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Sponsoredby: Eufar ahead of the U.S. in adopting ESG programs. about ESG issues PAGE 6 than ever before. PAGE 13 ESG efforts at the KKR and Doughty firm level? PAGE 7 Hanson named ESG leaders in 2013. PAGE 15 2013PEESGSURVEY ENVIRONMENTAL | SOCIAL | GOVERNANCE TableofContents Introduction 4 Participant Statistics 5 Credits&Contact PitchBookData,Inc. ESG Programs at PE Firms 6-10 JohnGabbert-Founder,CEO ESG at Portfolio Companies 11-12 AdleyBowden-ResearchDirector The LP Point ofView 13-14 Content Industry Leaders 15 JamesGelfer-Editor AllenWagner-SeniorWriter Design AllenWagner-SeniorWriter JenniferSam-GraphicDesigner RR Donnelley is the world’s largest integrated communications company.The company works collaboratively with more than 60,000 customers worldwide to develop custom communicationsrDataAnalyst solutions that reduce costs, drive top-line growth, enhance ROI and increase compliance. Drawing on a four continents, the company employs a suite of leading Internet based capabilities and other resources to provide pre-media, printing, logistics and business process outsourcing services to clients in virtually every private and public sector. Our Corporate Responsibility Report is available at www.rrdonnelley.com.ess OurVenue® secure online workspace provides a powerful feature-set and an intuitive design that allows you to easily organize, manage, share and track all of your sensitive information.Venue® data rooms provide complete control, allowing you to manage who has access to yContactPitchBookhich documents they see, and how they can interact with those documents. Venue® data rooms are backed by RR Donnelley, a $10.2 billion corporation with approximately 500 operating locations, with operations in North America, Latin America, Europe and Asia, and morechbook.com room providers combined.Whether you’re conducting due diligence for a merger, raising capital,al data or developing a document repository, aVenue® virtual data room is the ideal virtual workspace forchbook.com managing critical information. 206-257-7854 purposesonlyandshouldnotbeconstruedaslegal,accounting,tax,orotherprofessionaladviceofanykind,onanysubjectmatter.RRmational Donnelleyexpresslydisclaimsallliabilityinrespecttoactionstakenornottakenbasedonanyorallthecontentherein. COPYRIGHT©2013byPitchBookData,Inc.Allrightsreserved.Nopartofthispublicationmaybereproducedinanyformorbyanymeans–graphic,electronic,ormechanical,includingphotocopying, accuracyandcompletenesscannotbeguaranteed.Nothinghereinshouldbeconstruedasanypast,currentorfuturerecommendationtobuyorsellanysecurityoranoffertosell,orasolicitationofanoffertot buyanysecurity.Thismaterialdoesnotpurporttocontainalloftheinformationthataprospectiveinvestormaywishtoconsiderandisnottoberelieduponassuchorusedinsubstitutionfortheexerciseof independentjudgment. WE’VE GOT IT COVERED Identify top-performing GPs Find out more by emailing PITCHBOOK FOR LIMITED PARTNERS: firstname.lastname@example.org or Nooneoffersmorecoverageoftheprivate Conduct better due diligence visiting pitchbook.com Trackindustrytrends equity and venture capital landscape. …andmore! 2013PrivateEquityESGSurvey email@example.com Introduction When we conducted our inaugural environmental, social and governance (ESG) survey of private equity (PE) professionals last year, it was startling to see that nearly half (49%) of our general partner (GP) respondents did not have an ESG program at their firm and had no plans to create one, despite heightened concern from limited partners (LPs) on ESG issues.What a difference a year makes—not to mention the fact that we had a higher proportion of European respondents this year, who are much more progressive when it comes to ESG issues. In our second edition of the ESG survey, a majority of GP respondents (60%) now work at a firm with one in the near future. However, there are still some PE firms that see little value in ESG programs. As one GP respondent put it:“we think [ESG] is the most asinine initiative ever to come out in the business world.” While some PE firms eschew ESG issues and think that strong fund performance is enough to attract LP commitments, the LPs themselves are telling a different story. Eighty-four percent of LP respondents say that ESG issues are at least somewhat important when deciding whether or not to commit to a PE fund, with 18% claiming they are essential. Furthermore, 24% said they would they would commit to a fund with slightly lower historical performance if the firm had a strong ESG program. Remember, many of the largest contributors to PE funds are public pension plans, endowments, foundations and sovereign wealth funds—institutions which not only are interested in returns but also have an image to maintain.