Responsible Investing and ESG
ESG is integrated throughout our investment process
Increasingly, investors are demanding high standards from companies in relation to sustainability and societal impact. These standards, which include climate change, diversity and corporate ethics, are commonly covered by the term Environmental, Social and Governance (“ESG”). While definitions vary, ESG is used to help evaluate a company or organisation’s progress against key criteria.
There is often a misapprehension that ESG factors are not regarded as important in private equity investment. However, Pantheon believes that the consideration of ESG risk forms part of general risk management and effective mitigation of such risks strengthens downside protection and enhances a company’s reputation. In fact, it is Pantheon’s view that the implementation of sound ESG practices can have a material impact on value creation in private equity.
As a result of Pantheon’s approach and with the full commitment of the Board, ESG factors are incorporated into the entire investment process. This starts with the initial due diligence and assessment of the suitability of a fund/company for inclusion in PIP’s portfolio. But it does not stop there. There is also an extensive ongoing monitoring programme which comes into play after an investment has been made.
Pantheon’s dedicated ESG Committee is comprised of senior individuals from its Investment, Risk and Investor Relations teams. As part of its duties, the Committee sets Pantheon’s ESG strategy and policy, and provides feedback across the business and to external stakeholders.
The Directors of PIP have full oversight of ESG matters within PIP’s portfolio.
‘We believe that incorporating ESG into our investment process is not only the right thing to do, but it is also good for business.’
Partner and Global Head of ESG
An ESG strategy underpinned by the UN PRI
Pantheon became one of the first private equity signatories to the UN-backed Principles for Responsible Investing (PRI) in 2007. The PRI is the world’s leading proponent of responsible investing and is underpinned by six principles that signatories commit to uphold. These are: