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Responsible Investment at House Level Responsible investment at house level

Responsible investment at house level

Most GPs have considered ESG matters to some extent in their operations and investments, but this may be more ad-hoc than systematic. Building on what your firm is already doing, while taking a more strategic approach to ESG issue management, can help maximise opportunities.

A defined strategy can significantly support ESG-related decision-making during the investment life cycle, but can also give support during fundraising activities by providing a framework for meaningful responses to LP enquiries, and by helping to demonstrate a proven RI track record.

Please click on each component of a responsible investment approach at house level to learn more.



Responsible investment approach at house level

01. RI strategy and policy


The RI strategy sets the ambition and vision of the firm from an RI perspective, including in terms of positioning within the market over time. It takes into account stakeholders’ current and future expectations.

The RI policy underpins the strategy and articulates the firm’s RI commitments, governance and implementation arrangements. At the very least, it should set out the firm’s commitment to compliance with all relevant legislation, to continuous improvement and perhaps to exclude certain named activities.

02. RI investment procedures


RI investment procedures help integrate RI into deal and portfolio management by establishing clear governance, lines of accountability and audit trail.

03. Tools for RI policy implementation

RI tools help deal team members to implement the RI policy at acquisition and throughout the period of ownership, including preparation for exit.

04. RI training and awareness raising


Training and awareness raising activities enable investment professionals to be in a position to implement the RI policy, notably by understanding and identifying RI matters.

05. RI legal compliance


A strategy to maintain awareness of, and compliance with, ESG-related legal requirements contributes to reduce the firm’s exposure to reputational and financial risk.

06. RI KPIs and reporting


Measuring progress using ESG key performance indicators facilitates evaluation of the firm’s activities to protect and enhance value and reporting to key stakeholders, notably LPs.

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It is worth noting that different firms may be at different stages of their responsible investment “journey” and it is not expected that you will consistently cover all aspects of the RI management framework detailed above. There is no ‘one size fits all’ approach and a firm’s ambition, as well as its current status on responsible investment, will influence the shape of its own RI strategy and, consequently, management framework.


Setting the PE house position on ESG values and principles

House position on ESG values and principles

Top tips

HOW TO DEFINE YOUR RI STRATEGY?

  • Start by reviewing what is already in place, do not reinvent the wheel.

  • Consult with your stakeholders to align your ambitions with their expectations.

  • Ensure senior buy-in and pave the way to a successful implementation by involving senior management early in the process.

Case study: NorthEdge Capital

NorthEdge

A case study on defined ESG strategy at house level.

VIEW CASE STUDY