“GPs have to be more aware of investors’desire for knowledge of their investments beyond just the financial return,” commented one LP respondent, while adding that the responsibility ultimately falls on the investors:“GPs will only change if the LPs push them to.” One of the big takeaways from this year’s survey is that more PE firms are taking the necessary steps to make ESG a fundamental part of their investment approach. For example, 28% of GP respondents indicated that their firm produces a corporate social responsibility (CSR) report, up from 18% in 2012. And while finding effective metrics to monitor ESG performance continues to be the largest hurdle for ESG efforts, PE firms continue to find new ways to measure their ESG initiatives and have increasingly utilized forums, case studies and industry events and guidelines to fill the knowledge gap. a starting point for developing a set of best practices that can be adopted by firms of all sizes. If you ares interested in participating in future editions of the survey, or have any comments or suggestions for how we can improve this report, please contact us at firstname.lastname@example.org. What is ESG? E nvironmental:waste, water, electricity, transportation fuel, toxic chemicals, paperSR:Corporate Social Responsibility EDF:Environmental Defense Fund GIIRS:Global Impact Investing Rating System S ocial:diversity, human rights, supplPEGCC:Private Equity Growth Capital Council chain, employee engagement PRI:Principles for Responsible Investment G overnance:policy, management ILPA:Institutional Limited Partners Association structure, board-level oversight 2013PrivateEquityESGSurvey email@example.com ParticipantStatistics 2013 2012 23 9 14 2 2013 2012 28 38 39 2 #ofGPRespondents #ofLPRespondents 2013 2012 Our GP respondents showed a much higher level 3 1 of ESG awareness than they did last year, which is 2013 2012 0 0 to be expected with the increased focus on ESG issues exhibited by LPs, industry organizations and 0 0 governmental bodies. But a bigger factor is that there was a much higher proportion of European 1 0 respondents in this year’s survey. As will become evident throughout this report, European investors place a much greater importance on ESG issues than investors from other regions. NumberofGPRespondentsbyAUM NumberofLPRespondentsbyAUM 18 16 16 35 32 16 15 30 14 13 12 11 11 25 10 20 8 8 14 6 15 6 4 4 10 2 6 2 5 2 2 2 0 1 0 1 0 0 <$500M $500M-$1B $1B-$5B >$5B N/A <$5B $5B-$25B $25B-$100>$100B N/A 2012 2013 Source:PitchBook 2013PrivateEquityESGSurvey firstname.lastname@example.org ESGProgramsatPEFirms PEfirmsshowanincreasedfocusonESGissuesin‘13 GPQ1:DoesyourfirmhaveanESGmanagement GPQ2:Whendidyourfirmstartactively program? implementingESGinitiatives? 100% 100% Yes More than 5 80% 80% years ago 2-5 years ago 60% No; it is 60% currently in development 40% 1-2 years ago 40% No; but we Less than 1 20% have plans to 20% year ago create one Do not have 0% No 0% ESG initiatives 2012 2013 North Europe 2012 2013 North Europe America America Source:PitchBook Source:PitchBook The topic of ESG in PE has received increased Even with substantially more PE firms having attention from the media and investors over the last ESG programs in 2013 than 2012, the proportion of year, and PE firms have responded. In our 2012 survey, respondents that plan to increase their attention to nearly half (49%) of GP respondents came from firms ESG issues in the future still grew from 55% in 2012 that had no ESG program and no plans to create to 89% this year.With more and more LPs pushing one. Now, just 14% of GPs fall into that category, GPs on ESG issues, as we will explore on page 13, this with nearly two-thirds (60%) of respondents this year certainly seems to be the logical move for PE firms in indicating that their firm has already established an increasingly competitive fundraising environment. an ESG program. In addition, 26% of respondents hail from a firm that is currently developing an ESG GPQ3:Doyouplantoincreaseyourattentionto