Goals and positioning

Universal Materials Incubator Corporation ("the Company") aims to strengthen Japan’s engineering capabilities and foster a world-class industrial structure through the development of superior materials and chemical companies.

The Company promotes investments that contribute to the development of Japan's materials and chemical industries by seeking out exceptional technologies and engineers, providing risk money and appropriate management support, and developing new industrial structures thereby ensuring their permanence as businesses. In this way, the Company enhances the medium- to long-term corporate value of the companies in which it invests and contributes to the development of Japan's materials and chemical industries. Through such support, we will promote innovation and contribute to the development of the Japanese venture capital industry ecosystem.

Recognizing the impact that environmental, social, and corporate governance (ESG) issues have on the corporate value of potential portfolio companies and its investment performance, the Company promotes consideration and understanding of ESG issues in its investment opportunities and activities, to the extent consistent with its fiduciary responsibilities. This policy has been developed in line with this objective and in consideration of stakeholder expectations, the Principles for Responsible Investment (PRI) and other international standards, and the Company’s fiduciary responsibilities to investors.

Definition of ESG

The Company shall consider the risks and opportunities associated with the ESG issues listed below in its investment portfolio considerations and its efforts to enhance the corporate value of portfolio companies.

(1) Environmental

  • Increasing energy efficiency (proliferation of green energy)
  • Climate change
  • Responses to natural disasters
  • Food security
  • Appropriate management of harmful substances
  • Waste management and handling of harmful substances
  • Diversity of ecosystems and ecosystem services
  • Destruction of forests
  • Water shortages

(2) Social

  • Compliance with labor standards
  • Attention to human rights
  • Appropriate management of confidential information, and data protection and privacy
  • Prohibition of fraudulent sales of products
  • Securing product safety
  • Establishing appropriate supply chains
  • Avoiding forced labor and child labor in all forms
  • Involvement in the manufacture, sales, and trade of weapons and tobacco products.

(3) Corporate governance

  • Eliminating relationships with anti-social forces
  • Prohibition of money laundering
  • Ensuring corporate ethics (regarding fraud, negligence, and corruption)
  • Compliance with domestic laws and regulations (e.g., accounting and finance standards)
  • Appropriateness of management structures
  • Prohibition of anti-competitive practices
  • The establishment of internal notification systems
  • The establishment of appropriate auditing systems

Scope of application

The Company encourages the top management of portfolio companies to identify and address ESG-related risks in corporate operations and opportunities to enhance corporate value.

Applicable laws and guidelines related to ESG

The Company complies with the domestic laws in countries and regions where portfolio companies and their affiliates conduct business.

Structures related to ESG

The Representative Director is responsible for this policy. In addition, corporate officers in charge, staff in charge, and all executives and employees undertake activities targeting ESG.

Specific activities

The Company will incorporate ESG into its fundraising and investment activities as follows.

(1) Fundraising

The Company incorporates general policies relating to ESG in the Private Placement Memorandum (PPM).

(2) Investment activities

When selecting investment candidate companies, the Company conducts screening based on negative screening standards.

(3) Due diligence

The Company analyzes ESG materiality through due diligence at the investment consideration stage, and in the investment decision process, it evaluates ESG factors that tie into increased corporate value.

(4) Investment structuring

Prior to the conclusion of an investment agreement, the Company discusses with the investment candidate company policies for the continuous improvement in the management of ESG issues, with a view toward the medium- and long-term growth of the potential investment company.

(5) Portfolio management

The Company makes judgments on the need for improvement activities at the portfolio companies; e.g., in ESG items identified through ESG due diligence.

(6) Exits

The Company seeks to ensure that our portfolio companies continue to implement good ESG practices.

Monitoring

The Company requests that the portfolio company create an ESG action policy and an ESG activity plan targeting the ESG issues identified at each company. We also request that the portfolio company submit an appropriate report on ESG activities.

Communication

The Company reports to investors on ESG considerations in its investment activities.

As of May 20, 2022

　　　　

Updated on June 21, 2024