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’
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: