ESG for PE and alternative asset managers

ESG for PE and alternative asset managers
28th January 2021 Judy Kuszewski
In Insights

The ESG wave is continuing its steady progress, washing over the whole of the international finance and investment community – thanks in large part to the rising interest and demands for information from pension funds and individual investors, but also to tightening of expectations for firms and funds to understand, manage and report on ESG risks in their portfolios. An increasing number of jurisdictions, for example, has moved to mandate reporting based on the Taskforce on Climate-related Financial Disclosure recommendations, awareness of which is already sweeping through the sector in preparation.

Sancroft has been active in advising firms and funds across all asset classes to establish and integrate their approach to responsible investment for several years, and much of this activity has been targeted at the private markets. This is why we were so thrilled to learn that Sancroft has been recognised as the best ESG advisory/consultancy at the Private Equity Service Providers 2020 Awards hosted by The Drawdown, one of the leading media companies focused on driving excellence in the private equity sector. We are delighted by this honour and grateful to have had the opportunity to work with some of the most exciting and inspiring firms in the sector to help them achieve sustainable value for years to come.

But what is ESG integration, and why do we do it? Having a strong approach to ESG is not just a risk mitigation exercise, it helps firms to shore up their ability to efficiently fulfil investors’ requests for information in the short term and retain access to capital in the long term. It strengthens their overall command of material risk and opportunity in operations, investments and supply chains with a real impact on improved returns upon exit. And because it’s not just investors and regulators who want to understand asset managers’ ESG approach, it also supports efforts to attract and retain the best talent, as well as strengthens reputation amongst peers.

Our unique strength at Sancroft is our ability to bring together our decades of experience driving better sustainability performance in collaboration with our corporate clients alongside a deep and practical understanding of the investment objectives, approach and value-adding capacity that private and capital markets investors can bring. Some of the ways that Sancroft has helped our clients:

ESG Integration in investment process and decision making: We can develop ESG and responsible investment policies, implementation frameworks, KPIs and monitoring tools tailored to our clients’ firms and their own ways of working. We can create a roadmap that sets out what responsible investment means to the firm and supports continued progress toward its own goals and targets. We can help upgrade the existing investment process to take account of a changing environment, one growing in sophistication and rising expectations for sustainable results.

Comprehensive understanding of risk and value creation opportunities: We can help our clients identify the material ESG factors that affect their investment approach as well as the specific issues most important to their portfolio companies. We can review and challenge the investment strategy to uncover opportunities to strengthen it for the future. We can create specialist due diligence tools, sector-based ESG scorecards, portfolio monitoring and engagement process, tools and procedures tailored to the most relevant markets and sectors.

Enhancing and protecting value for investee companies: We can work directly with portfolio companies to implement a sustainability strategy that adds value during the investment period and supports excellent returns upon exit. We can help clients to monitor and encourage consistently good ESG performance across portfolio companies.

Reporting on what matters: We can create a reporting strategy that encompasses a range of audiences and their information needs, from investors to regulators to employees. We help our clients put their best foot forward with their UN PRI annual submissions as well as their own firm-wide and fund-specific external ESG reports.

For us, ESG integration is about much more than protecting capital against losses – it’s about advancing an economy that works for the planet and people, driving the investment community’s own ambitions to support positive impact and sustainable long-term value. We are proud to be recognised as one of the best in our field, but even more so to be trusted by so many PE and other investment firms and funds as their partner in ESG excellence.

If Sancroft can help you achieve your ESG and responsible investment ambitions, please contact Ivaylo Dimov 

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