program or planning to create one in the near future. ESGissuesinthefuture? But as the charts above reveal, much of the rise in ESG consciousness in this year’s survey stems from our 100% higher rate of European respondents, who tend to be more ESG savvy. More than three-quarters (78%) 80% of European GPs have an established ESG program, 60% compared to just half of North American GPs. Yes As to be expected, the ESG programs of our GP respondents are more developed than in last year’s 40% No survey; the percentage of firms with ESG programs that are at least two years old ballooned from 27% in 20% 2012 to 49% this year. But the main takeaway from the graph on the upper right is the steep drop in the 0% percentage of firms that do not have any sort of ESG 2012 2013 Source:PitchBook initiatives—from 53% in 2012 to only 25% in 2013. 2013PrivateEquityESGSurvey email@example.com WhyarePEfirmspayingmoreattentiontoESG? GPQ4:WhatfactorsdriveyourESGefforts?(multiplechoicespermitted) 80% 73% 74% 71% 69% 70% 64% 63% 2012 55% 60% 60% 2013 50% 45% 42% 42% 39% 40% 36% 34% 37% 31% 29% 29% 30% 24% 24% 20% 16% 11% 10% 0% Environ. LPs Risk Brand/ Corporate Portfolio Gov’t Employee Cost Operational Competitors & social mgmt image governance companieregulatiointerests mgmt eﬃciency consciousness Source:PitchBook Given the fact that PE firms are concerned with the “It’simportantthatESGmanagementis profitability of their investments first and foremost, it seems somewhat odd that environmental and social integratedwiththeoverallmanagement consciousness continues to rank significantly higher ofanybusinessandnottreatedasa than cost management and operational efficiency as a driver of ESG programs. It would appear that PE firms are not as incessantly focused on the bottom- separateorsomehowlessimportant line as they are typically characterized—or perhaps activitydrivenonlybyexternaldemands.” respondents are simply more inclined to display high-minded ideals when being surveyed. -PhilipRowland,SeniorOperatingPartneratTDRCapitalLLP One factor directly related to the success of PE investments that did rank highly was risk GPQ5:WhendoyouconsiderESGissues? management, with 64% of GP respondents citing it (multipleanswerspermitted) as a contributor to their ESG efforts, up from 55% in 2012.This is corroborated by the fact that ESG issues are considered most frequently during the due Fundraising diligence process. Unsurprisingly, LPs continued to be a top driver of Due diligence ESG programs at PE firms, although the proportion of GP respondents that identified LPs as being a factor in their ESG efforts dropped slightly from Holding period 74% in 2012 to 69% in 2013.With LPs being such 2013 an important motivator for PE firms, and our GP 2012 respondent base being fairly attuned to ESG issues, Exit it is somewhat odd to see that ESG issues are only taken into consideration by 76% of PE firms during the fundraising process. 0% 20% 40% 60% 80% 100% Source: PitchBook 2013PrivateEquityESGSurvey firstname.lastname@example.org WhatneedstobeincludedinanESGprogram? GPQ6:HowimportantarethefollowingfactorswhendevelopinganESGprogram? Monitoring the succ2013 of ESG initiat2012 Developing an ESG mg2013 program at the ﬁrm l2012 Using industry guidelines 2012 Engaging outsi2013 ESG expert2012 Outlining ESG philos2013 in LP agreemen2012 Requiring portfolio2013s to develop a CSR re2012 Hiring in-hou2013 ESG profession2012 0% 20% 40% 60% 80% 100% Essential Very important Important Somewhat important Unimportant Source:PitchBook In last year’s survey, GPs indicated that developing an ESG management program at the firm level was the most important factor when developing an ESG ManyGPsexpressedthedesireforindustry program.While GPs saw this as even more crucial groupstoprovidemoreguidanceand in this year’s survey, monitoring the success of ESG standardizedbenchmarksforESGmetrics, initiatives overtook it as the most important factor of an ESG program, which makes sense with the high priority that GPs place on metrics of all stripes. But whichshouldleadtohigherprioritization despite this development, finding effective metrics ofESGissuesbybothGPsandLPs. to monitor ESG progress continues to be the biggest challenge for PE firms. For firms that need guidance in this regard, a rundown of some of the most popular GPQ7:WhatisthebiggestchallengeforESG systems and resources currently