Culture shock: ESG, compliance and LPs

Have you integrated ESG into your culture?

Elin Ljung, director of communications and sustainability, Nordic Capital
Acting responsibly and being committed to positive societal contribution has long been integrated into Nordic Capital’s culture and is embedded in our core values. We also firmly hold the belief that responsible business practice is essential for achieving long-term success and value creation and it is therefore a vital part of our daily work. This applies not only to our own organisation but also to Nordic Capital’s portfolio companies.

Debojit Mukherjee, COO, Agilitas Private Equity
ESG has been part of Agilitas’s DNA since inception and is at the heart of our culture; every part of the firm was purpose built with this in mind. Building this culture begins with our recruitment process. We place a strong emphasis on the ethical values of candidates, along with their track-record and experience. Furthermore, we include a values interview as part of our process, to ensure we bring on board people who share our strong advocacy of ESG factors.

Diversity is a fundamental part of Agilitas’s inclusive culture, whether that difference comes through gender, nationality, socio-economic background, disability, religion or sexual orientation, because we know diversity of thought helps to generate different ideas, brings creativity and curiosity and informs better decision-making. Within our investment committee 75% of the team were born outside the UK, 25% are from ethnic minorities and 25% are female.

John Marsh, finance director, Growth Capital Partners
Responsible investment is part of our DNA and is part of every investment committee decision – treating people fairly, maintaining a motivated and engaged team, recruiting and retaining the best and most diverse talent are core differentiators for many of our businesses. We also have a process in place to set ESG objectives with each portfolio business and to review and report on progress on those objectives during the year.

Shami Nissan, head of responsible investment, Actis
ESG considerations are fully integrated into our investment process from origination to realisation.

Actis’ ethos is ‘Values drive Value’. This means we recognise that both financial and non- financial activities are crucial to not only mitigating risks but giving us a license to operate and driving value in our portfolio. We have a dedicated full-time responsible investment team, which has doubled in size in recent years and is represented on our executive committee but actually our values driven approach applies throughout the firm and is often cited as a reason our people join and stay with Actis.

Across the wider firm, we also encourage all employees to participate in activities designed to boost diversity and inclusivity within the organisation, which includes unconscious bias training and peer support as well as networks and mentoring initiatives for women and BIPOC colleagues. Lastly, employees of all levels and specialisms are able to contribute to our charitable foundation, Actis Acts, which aims to support charitable activities within our local communities.

Joe Silver, managing director and head of investor relations, Sun Capital Partners
ESG is an integral part of our firm and culture. We are proponents of environmental, social and governance (ESG) practices and incorporate them into Sun Capital and encourage our portfolio companies to do so, as well. We believe there is a clear benefit to better ESG management, and we know you can do well by doing good. Since initiating our ESG program, we have worked to enhance our ESG practices. Continuous improvement remains a core principle at Sun Capital.

As one of our earliest ESG initiatives, we founded The Sun Capital Partners Foundation in 2007. The Foundation serves to enhance Sun Capital’s strong culture of social engagement within the community by making grants to South Florida area charities. Since its inception, the Sun Capital Partners Foundation has been able to support more than 700 organisations in meaningful and compassionate pursuits.

Furthermore, we recognize a diverse group of Sun Capital portfolio companies each year with an ESG Excellence award given to those portfolio companies demonstrating a strong commitment to ESG.

How do you integrate and maintain compliance in the firm’s culture?

Elin Ljung, director of communications and sustainability, Nordic Capital
Nordic Capital’s culture is built on principles of transparency, openness and delegated responsibility, with ethical behaviour being an important part of our performance process. In addition, we work hard to build awareness within our own organisation and in the portfolio, providing regular training as well as policies, checks and balances that ensure responsible behaviour is built into all areas of our operation.

John Marsh, finance director, Growth Capital Partners
We have regular training both internally and from our external compliance consultants, and in recent years we have further improved the checks we have in place. Naturally compliance is non-negotiable for a regulated business, but we continue to increase our focus on this area, not because of regulatory requirements, but because we believe it is the right thing to do.

Shami Nissan, head of responsible investment, Actis
Our ethos of ‘Values drive Value’ and the structured learning and development we provide ensures everyone is clear – from intern to investment professional – on what is expected of them in terms of professional conduct as well as how to identify and manage the risks they might encounter investing across growth markets. We incorporate our values - transparency, accountability, teamwork, and responsible investing in to our review process and we share success and learnings across markets and functions.

At an organisational level, our executive committee, which includes representation from our responsible investing team and a broad range of expertise, drives participation in various international forums designed to drive up standards within our industry, including the United Nations’ Principles of Responsible Investment (UNPRI) and The World Bank’s International Finance Corporation (IFC). Our active engagement with these organisations ensures we’re at the cutting edge of compliance and signals to our employees and counterparties the principles we adhere to.

Joe Silver, managing director and head of investor relations, Sun Capital Partners
This starts at the top with our co-founders and the executive committee being fully committed to making sure Sun Capital is a good corporate citizen to our employees, our portfolio companies and our communities. The ESG committee meets periodically to review and track metrics to ensure the firm is abiding by our ESG guidelines and best practices. We also present updates on the ESG program to the firm at our annual “Town Hall” meeting.

How much do your investors assess your culture?

Elin Ljung, director of communications and sustainability, Nordic Capital
Culture, inclusion and diversity are increasingly becoming areas of focus of our investors and many include these topics in their ESG assessments. We encourage and fully support the drive for transparency in these areas as it promotes the wider sustainability agenda, to which we are highly committed.

John Marsh, finance director, Growth Capital Partners
Our culture links to our investment strategy of partnership with owner managers and entrepreneurs. It is therefore important we have a collegiate and supportive culture where relationship building and empathy are encouraged as this links closely to making successful investments for our investors.

Shami Nissan, head of responsible investment, Actis
We are seeing increasing interest from our investors about our ESG and D&I strategies, we track and monitor our work in both areas and are able to report on progress. As firm believers in transparency and accountability, we provide investors with regular communications, including responsible investment reports, macro forum publications honing in on sustainability, equality and culture, digital resources dedicated to responsible investing and diversity and inclusion, investor days & conferences, as well as access to specific updates on individual assets and the ESG considerations we have taken.

During the Covid-19 pandemic, we’ve moved a great deal of these engagements online with considerable success. We recently held our first virtual site visit at the Taiba N’Diaye wind power plant, in Senegal. This gave us the opportunity to provide more investors with a complete view of our assets and people that normally wouldn’t be possible with physical tours. The initiative was met with such positive feedback that we’re planning to organise further virtual site visits.

Joe Silver, managing director and head of investor relations, Sun Capital Partners
Our investors increasingly want to see Sun Capital be a responsible ESG citizen which we are committed to delivering upon. Some investors have a more active pursuit of ESG standards than others, yet it is our aim to adhere to the highest standards, and endorse the American Investment Council (AIC) guidelines.

How do your investors understand culture?

John Marsh, finance director, Growth Capital Partners
Investors take an ever closer interest in our culture – wanting to meet the extended team, understand how responsibility is allocated, and ensure compensation is fair. They like to know that even our junior investment staff invest alongside the fund investors so that we are absolutely aligned. We always encourage potential investors, management teams and new hires to take up references with other investors or management teams about the way we do business and the feedback is consistently that we are straightforward and do what we say we will do.

Shami Nissan, head of responsible investment, Actis
In many ways our culture is best represented through the macro forum, a group comprised of Actis investment professionals that meet regularly to share ‘the street view’ on core macro and political developments across our markets. Their outputs are shared widely both internally and externally and provide an unparalleled view into not only how our markets work but how they live. The street view vehicle also regularly focuses on a theme for example sustainability or diversity & inclusion or, inevitably, our response to Covid-19. In each case we try to take the topic from the abstract to the actual by providing live examples from the portfolio.

Actis also seeks to create platforms for the firm and our investee companies to celebrate success and share best practice- for example we host off-site meetings for all the CEOs, CFOs, COOs and heads of ESG from our energy generation companies to trade their experiences and to facilitate knowledge transfer- we see these opportunities as hugely value accretive. We also invite members of the management teams to participate at our investor meetings.

Joe Silver, managing director and head of investor relations, Sun Capital Partners
For the past several years, at our annual investor meeting and sometimes during quarterly webcasts, we present various ESG updates pertaining to Sun Capital and our portfolio companies. We also produce and distribute to our investors and other third parties materials that detail our ESG program and initiatives.

How much does transparency mean to your culture?

Elin Ljung, director of communications and sustainability, Nordic Capital
Nordic Capital was founded more than 30 years ago in the Nordic region and transparency is a hallmark of our society’s leadership style and culture. As a result, it is very much at the core of our DNA and is reflected in the way we work with each other and interact with our stakeholders.

Debojit Mukherjee, COO, Agilitas Private Equity
Transparency is vital both internally and externally. To reinforce and reflect this within the firm’s culture, Agilitas opts not to use job titles within the investment team, reflecting a true level playing field and preventing the team members from feeling “boxed in” by their titles. Furthermore, this helps to encourage less experienced members to voice their views.

The culture of Agilitas is very entrepreneurial and the structure is flat: everyone, other than some support professionals, is involved in investment decisions. As a consequence, individuals feel more valued and their particular talents are allowed to flourish. When it comes to new hires, all of the team, from our managing partner to our support staff, interview prospective candidates before we issue an offer to join Agilitas, because all the team members’ voices matter.

John Marsh, finance director, Growth Capital Partners
We are great believers in transparency. The feedback we receive is our fund reports are especially thorough and detailed – we are happy to explain in full what is going well and, where there are things that aren’t going so well, what we are doing about them. We have recently upgraded our website but we plan to do more to share our progress on ESG on our website, in addition to what we currently publish in our fund reports.

Shami Nissan, head of responsible investment, Actis
Transparency is one of Actis’ four values we believe drives sustainable value creation. Our 70-year heritage has taught us transparency is crucial to building the trust of our investee companies and management teams, investors and the communities we operate in. Our culture has been the subject of repeated external recognition and has given investors the confidence to support our continued growth and operation. Building on our success to date, we continue to entrench transparency in our corporate culture and business processes.

Our most recent example of this was the publication of our disclosure statement against the IFC’s Operating Principles for Impact Management, which reflected our intent to promote industry standards for more transparent and robust impact measurements and was externally verified by PwC. We have also achieved the highest rating score for the fourth consecutive year in the UN Principles for Responsible Investment (UN PRI) independent assessment. Actis received an A+ rating and scored considerably and consistently higher than the median industry average.

Joe Silver, managing director and head of investor relations, Sun Capital Partners
Transparency and integrity within our firm and with our partners is vital. It provides accountability, strong leadership, and drives operational excellence.