Meridiam Infrastructure

North America II

Asset class

Year of creation

Duration of the fund

Geographicalarea

Types of projects

Infra Infra Infra Infra Infra Infra

2008 2012 2015 2016 2016 2012

25 25 15 25 20 25

OECD countries in Europe

and North America

Europe, including Central

and Eastern EuropeAfrica

Europe, including Central

and Eastern EuropeEurope

OECD countries in North America

and South America

Transport infrastructures

Socialinfrastructures


Social infrastructures

Energyinfrastructures

Public utility services

and networks




Transportinfrastructures


Publicbuildings


Public utility services

andnetworks



Social infrastructures

Public buildings

Meridiam currently manages 7 funds, the details of which are presented below.

INFORMATION ABOUT THE MERIDIAM FUNDS

LIST OF FUNDS

Meridiam Infrastructure

North America III

Infra

2017

25

OECD countries in North America

and South America

Transportinfrastructures


Publicbuildings

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ESG charter, code or label

Meridiam does not manage specific labelled

funds. However, all investments have a dimension

that contributes to achieving ESG objectives. The

Meridiam Transition fund was created for the sole

purpose of financing energy transition projects.

Meridiam’s approach to environmental, social and

governance responsibility consists in involving

all members of the development and asset

management teams in the process of evaluating,

developing and managing the projects in which

the organisation invests. Each employee receives

training and awareness on ESG topics on an

ongoing basis, so that he or she takes ownership

of the procedure put in place for the responsible

consideration of ESG issues in all projects.

Some of the project companies in which Meridiam

invests also have a dedicated ESG team.

In addition, there is a procedure in place for

sharing knowledge and good practices with

project companies on various topics including

ESG.

ISO 9001 certification, version 2015

The importance of ESG issues is also reflected

in the continuous improvement of Meridiam’s

operational methodology, as illustrated by the ISO

9001 certification obtained in January 2012, the

first of its kind to be awarded to an investment

company. This certification is renewed regularly;

the last renewal was in January 2018.

As a reminder, the ISO 9001 certification is an

international standard for quality management

and provides guarantees in terms of organisational

quality within the company.

External ESG Audits

Meridiam conducts audits on Corporate Social

Responsibility (CSR) and calls on specialised

external consultants such as Vigeo Eiris, an

independent international research and ESG

agency offering services to private, public and

associative organisations and investors.

Vigeo Eiris has carried out several audits, the last

of which was conducted in December 2017 on the

basis of the ISO 26000 standard. The «Advanced»

rating awarded to Meridiam in 2017 reflects the

maturity of its organisation.

PRI Signatory

Meridiam has been a signatory of the United

Nations Principles for Responsible Investment

(PRI) since January 5, 2011. In 2017, and for the

third year in a row, Meridiam’s ESG approach

received ratings of:

• A+ (29/30) for the overall ESG approach

• A (27/30) on topics specific to infrastructures

Certifications within the project com-panies

Meridiam ensures that ESG issues are taken into

account by all companies created to manage the

infrastructure assets in which the organisation

invests. The achievement of performance

objectives often results in obtaining labels or

certifications of national or international scope as

is the case for the following examples:

• The project company for the A66 motorway

in Spain, i.e. the 49 km section between

Benavente and Zamora, received the Green

Energy certification for the use of renewable

energy for all of its energy needs;

• The Research Centre of the University Hospital

of Montreal (CRCHUM) in Canada obtained the

LEED Gold certification;

• The Long Beach Courthouse in California has

been LEED Gold certified;

• The student residence complex at the

University of Hertfordshire in England, which

includes 3000 housing units, common rooms,

a gymnasium and sports fields, obtained the

BREEAM Excellent certification.

Many project companies have put in place an

environmental management system that meets

the ISO 14001 standard.

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MERIDIAM’S ESG ANALYSIS PROCEDURES

Meridiam’s ESG analysis consists in an integrated

approach to responsible investment; it covers all

activities related to investment in infrastructure

projects, from identifying investment opportunities

to the long-term management of assets. The

analysis is based on an increasingly complete

control of the ESG components of a given project

as the investment process progresses. In the initial

phase of projects, the approach developed by

Meridiam focuses on ESG risk management. It then

makes it possible to optimise the positive effects

of the projects and improve their ESG performance

once the assets are in operation.

The main elements of Meridiam’s ESG approach

are described below. This approach is applied

both in Meridiam’s investment process and in

monitoring the funds it manages. Meridiam’s ESG

approach also meets regulatory requirements for

the application of ESG criteria in France4.

Main ESG criteria

A set of more than 45 ESG conditions and criteria

are used to analyse all investments, without

distinction by sector of activity or asset class.

This ESG analysis framework is used to identify

the ESG issues and risks that are associated with

investments and to determine the implementation

modalities for projects that will allow these

issues to be effectively taken into account. Each

condition/criterion must be documented during

the different analysis phases. Here are some

examples of analysis criteria.

