Cinven has implemented a process of developing a bespoke set of non-financial KPIs for each portfolio company, recognising that improving ESG performance metrics can be a value-enhancing lever in its own right. The ESG-specific KPIs are designed to address the relevant aspects of responsible investment, sustainability, the impact on society and the environment, as well as other ethical and corporate governance issues pertaining to each individual company. Due to the breadth of industries covered by Cinven’s diverse range of six sectors, the metrics tracked for each company will vary widely, albeit have been designed to achieve the same common goal.
We require all our Fund 5 and 6 portfolio companies to report on three standard ESG KPIs – which are recorded across our entire Fund 5 and 6 portfolio. These are:
1. Environment - Carbon footprint
Carbon dioxide emissions associated with direct emissions (e.g. carbon dioxide generated from the amount of electricity used within offices, factories etc. as well as generated from production processes); and from consumption of grid electricity.
2. Social - Accident / incident rates
The lost-time accident (LTA) frequency rate is defined as the number of LTAs per 1,000 employees. An LTA is defined as any work-related incident resulting in injury, stress or illness where the individual is unable to work or where a job restriction is required. LTA numbers also include any work-related fatalities. The assessment of lost time excludes the day the incident occurred, is based on calendar days, and is made without regard to whether the person was scheduled to work or not. In line with industry best practice, included in the definition of an ‘employee’ all temporary staff and contractors who work under direct supervision.
3. Governance - Anti-Bribery and corruption
Number of ABC-related incidents / complaints made against the company. To include cases that have been raised either internally or externally and should include incidents that may not have resulted in a formal action being taken.
In addition, each of our Fund 5 and 6 portfolio companies have developed (or are in the process of developing) an additional 3-4 ESG KPIs, specific to their company, which we will record and monitor on an ongoing basis.
All the ESG KPIs for each portfolio company are incorporated into our iLevel reporting framework. This work is currently being undertaken so the ESG KPI information will be recorded centrally, along with each portfolio company’s financial performance and operational KPIs. These will be monitored on an ongoing basis.