private equity
Common sustainability challenges for general partners
Value
There is limited space for altruistic endeavours - actions and spend need to contribute to value. While the value-protection from basic sustainability (or "ESG") foundations is becoming clearer, the value-upside potential is still emerging. Hence "ESG" is often a 'tick box'.
Article what?
Significant change to UK and EU sustainability regulation and disclosure rules have been a heavy burden for GPs to bear. Decisions on whether to align to Article 8 or 9 need to be balanced with reporting requirements and incoming FCA SDR regulation in the UK.
Data
Clarity and consistency on which sustainability metrics really matter remains elusive. In reality, this will differ depending on portfolio aims and the underlying PortCo risks and opportunities. Collecting consistent and reliable data from PortCo's is a further challenge!
LP demands
Increasing demands of LPs for "ESG" data does not always align to what is a) available and b) deemed to be material for the GP and PortCo's. The constant evolution of the sustainability landscape and the huge spread of LP attitudes towards "ESG" adds further challenge.
GPs are short on time, manage lots of competing priorities and are understandably demanding. We cut through the noise, bring experience, pragmatism and a focus on value realisation to our partner relationships.
We advise on a wide range of sustainability topics to drive impact, value and risk-mitigation across the investment and fund lifecycle (as well as working with portfolio companies directly).
A lot of our work is focused on the following:
due diligence
Using our proprietary ESG diligence process and DDQ we undertake acquisition diligence for GPs, identifying financial (ESG) risks and opportunities for value creation through impact. This review and report process sets the foundations for stewardship for the period of GP ownership.
We also prepare vendor DD for PortCo's, structuring the narrative and evidence base to protect and enhance value.
smart foundations
We help GPs to embed responsible business practice across portfolios and throughout the investment lifecycle, from screening to exit – often through developing or enhancing Responsible Investment Policies - to more strategically protect and identify value.
We also establish sustainability policy and governance structures for new PortCo’s during early ownership, quickly addressing any identified gaps.
unlocking value
Our data-driven approach to identifying and assessing a PortCo or portfolio's most material impacts, risks and opportunities allows us to develop highly-focused sustainability strategies.
Generic "ESG" plans are a key limitation to connecting sustainability and value. We give your strategy teeth with effective frameworks, targets and prioritised action plans.
For some PortCo's this might include B Corp certification, which we can support.
efficient reporting
We help GPs navigate the changing UK and EU regulatory and reporting regimes and efficiently meet disclosure requirements (e.g. SFDR Article 8 and 9 funds).
We establish streamlined data and information collection and reporting from PortCo's to LPs, aligning internal and external reporting priorities to maximise efficiency.
Where there are data or information gaps, we work with PortCo's to fill them.