ESG THEMES Examples of criteria for the evaluation of investments

WORKING STANDARDSFree from child labourFree from forced or compulsory labour practicesGood working conditions, in terms of health / safety and equality

LAWS AND REGULATIONSLegal context and complianceProcurement procedure

ESG CAPACITYClient’s ESG policy and proceduresESG policy and procedures of Meridiam’s Partners

ENVIRONMENTAL

ISSUES

Impacts on the physical components of the environmentImpacts on nature protection areas and biodiversityImpacts on fauna, flora and habitatsEnvironmental measures

SOCIAL ISSUES

Social impactsCultural heritageInterests of stakeholdersLand acquisition and resettlement

ENERGY,

CARBON AND CLIMATE

Vulnerability to climate changeContribution to the fight against climate changeCombined risk relating to the Energy and Carbon market and Climate risk

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In the asset management phase, i.e. during the construction and operation of the infrastructures, the ESG analysis is carried out on the basis of detailed criteria whose scope is adjusted according to the type of infrastructure and the issues it generates. More than 180 criteria are used to monitor the implementation of ESG measures and to evaluate the ESG performance of projects. The following table shows some of these criteria.

ESG THEMES Examples of criteria to analyse the performance of assets

GENERAL

ENVIRONMENTAL

POLICY

Environmental policyTrainingEnvironmental protection expenditureClimate change risk management approach

CONTROL OF

POLLUTION AND MANAGEMENT

ENVIRONMENTAL

OF WASTE

Air quality / emissionsWaterSoilNoiseWasteDischarges

SUSTAINABLE USE

OF RESOURCES

Energy consumptionWater consumptionResource consumption

ARCHAEOLOGY

AND CULTURAL HERITAGEArchaeological discoveries and presence of heritage sitesCommunication to the public

BIODIVERSITYProtected areas and speciesMinimization and compensationDeforestation

EMPLOYMENT

Job creationDiversityRepresentation of workersWorking conditionsManagement of complaints and grievances

TRAININGTraining policyTraining resultsPercentage of employees trained

SAFETYSafety procedures and programmesResults in terms of safety for workers and users

ECONOMIC AND SOCIAL IMPACT

Impact on local employment and the economyQuestions from stakeholders (employees, unions, suppliers, neighbouring populations, etc.)Relations with local development and support actors

MANAGEMENT Stakeholder involvement

COMPLIANCE Certifications / labelsSanctions / penalties

(4)Decree No. 2015-1850 of December 29, 2015 applying Article 173 (paragraph VI) of the LTECV of August 17, 2015.

ESG

ENVIRONMENTAL

SOCIAL

GOVERNANCE

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Internal ESG analysis and monitoring

A rigorous and demanding approach to ESG

standards and responsible investment is

embedded in Meridiam’s investment process.

This is reflected in the resources that Meridiam

allocates to the implementation of its responsible

investment policy as defined by the Sustainable

Development Charter.

Two ESG specialists are involved full-time in the

implementation of Meridiam’s ESG policy and

procedures. In addition, all staff are engaged

and proactive in integrating ESG elements into

projects and investment opportunities that are

controlled under Meridiam’s ISO 9001 system. In

order to ensure ownership of ESG procedures

by the teams and their commitment, training

sessions are organised on ESG topics and on the

mechanisms for integrating these issues into the

conduct of their activities. The participation of all

team members in official training sessions with the

Meridiam ESG Compliance Manager is mandatory.

The ESG requirements, including all procedures,

tools and details on the distribution of

responsibilities, are included in Meridiam’s ISO

9001 procedures.

In addition, all project development teams

carry out due diligence during the opportunity

assessment phase and the planning and

finalisation phase of projects, then during the

asset management phase. The ESG Compliance

Officer is involved in development strategies and

monitoring before decisions are finally made for

projects where the ESG risk is considered medium

or high. The teams are empowered and are

involved in the preparation of the quarterly and

annual reports.

Meridiam is an involved investor and asset

monitoring is done on three complementary levels:

• Representation on the Board of Directors:

Meridiam is represented on the Board of

Directors of each of the project companies;

• Staff of the project company: Meridiam

appoints full-time members to the

management team of each asset or provides

seconded staff;

• Active/involved management of assets

according to a local approach.

The proximity with its assets ensures that

Meridiam’s investments are managed transparently

in all areas, including for ESG aspects. Each

project company contributes to Meridiam’s

ESG reports via standard questionnaires to be

completed once a year. These questionnaires

were developed by Meridiam with the assistance

of experts in the field, compiling industry best

practices and additional components more

specific to its business.

Meridiam is also supported by external specialists

on certain ESG themes in order to benefit from

their expertise and to equip themselves with

powerful and evolving tools.

External audits of the certification processes take

place annually or every two years, led by external

certification or rating bodies, whereby Meridiam’s

ESG approach is evaluated. Thus, the organisation

seeks to maintain a certain standard in the quality

of its management and more generally in its

procedures.

