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HQ Capital

PRI reporting framework 2017

You are in Direct – Private Equity » Pre-investment (selection)

Pre-investment (selection)

PE 07. Incorporating ESG issues when selecting investments

07.1. During due-diligence indicate if your organisation typically incorporates ESG issues when selecting private equity investments.

07.2. Describe your organisation's approach to incorporating ESG issues in private equity investment selection.

The ESG team has developed several tools, such as a GP ESG questionnaire, ranking system and deal breaker catalogue or "Exlcusion List", to analyze the ESG policies of the GPs during the investment due diligence process. For private equity investments, the result of this analysis is included in the written Investment Proposals that are submitted to the Investment Committee for approval. The "Exclusion List" is updated periodically to ensure it is in alignment with the excluded activities contained in the Fund's limited partnership agreement. The existence and robustness of a GP's ESG policy is an important factor in the evaluation of the GP and the overall investment.  In addition, HQ Capital conducts semi-annual portfolio reviews, which consist of detailed update calls with GPs covering their ESG policies and any changes or improvements in their methods. This information serves to help shape our own practices as we implement the principles, and also provide useful insight into the portfolio company ESG practices. 

07.3. Additional information. [Optional]

PE 08. Types of ESG information considered in investment selection

8.1. Indicate what type of ESG information your organisation typically considers during your private equity investment selection process.

8.2. Describe how this information is reported to, considered and documented by the Investment Committee or similar.

The deal team analyzes the above information, and conveys to the broader investment team, including the Investment Committee, any issues relating to ESG throughout the due diligence process. Issues include assets operating in industries on our "Exclusion List" or GP's who do not meet our minimum threshold per our "Ranking System and On Going GP Monitoring".

Investments flagged during this process will not pass our intermediate investment memo stages.

PE 09. Encouraging improvements in investees (Private)

PE 10. ESG issues impact in selection process (Private)