Vista Endeavor III Offshore Feeder Fund, L.P.

The Partnership is being established to act as an investment vehicle that will invest substantially all of its assets in limited partner interests of Vista Equity Endeavor Fund III-B SCSp (the “Fund”). The Partnership promotes environmental and/or social characteristics by virtue of investing substantially all of its investable assets in the Fund. The Fund promotes environmental or social characteristics within the meaning of Article 8 of the SFDR. 

The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

1. Summary

Summary

No sustainable investment objective

The Fund promotes environmental and social characteristics but does not have as its objective sustainable investment.


Environmental or social characteristics of the financial product

Environmental characteristic: The Fund will support its majority-controlled portfolio companies to develop actions and initiatives to reduce their greenhouse gas (“GHG”) emissions as part of its engagement on value creation and in line with the firm-level commitment by Vista Equity Partners (“Vista”) to reduce portfolio company emissions by 50% by 2030 and emit net zero GHG emissions across the firm’s private equity and permanent capital portfolio by 2050.

Social characteristic: The Fund will promote diversity and inclusion in its portfolio companies, from board composition to workforce management and programs, by supporting gender and racial diversity and advocating for a reduction in inequality as part of its engagement on value creation.


Investment strategy

The Fund’s primary investment strategy is to acquire controlling interests in “Small Cap” enterprise software, data and technology-enabled solutions companies with enterprise values generally up to $250 million, and then apply its proprietary set of processes and methodologies (“Vista Best Practices”)  to rapidly and aggressively implement change, create value and generate positive returns for the Fund.


Proportion of investments

The Fund will apply the environmental and social characteristics outlined above to all of its majority-controlled portfolio company investments. There can be no guarantee or assurance that the Fund will be able to implement the characteristics with respect to 100% of investments..


Monitoring of environmental or social characteristics

During the initial on-boarding process and thereafter annually, a quantitative baseline measurement of key performance indicators (“KPIs”) is expected to be established for all portfolio company investments in the Fund. The following sustainability indicators are used to monitor progress:

  • Number of majority-controlled portfolio companies that have set a company-specific interim- term target to reduce their GHG emissions.
  • Total GHG emissions (in tonnes of CO2 equivalents) in the overall portfolio of the Fund.
  • Number of boards of portfolio companies of the Fund that are controlled by Vista with at least one female director.
  • Number of boards of portfolio companies of the Fund domiciled in the United States of America that are controlled by Vista with at least one director who is a person of color.1

Methodologies 

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. Vista seeks to engage in regular conversations and documented check-ins with Vista portfolio company management and leadership.

Environmental characteristic: To meet the environmental characteristic, each of Vista’s portfolio companies is expected to utilize an internal or third-party software platform to measure and report its GHG footprint. The third-party software tool offered to Vista portfolio companies provides a pre- defined set of questions to calculate GHG emissions in alignment with the GHG Protocol Standard. Companies also have access to a toolkit of additional supporting resources and support from Vista’s ESG team. 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.

Social characteristic: 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.


Data sources and processing

Vista offers third-party software tools to portfolio companies as well as relying on reporting by portfolio companies to obtain data to assess the attainment of the environmental and social characteristics promoted by the Fund. Vista reviews and engages with portfolio companies in order to ensure the accuracy of data. Some data may be estimated.


Limitations to methodologies and data

Limitations to the methodologies and data may arise due to a lack of data availability and/or a lack of infrastructure in place for the collection and processes of data by investee companies. 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.


Due diligence

During the due diligence phase, ESG analysis is embedded into the investment process to identify material ESG risks. At the commencement of due diligence, the ESG team collaborates with Vista’s Value Creation Team, 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, where appropriate, Vista engages law firms and consultants to support its assessment of material ESG risks in a company’s industry or in relation to its approach to ESG risk management. Material findings are communicated to the investment committee and management teams and are included as part of the company’s 100-days list.


Engagement policies

Vista seeks to conduct its first ESG Assessment within approximately 100 days after the closing of an acquisition of a new portfolio company. Thereafter, ESG Assessments are conducted annually.


Designated reference benchmark

No reference benchmark has been adopted to determine whether the Fund is aligned with the environmental and social characteristics it promotes.