Internal audits on compliance and ESG topics are

also organised on a recurring basis, for example on

an entire portfolio of Meridiam funds or a part of it.

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The ESG approach is generalised and systematically

integrated into Meridiam’s ISO 9001-certified

investment and asset management processes.

The ESG assessment and the establishment of

avenues for ESG improvement take place as soon

as investment opportunities are identified using the

criteria mentioned above.

In practice, each project is thoroughly assessed

through an initial due diligence analysis prior to

investment. When ESG topics are highlighted during

this process, risk mitigation procedures are included

in the project documentation and specific risk

indicators are identified for the implementation of

continuous monitoring.

In general, the methodology used in the ESG

analysis process for investment opportunities is built

around the following steps:

11. Verification of the eligibility of the project

against the exclusion list established by

Meridiam for its various funds

2. ESG framing of the project in regulatory terms

and needs for its development

3. Detailed analysis of ESG issues

4. Determination of ESG risks

5. Identification of the ESG mitigation and

monitoring strategy.

Four levels of risk can be identified for each ESG

element that will be assessed. The level of risk will

vary from «low» to «high».

The risk assessment itself takes into account

criteria such as the intrinsic value of the component

affected by the proposed project, the possibility

of implementing measures to control and limit the

impacts of the project on this component, the social

acceptability of the project, etc. The application

of this methodology not only makes it possible to

evaluate all the ESG risks of a project but also to

understand the context in which it is to take place. In

addition, by providing details of the issues related to

the project, the methodology allows for an efficient

transition to the implementation phase of the

project, namely the construction and operation of

the infrastructure.

Meridiam also conducts regular audits of the project

companies and, where appropriate, will require

audits on the ESG aspects to be carried out.

The ESG analysis and evaluation methodology is

based on the approach presented in the following

diagram.

Analysis methodology

ESG ANALYSIS AND RISK ASSESSMENT

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Integration in the investment process

All of Meridiam’s investment opportunities

are reviewed based on Meridiam’s ESG policy

including on the lack of controversial elements

and the opportunity to engage positively with

local stakeholders and authorities to develop a

sustainable project.

Indeed, when analysing the market and/or the

origination of projects, the prerequisite for the

decision to develop a project is based on a

typology of activity criterion. Meridiam has a list

common to all funds presenting the typology of

activities in which the organisation will not invest,

whether for reasons of environmental or social

impacts, or moral reasons. In addition, for certain

geographic regions and depending on the type

of investment funds, additional lists of excluded

activities are established. These exclusion lists

contain all the activities in which Meridiam

undertakes not to invest and are part of the ESG

procedures, which are themselves integrated into

the ISO: 9001 system that governs the conduct of

business activities.

Meridiam’s eligible investment universe is defined

after this first filter.

All funds managed by Meridiam integrate all

ESG criteria due to the nature of the investment

process. Nevertheless, no specific weighting is

defined for one category of ESG issues compared

to another. The relative weight of the categories

of ESG criteria, some examples of which are given

above, is therefore the same for each of them. The

decision to pursue the development of a potential

investment is based on the overall assessment of

ESG issues and risks; Meridiam must be confident

that it can effectively manage ESG issues to move

forward with a project.

In addition, at the end of COP 21, the Meridiam

Transition Fund was created; it is dedicated to the

development and implementation of projects in

the field of energy transition in Europe. The fund’s

portfolio is therefore based exclusively on ESG

criteria.

Once a project is eligible, each stage of the

investment process includes an analysis of ESG

issues as well as the analysis of other criteria,

including financial criteria. In practice, since the

initial phase of eligibility of the investment, the

investment process integrates the analysis of E, S

and G dimensions as follows:

• An initial classification of the risk. This

classification will determine the ESG risk

management process to be put in place;

• The risk classification will be reassessed

throughout the process, as shown in the

section describing the analysis methodology.

This reassessment will follow a series of actions

that development teams must undertake to

understand the detailed characteristics of the

project, the components of the environment in

which it is located and the environmental and

social impacts it generates.

• The definition of a strategy for managing ESG

issues and risks.

Specifically, as needed, the project development

team could conduct an additional due diligence

study to establish an environmental and social

action plan, or even initiate an environmental

and social impact assessment (or a study of the

deviations between an existing impact study and

international performance standards) or any other

required study. Depending on the scope of the

studies to be carried out, Meridiam will call on

external consultants specialised in environmental

and social studies.

It is also necessary to obtain confirmation that a

project complies with Meridiam ESG criteria for

validation. If the ESG issues are too significant

and/or unmanageable, or if the compensatory

measures prove to be insufficient, the investment

process is not continued.

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Documents

APPROACH FOR A RESPONSIBLE ESG MANAGEMENTThis approach is based in particular on international standards, such as the UN Principles for Responsible Investment (UNPRI) and the Equator