available for gauging programsandinitiatives? the ESG performance can be found on page 12. Amazingly, only 19% of GP respondents found it 5% Eﬀective metrics to be very important or essential to outline their ESG 7% to monitor philosophy in limited partnership agreements, despite 7% performance 76% of firms claiming to consider ESG issues during 9% fundraising. If a PE firm is going to invest the time and 7% 43% Implementation 42% resources into an ESG program, why wouldn’t they 18% 2012 Cost want to make those efforts explicit to their investors? Cost was identified as the biggest challenge to ESG 24% Employee efforts by roughly one in five GP respondents in 2012 2013 participation but cited by just 7% of respondents this year. Several 38% Other factors likely led to this decrease, such as more readily available resources to assist in ESG efforts and the fact Source: PitchBook that ESG programs can actually lead to cost savings. 2013PrivateEquityESGSurvey email@example.com Howtoshareyourfirm’sESGstory GPQ8:Doesyourfirmproduceacorporatesocial responsibility(CSR)report? Creating the CSR Report 100% Who 80% The audience for a PE firm’s CSR report will obviously vary depending on the firm’s size and 60% level of public visibility, but the most crucial Yes audience for all PE firms will no doubt be LPs. 40% For firms that put in the effort to develop an ESG No program, it is imperative to clearly articulate what 20% the program is accomplishing to both current and potential investors.The CSR report is the ideal 0% format for this and should include everything from 2012 2013 North Europe high-level ESG philosophies to specifics on how America Source:PitchBook ESG performance is measured and how it impacts the firm’s investments. The CSR report not only articulates a firm’s ESG program to outside parties, but also underscores the importance the firm places on ESG issues and What The actual content of the CSR report will vary from highlights successes to people within the firm.The percentage of PE firms with a CSR report—a hallmark firm to firm, but there needs to be substance. PE of a well-established and mature ESG program— firms that include quantitative results in their CSR report differentiate themselves from those that expanded from 18% in 2012 to 28% in 2013. In the future, more PE firms will likely allocate the resources simply have nice photos. Key details all firms should necessary to produce the CSR report as their ESG consider in their CSR report include: programs become more mature. • Objectives of the ESG program • General approach to ESG issues • How ESG performance is measured Examples of CSR Reports • Updates on specific ESG initiatives at both portfolio companies and the firm itself All PE firms will take a different approach when it comes to crafting the CSR report. Some produce When andWhere it as a standalone publication while others Most firms produce a CSR report on an annual incorporate it with their annual review. Here are basis, but LPs appreciate a high level of some examples of how the top PE firms share their ESG stories: communication from their GPs. As such, it would also be wise to include ESG updates in quarterly KKR:2012ESGandCitizenshipReport reports. Making the CSR report easily accessibly Carlyle:CorporateCitizenship online allows potential future investors, acquisition targets, media outlets and other interested parties CalPERS (LP):TowardsSustainableInvestment to see the firm’s commitment to ESG issues. 2013PrivateEquityESGSurvey firstname.lastname@example.org StayingcurrentwithESGdevelopments ESG Groups & Programs PRI:Developed by a group of international institutional investors in conjunction with the United Nations, the PRI is a set of six principles that guide the investment decisions for more than 1,000 signatories. PEGCC Guidelines for Responsible Investmet:EGCC, the main lobbying group for the PE industry, developed its Guidelines for Responsible Investment through a collaboration with institutional investors around the world and the PRI.The Guidelines serve as a starting point for PE firms that are developing ESG programs. ILPA Private Equity PrinciplesE:ndorsed by more than 240 investors, the ILPA’s Private Equity Principles provide a blueprint for GPs and LPs to align their ESG efforts. GPQ9:Howdoyoustayabreastofdevelopments ESG Disclosure Framework: ver the course of 16 inESG?