Engaging with private equity owners on ESG performance

We believe we have a key role to play in engaging with GPs to support them to improve their ESG approach.

Case Study

Strategic Equity strategy

Our Strategic Equity strategy is a market leader in the growing General Partner-led secondaries marketplace, with a successful track record of leading a variety of customized liquidity and structural solutions.

General Partners (GPs) that are better able to manage environmental, social and governance (ESG) risk and identify ESG opportunities across the portfolio, create value for us as investors. We are conscious that in this market our GPs partners vary in terms of size, scale and ESG maturity.

In the GP-led secondaries market, GP engagement on ESG matters is crucial.

Following the results of the inaugural survey in 2020, we targeted engagement with GPs/sponsors to support them in further enhancing their approach to ESG integration by sharing our experience and networks, as well as resources for portfolio monitoring and reporting.

In 2021, we conducted the second survey with 100% response rate and questions added to assess in relation to ESG integration, consideration of climate risk and opportunities and gender diversity profile of GP/sponsor.

The inherent structural complexity of these portfolio transactions require a tailored approach to ESG integration. We incorporate ESG considerations into the screening and due diligence process using our ESG Screening Checklist to assess each underlying company within the portfolio, which is supplemented by a GP/sponsor questionnaire.

Ongoing ESG monitoring is achieved through a combination of Board seats, information rights, active engagement with the GP/sponsor on material ESG issues and the Annual GP/sponsor survey and follow up dialogues to discuss improvements.

ESG GP survey highlights

100% (2020: 64%) have an established ESG policy

100% (2020: 82%) use Board influence to engage on ESG matters

New questions in 2021

60% integrate climate change considerations into investment decision-making

80% have gender diversity among the senior management of their firm (typically in the range of 15-25% female senior managers)