One size does not fit all in the ESG journey

18 July 2022 | Ashalan Pillay, Research Analyst, ESG & Sustainability

The BVCA’s inaugural ESG conference this year took place at the Royal College of Surgeons. The venue was recently redesigned using innovative building practices to ensure the highest levels of sustainability including solar panels for energy and the capacity to recycle 98.5% of waste. It was the perfect venue to bring together industry-leading experts in ESG to discuss the impact and implications that sustainability is having on private markets.

As we heard from a variety of experts and industry leaders, some key themes emerged.

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One size does not fit all

The abiding theme throughout the conference was the importance of bespoke, firmwide ESG strategies and commitment from the top to implement and deliver.   “Actions need to be robust and impactful,” said Kate Goodall, Head of ESG & Sustainability at PER.   Kate chaired a lively panel with Afolabi Oliver from Aksia, Mirja Weidner at Charterhouse and Ravi Bhatt from Apis who discussed the challenges of building an effective ESG framework.   Their discussion was echoed throughout the day, particularly with respect to the difficulties that organisations faced when attempting to build an effective framework and in particular the importance of making sure that it was molded to fit the culture, strategy and objectives of the firm rather than a bolted on one-size-fits-all approach.

Make the extra effort to ensure full buy-in

Bringing stakeholders along on the ESG journey is key. Several examples were given, from sitting down with all relevant stakeholders and agreeing on what's required, to taking on feedback on how to make it work for each individual team. And all the while balancing the needs of external stakeholders such as investors as well as improving value in the portfolio.  As different ESG professionals described their process it became clear that installing an ESG framework successfully is as reliant on the ability to bring colleagues along with them on the journey, as it is on the content of the programme. In many cases, the ESG professional has started with a firm-wide education programme to ensure that everyone within the business understands its importance and its potential impact.  This commitment to buy-in extends into the portfolio.  Most speakers felt that there was a great opportunity to move investee business from A to B with a combination of measurement – where are we today – and buy-in – this is where we aim to get to.

Focus on what is necessary first and work and then build the strategy from there

There is a need in organisations for a pragmatic approach to installing an effective ESG framework and strategy. Start by focusing on the most material issues first. These will inevitably be unique to each firm, and build from there, rather than chasing a complete overhaul overnight.

The need for dedicated ESG professionals is rising

The role of an ESG professional continues to evolve and its impact becomes more visible and more valuable. Regulation and reporting have increased in complexity and firms are facing an onslaught of new, more thorough standards to meet.  The need for a dedicated and skilled team to meet the changes in the landscape is more important than ever.

How PER can help to build a bespoke solution for your firm

We work across private capital and see firms at all different stages of development, implementing their ESG strategies.  Different firms require different amounts of resource and varying skill sets.  The depth of our understanding of what ESG in private markets means, makes us uniquely positioned to help our clients spec out their needs as well as identify and screen people with the skills and passion to deliver.  Having placed more than 30 people in ESG positions in private markets in the last eighteen months, including with venture capital, private credit, private equity and infrastructure funds, we have great market insight into the range of strategies that different firms have adopted as well knowing who might be able to help you.   Whether you’re in need of an ESG consultant, starting out with a part-time professional or looking to hire someone full-time to take the lead on ESG or build out their team, we probably already know the people you’re looking for. Get in touch with Kate, who will share her insight and ideas.

Get in touch 

Good Returns | The PER Guide to ESG in Private Markets

At PER, we’re seeing increasing demand for ESG professionals that can drive investments and help to build businesses that are sustainable in all senses. This is a critical moment for private markets, an industry with the agility, long-term perspective and capital to have a significant positive impact on our economies, communities and planet.

In our podcast series, Good Returns, we talk to key players in the ESG space to find out about the policies, people and purpose that will future-proof your business and investment strategy.

LISTEN TO THE PODCAST

About the author

Ashalan is part of the research team at PER, identifying new potential in private equity with a focus on ESG, sustainable and impact investment mandates.

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