(multipleanswerspermitted) months, a group that included 20 PE associations, 10 Forums, case studies prominent GPs and dozens of LPs from 11 countries & industry events came together to create the ESG Disclosure Framework. Industry guidelines Published earlier this year, the document is centered around ESG disclosures in PE investments, outlining Independent five objectives relating to fund due diligence and three research pertaining to disclosures during the life of the fund. Outside consultants 2013 PEI Responsible Investment ForumT:he forum, In-house experts which is co-hosted by the PRI, informs PE firms on ESG 2012 strategies that can be employed to develop better We don’t portfolio companies. 0% 20% 40% 60% 80% Source:PitchBook GPQ10&LPQ1:WhichESG-relatedgroupsorprogramsdoyoubelongto,endorseorparticipatewith? (selectallthatapply) 60% 53% 50% 50% GPs 40% 35% 30% 33% LPs 30% 30% 20% 16% 15% 16% 12% 14% 7% 10% 2% 4% 0% 0% 0% UN PRI ILPA PE PEGCC Environmental Global Business for Other None Principles Responsible Defense Fund Reporting Social Investment InitiativeResponsibility Source:PitchBook Guidelines 2013PrivateEquityESGSurvey email@example.com ESGatPortfolioCompanies GPsseeESGbecomingmorecriticalinoperations GPQ11:HowimportantareESGissueswhen GPQ12:HowimportantareESGissueswhen exitingacompanyvia__________? implementingoperationalimprovementsata portfoliocompany? 100% 100% Essential Essential 80% 80% Very important Very 60% 60% important Important Important 40% 40% Somewhat Somewhat 20% important 20% important Unimportant 0% Unimportant 0% Corporate Secondary IPO 2012 2013 North Europe acquisitiobuyout Source:PitchBook America Source:PitchBook PE firms have changed their tune in the last year whenGPQ13:Doyouhavephilanthropicand/or it comes to utilizing ESG initiatives at their portfolio employeevolunteerprogramsatyourportfolio companies.Thirty-one percent of GP respondents this year said that ESG issues were essential or very companies? 100% important when looking to improve portfolio company operations, compared to just 18% in 2012. European Yes; they are GPs were much more inclined to find ESG issues to be 80% required an important factor in portfolio company operations, with 86% saying they were at least important. 60% With the scrutiny that comes with being a public Yes; they are encouraged company, GP respondents found ESG issues to be 40% but not significantly more important for companies being required exited via IPO as opposed to a sale to corporate 20% acquirer or another PE firm. ESG issues were found to No be least important when selling to another PE firm, 0% which was somewhat surprising given the relatively 2012 2013 Source:PitchBook high level of ESG focus and awareness indicated from respondents throughout our survey—particularly when performing due diligence. ideal way to engage employees from across the Much of the effort around ESG programs centers organization.To that end, more than half (52%) of GP around initiatives that can cut costs, improve efficiency respondents encourage these types of initiatives at and enhance the operations of the portfolio company, portfolio companies but hardly any (2%) make them a but philanthropic and volunteer programs are an requirement. 2013PrivateEquityESGSurvey www.pitchbook.com|demo@pitchbook11om HowdoGPsmonitorESGatportfoliocompanies? GPQ14:Doyourequireportfoliocompanies touseasystemsapproachtomanage Commonly used environmentalperformance? ESG rating systems 100% International Organization for 80% Yes; ISO Standardization (ISO) certiﬁcation required Recognized as an international leader in 60% voluntary standards systems, ISO standards Yes; other address a vast array of ESG issues, including 40% type of energy and environmental management and certiﬁcation social responsibility. ISO develops its standards 20% through a consensus process that draws on No experts and industry professionals from around 0% the globe.The organization has published more than 19,500 International Standards since its 2012 2013 North Europe America Source:PitchBook inception in 1947. Global Impact Investing Rating System (GIIRS) “Ournextinitiativearoundawarenessis Initiated as a project by B Lab, an independent bringingourportfoliocompaniestogether non-profit organization, GIIRS assesses the social and environmental impact of both funds and tosharebestpracticesinESG,discussthe individual companies. GIIRS utilizes third-party documentation and ratings methodologies issuesandopportunitiesandre-confirmour developed by an independent Standards Board. One of the biggest advantages to using a third- expectationsformanagementofthisarea”. party system is that it addresses the diverse nature -PhilipRowland,SeniorOperatingPartneratTDRCapitalLLPompanies and funds by evaluating them on a range of criteria pertaining to specific industries, impact areas and investor preferences. GPQ15:Doyourequireportfoliocompaniesto developaCSRreport? Impact Reporting and Investment Standards (IRIS) 100% Yes Developed by the Global Impact Investing 80% Network (GIIN), IRIS is a catalog that offers standardized metrics that can be employed to No; but measure social, environmental and financial 60% currently working performance. Some of the specific variables that towards IRIS can help quantify include: governance, social 40% it policies, employee training, greenhouse gas emissions and biodiversity. 20% No 0% 2012 2013 North Europe America Source:PitchBook 2013PrivateEquityESGSurvey firstname.lastname@example.org TheLPPointofView LPscaremoreaboutESGissuesthaneverbefore LPQ2:HowimportantareESGissueswhen GPQ16:HowimportantareESGissueswhen evaluatingaGPanddecidingtocommittoafund? draftinglimitedpartnershipagreements? 100% 100% Essential Essential 80% 80% Very Very 60% important 60% important Important Important 40% 40% 20% Somewhat 20% Somewhat important important 0% Unimportant 0% Unimportant 2012 2013 North Europe 2012 2013 North Europe America America Source:PitchBook Source:PitchBook As was the case in 2012, LPs continue to indicate asingle LP fell into this category. European LPs, like their high level of concern regarding ESG issues.The results GP counterparts, are particularly concerned with ESG; largely mirror those from last year, but the LPs thevery European LP respondent said that ESG issues were simply interested in ESG issues last year are were at least important when committing to a fund. beginning to view them as essential. Nearly one in fivGPs are more attuned to the ESG concerns of LPs (18%) LP respondents reported that ESG issues were than they were last year, but there is still room for essential when evaluating GPs while last year not aimprovement, with 27% of GP respondents saying LPQ3:HowhasyourfocusonESGissueschanged GPQ17:HaveLPsexpressedincreasedconcern inthelastthreeyears? aboutESGissuesinthelastthreeyears? 100% 100% 80% Increased 80% 60% 60% Stayed the Yes 40% same 40% No 20% Decreased 20% 0% 2012 2013 North Europe 0% America 2012 2013 Source:PitchBook Source:PitchBook 2013PrivateEquityESGSurvey email@example.com LPQ4:HowdoyouexpectyourfocusonESG LPQ5:WhydoesESGmatterinyourinvestment issuestochangeinthefuture? decisions?(multiplechoicespermitted) 100% Risk management Brand/image 80% Increase Environmental/social consciousness 60% Corporate governance Government Stayed the regulation 40% same Employee interests 2013 Competitors 20% 2012 Decrease Other 0% It doesn’t 2012 2013 North Europe America 0% 20% 40% 60% 80% 100% Source:PitchBook Source:PitchBook that ESG issues are unimportant when drafting limited respondents said they will continue to increase their partnership agreements. focus in the future.This should only serve to motivate Sixty-two percent of LP respondents say that their GPs to build out their ESG programs even faster. focus on ESG issues has increased in the last three Environmental and social consciousness ranks years, with just one respondent saying that they are highly among LPs as a motivator to address ESG issues, less concerned with ESG issues than in the past. GPs but they are also concerned with the risk profile of appear to be getting the message loud and clear. In their investment and their brand and image. Corporate 2012, only half of GP respondents said that LPs had governance, business integrity, and environmental expressed increased concern over ESG issues, but that health and safety were the main concerns of LPs when surged to 77% in this year’s survey. it came to specific ESG issues. Interestingly, European Even though LPs have shown significantly more were much more inclined to care about social issues, attention to ESG issues in recent years, 60% of LP which was their second highest concern. LPQ7:WouldyourathercommittoaGPwithnoESG LPQ6:Whatareasareyoumostconcernedabout programbuttopquartileperformanceoraGPwitha whenitcomestoESG?(limitthree) strongESGprogramandslightlylowerperformance? Corporate 100% governance Business integrity 80% Environmental ESG program health & safety & lower 60% performance Social issues Climate change 40% No ESG Resource 2013 program & preservation 2012 higher Other 20% performance None 0% Source:PitchBook 2012 2013 0% 20% 40% 60% 80% 100% Source:PitchBook Source:PitchBook 2013PrivateEquityESGSurvey firstname.lastname@example.org IndustryLeaders As part of this year’s survey, PitchBook asked respondents to name some of the firms they viewed as leaders in ESG practices. It was encouraging to see firms of all different sizes and from both sides of the Atlantic be named, but there were two clear industry leade:rKKR and Doughty Hanson. KKR was the most frequently named leader in ESG practices in both this and last year’s survey, which is no surprise considering the firm initiated its Green Portfolio Program in 2008 and maintains an ongoing partnership with the Environmental Defense Fund. Doughty Hanson, a London-based European private equity firm, wasn’t mentioned in last year’s survey, but was cited as a leader by several firms and LPs this year. Here’s a look at what makes each firm so respected among their peers when it comes to ESG issues: http://green.kkr.com http://www.doughtyhanson.com/responsible-investing.aspx http://www.kkr.com/company/responsibility http://www.doughtyhanson.com/private-equity/esg-engagement.aspx KKR was the firm most frequently named as a leader Doughty Hanson has been active in ESG issues and in ESG practices for the second year in a row.The practices for several years and became the first PE firm launched its Green Portfolio Program in 2008 to signatory to the PRI in June 2007.The London-based generate operational improvements at its portfolio PE firm was also one of the first to produce an ESG- companies.The program was created in partnership focused report, partnering with theWorldWildlife with the Environmental Defense Fund and focuses Fund in 2011 for“Private Equity and Responsible its efforts on reducing emissions, electricity usage Investment.” and other environmentally focused operational On its website, the firm includes a list of ESG improvements. KKR estimates that through its first five policy items it seeks to achieve, a case study for years the program has generated $917 million in cost one of its portfolio companies, details on its own savings and additional revenue. carbon neutrality efforts, and information on social According to KKR, 25 companies have participated investment and charitable efforts. and avoided more than 1.8 million metric tons of GHG As was the case for many of the GP respondents emissions since the program’s inception. Also included to our survey, Doughty Hanson sees undertaking on the Green Portfolio Program website are numerous ESG issues not as a burden, but as a way for the case studies and statistics that show the impact of firm and its portfolio companies to enhance value, the firm’s ESG programs. For example, KKR portfolio elevate the brand and reduce risks associated with company Oriental Brewery, which installed a modified poor governance. According to the firm, the projects boiler system and optimized the fermentation it undertakes are:“commercially driven and are processes in-house, reported that from 2008 to 2010, designed to mitigate the financial and reputational the company avoided $17.7 million in energy costs risks to which Doughty Hanson, our portfolio and 19 million cubic meters of water consumption. companies and our investors are exposed.They also KKR also operates initiatives at its portfolio create additional opportunities to increase the value companies to improve transparency, employee health of our portfolio companies, enhance their brands and sourcing practices and supply-chain risks. and better position them for exit.” 2013PrivateEquityESGSurvey email@example.com PitchBook PitchBook for Private Equity Firms Better Dat a. Better Decisions .firstname.lastname@example.org INTELLIGENCE IN ACTION No one offers more insight on the private equity landscape than PITCHBOOK FOR PE FIRMS What will you do with it? Source & filter Benchmark your fund investment opportuperformance industry trendstivcomparables& private Identify the rightAugment portfolio your next fund executive teams
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