Responsible Investing and ESG

Investing responsibly today for a sustainable tomorrow

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, this could not be further from the truth. 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 is at the core of PIP’s investment philosophy with ESG factors 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 and an ESG sub-committee has been formed, comprising the Chairman, Senior Independent Director and another member of the Board as well as representatives from Pantheon. The sub-committee meets at least twice each year to discuss a variety of topics and receives regular updates from the two Co-Heads of Pantheon’s ESG Committee.

We have seen that incorporating ESG into our investment process is not only the right practice by our planet and people, it is also good for business’

Alex Scott

Partner, European Primary Investment and member of ESG Committee

ESG is in Pantheon’s DNA

While many parts of the investment world are being redefined through the lens of responsible investing, Pantheon has a history of being fully engaged with ESG matters. From working with managers backing businesses with a clear social mission to persistent industry advocacy, Pantheon has relentlessly sought to promote and demonstrate its commitment to the ESG agenda in private equity.

The bar was set when 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:

01

We will incorporate ESG issues into investment analysis and decision-making processes.

02

We will be active owners and incorporate ESG issues into our ownership policies and practices.

03

We will seek appropriate disclosure on ESG issues by the entities in which we invest.

04

We will promote acceptance and implementation of the Principles within the investment industry.

05

We will work together to enhance our effectiveness in implementing the Principles.

06

We will each report on our activities and progress towards implementing the Principles.

As an engaged and active supporter of the PRI, Pantheon has fully embedded the six principles into its investment approach, strategy and ethos, and each year is required to report on progress against these principles.

In 2009, Pantheon joined the PRI Steering Group, an influential position helping to shape the PRI’s work and in 2015, Pantheon was awarded A+ in the PRI’s first formal assessment.

A history at the forefront of ESG

  • 2007

    Signed up to the Principles of Responsible Investment (“PRI”)
  • 2008

    Established an internal ESG working group
  • 2009

    Joined the PRI Steering Committee
  • 2010

    Successfully integrated the Principles into our investment processes
  • 2011

    Ranked in the top quartile for all six Principles of the PRI
  • 2012

    Implemented pioneering reporting to clients on ESG
  • 2013

    Adopted ESG Disclosure Framework
  • 2014

    Enhanced our ESG Reporting for Clients
  • 2015

    Awarded A+ in UNPRI’s first formal assessment i
  • 2017

    ESG reporting 2.0

    Joined PRI Private Equity Advisory Committee (PEAC)

    Integration of Reprisk into our due diligence processes
  • 2019

    Winner of ESG/SRI Manager of the Year at the Pensions Expert Pension and Investment Provider Awards
  • 2020

    Awarded A+ for Private Equity

Showing leadership through industry advocacy

A core pillar of Pantheon’s leadership in ESG is through industry advocacy. It does this in a variety of ways including:

Working with private equity trade associations to advocate ESG amongst our private equity managers through seminars and workshops.

Contributing to a number of UNPRI guidelines and those created by some regional organisations.

Through our role at the Hong Kong Private Equity and Venture Capital Association, setting up a biennial ESG Award of Excellence in Asia, the first of its kind in the region.

Pantheon believes that its efforts are making a real difference in raising ESG standards across the private equity industry.

Media coverage

8 Mar 2022 Citywire Wealth Manager

How one real asset house has broken through gender barriers

In this interview, Helen Steers talks about how the market has evolved since she co-founded Level 20 in 2015, when a lot of women were still put off working in private equity, and why Pantheon is committed to fostering gender, socioeconomic and ethnic diversity in its workforce.

17 Feb 2021 ESG Investing

Ethical Behaviours & Sustainability in Private Equity Lead to Better Outcomes

In this article for ESG Investing, we talk about how ESG and D&I are integrated in our investment approach and our managers' response to the outbreak of COVID-19.

Read more
16 Feb 2021 ESG Clarity

Green Dream with Pantheon’s Helen Steers: Every manager can put in place a comprehensive ESG policy

In this interview with ESG Clarity, we talk about how PE managers are improving ESG standards and our efforts to promote D&I in the industry.

Read more

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Our ESG in action

We incorporate ESG into our due diligence process, with a focus on managers who understand the nature of ESG risks. Also, we understand that our responsibility and influence extend far beyond the point of investment and actively undertake extensive ongoing of our portfolio companies after an investment is made.

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