Printable summaries in English and additional languages

Sustainability-related disclosures

2. No sustainable investment objective

The Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

The Fund promotes environmental and social characteristics but does not have as its objective sustainable investment.

3. Environmental or social characteristics of the financial product

The Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

Environmental characteristic

The Fund will support its majority-controlled portfolio companies to develop actions and initiatives to reduce their GHG emissions as part of its engagement on value creation and in line with Vista’s firm-level commitment to reduce portfolio company emissions by 50% by 2030 and emit net zero GHG emissions across the firm’s private equity and permanent capital portfolio by 2050.

Social characteristic

The Fund will promote diversity and inclusion in its portfolio companies, from board composition to workforce management and programs, by supporting gender and racial diversity and advocating for a reduction in inequality as part of its engagement on value creation.

4. Investment strategy

The Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

Investment strategy used to meet the characteristics

The Fund’s primary investment strategy is to acquire controlling interests in “Small Cap” enterprise software, data and technology-enabled solutions companies with enterprise values generally up to $250 million, and then apply Vista Best Practices to rapidly and aggressively implement change, create value and generate positive returns for the Fund. Such interests are intended to be acquired principally through equity and the use of the Fund’s subscription line facility. Vista seeks to invest in opportunities in which Vista believes it can drive operational change.

The Fund will adopt a strategy of ESG integration and engagement to meet the environmental and social characteristics promoted.

Good governance

Vista engages with the Fund’s portfolio companies to encourage corporate governance over topics including supply chain management, legal compliance, business ethics, human rights, fair tax practices and whistleblowing systems. Vista seeks to engage the Fund’s portfolio companies to work proactively against corruption in all its forms and to follow-up on their level of compliance. As an example, Vista provides resources through board of director training and through BPSSs. BPSSs are targeted at the practice discipline level and include sessions specifically designed for Finance, Operations and Legal & Compliance professionals. Vista has provided updates on ESG regulatory compliance developments and Vista’s specific ESG program, expectations and resources through these venues. Vista also seeks to engage the Fund’s portfolio companies on maintaining 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 Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

The Fund will apply the environmental and social characteristics outlined above to all majority- controlled portfolio company investments. For the avoidance of doubt, the environmental and social characteristics will not be applied to investments in financial derivative instruments, investments made or cash held for hedging or ancillary liquidity purposes or investments made for structuring purposes. The Fund may engage in short selling and may use swaps, including credit default and total return swaps, and other over-the-counter derivative instruments to leverage, access or enhance investments. No minimum environmental or social safeguards are applied to these transactions.

No investments are made in environmentally sustainable economic activities within the meaning of Article 2(17) of the SFDR 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 Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

In the post-investment and stewardship phase, Vista seeks to engage its majority-owned private equity and permanent capital portfolio companies to encourage ESG integration within each business. 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, through 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 seeks a combination of quantitative and qualitative responses to questions intended to evaluate portfolio companies’ ESG initiatives and performance. The results of the ESG Assessment 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, a quantitative baseline measurement of the KPIs discussed below is expected to be established for all portfolio company investments in the Fund.

The following sustainability indicators are used to monitor progress:

  • Number of majority-controlled portfolio companies that have set a company-specific interim- term target to reduce their GHG emissions.
  • Total GHG emissions (in tonnes of CO2 equivalents) in the overall portfolio of the Fund.
  • Number of boards of portfolio companies of the Fund that are controlled by Vista with at least one female director.
  • Number of boards of portfolio companies of the Fund domiciled in the United States of America that are controlled by Vista with at least one director who is a person of color.2

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 Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

In the post-investment and stewardship phase, Vista seeks to engage its majority-owned private equity and permanent capital portfolio companies on ESG matters, including the implementation of the environmental and social characteristics promoted by the Fund. Vista seeks to engage in regular conversations and documented check-ins with Vista portfolio company management and leadership.

Environmental characteristic

To meet the environmental characteristic, each of Vista’s portfolio companies is expected to utilize an internal or third-party software platform to measure and report its GHG footprint. The software tool offered to portfolio companies provides 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 tool will automate estimates.

Companies also have access to a toolkit of supporting resources to complete their GHG emissions measurement, 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 significant sources of scope 3: data center services under Category 1 purchased goods and service, air, rail, road, and hotel services under Category 6 business travel, and remove workforce energy under Category 7 employee commuting).3

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 provides portfolio companies with supporting resources for this purpose, including dedicated webinars, a target setting tool, best practices for setting a GHG reduction target and corresponding strategy, and support from Vista’s ESG team. 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, which is provided to the Fund’s portfolio companies. The implementation guide seeks to outline relevant decarbonization tactics such as procuring renewable energy, developing procurement standards and reducing business travel.

Social characteristic

To meet the social characteristic, Vista focuses on creating best practices and achieving scale across the Fund’s 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 Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

  • Data sources used to attain the Characteristic:
    • Environmental characteristic: the Fund’s portfolio companies are expected to utilize an internal or third-party software platform 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 the Fund’s portfolio companies to measure emissions across its value chain from the bottom up.
    • Social characteristic: 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: Portfolio companies also leverage a best practice guide and template to streamline data collection. Vista engages one-on-one with portfolio 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 characteristic: 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 internal or third-party software platform. The third-party tool will process actual consumption or emissions data, where available. If actual data is not available, the tool will automate estimates from proxy data.
    • Social characteristic: 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 significant sources of scope 3: data center services under Category 1 purchased goods and service, air, rail, road, and hotel services under Category 6 business travel, and remove workforce energy under Category 7 employee commuting). 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 characteristic: Real data provided by portfolio companies will be used, where available.

9. Limitations to methodologies and data

The Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

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. Neither do reported board diversity statistics include data in respect of people of color for portfolio company boards outside the United States of America, as this data cannot be reported due to data privacy regulation.

10. Due diligence

The Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

In Vista’s view, material ESG 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 responsible investment policy (“Responsible Investment Policy”) to inform its approach to ESG risk management. Vista has aligned its Responsible Investment 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 material ESG risks. At the commencement of due diligence, the ESG team collaborates with Vista’s Value Creation Team, 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, where appropriate, Vista engages law firms and consultants to support its assessment of material ESG risks in a company’s industry or in relation to its approach to ESG risk management. Material findings are communicated to the investment committee and management teams and are included as part of the company’s 100 days’ list.

To review and identify material ESG risks and opportunities during due diligence, Vista’s ESG team works with investment teams and outside legal counsel to assess certain ESG focus areas as defined by Vista’s ESG framework. To integrate ESG considerations into Vista’s private equity and permanent capital investment processes, this framework includes specific topics important to enterprise software companies, drawing upon global ESG standards such as those below and highlighting potentially material risks and opportunities throughout the investment lifecycle. These focus areas are periodically reviewed in light of current events and macrotrends. International ESG standards and frameworks considered include the Global Reporting Initiative (“GRI”) standards governed by the Global Sustainability Standards Board, the Sustainable Accounting Standards Board (“SASB”) standards, the United Nations Global Compact and the PRI. Vista has developed a process that enables the identification of material ESG risks and opportunities and the communication of those risks and opportunities to the investment teams. Findings from diligence are expected to be incorporated into the investment review process. Vista’s investment professionals receive an annual overview of Vista’s ESG commitments and investment processes, which is provided by Vista’s ESG professionals and external service providers.

While Vista may consider many factors in connection with its investments, such as macroeconomic trends or company-specific facts, it believes that strong ESG practices can correlate positively with enhanced financial performance within portfolio companies and hence the effective management of ESG risks may contribute positively to returns through alignment of interests of fund investors, the general partner, portfolio company management teams, employees and other key stakeholders. Therefore, one of the key drivers behind Vista’s identification, assessment, and management of material ESG risks relevant to the Fund’s investments, as outlined above, is to seek to mitigate any potential or actual negative effects on the value of such investments.

11. Engagement policies

The Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

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 majority-owned 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

The Partnership invests substantially all of its assets in the Fund. The disclosures of the Fund are included below for ease of reference only and are not intended to be disclosures of the Investment Advisor or disclosures which relate to the Partnership.

No reference benchmark has been adopted to determine whether the Fund is aligned with the environmental and social characteristics it promotes.

This disclosure is published on 7 May 2024.