Pre-deal we use 3 tools in our ESG analysis and reporting.
Tool 1, is a pointer to sources of ESG news and information to help identify ESG matters in a sector.
Tool 2 is used to look at the business sector that a target company is in and the likely materiality matters that may have to be assessed prior to a deal.
Tool 3 is then used to look at the specific matters relating to the target company and to create a profile of what is relevant. It operates two levels, highlighting significant material matters such as e.g. carbon intensity, human rights violation risks, regulatory and compliance related risks, etc, but also digging deeper to fill out the picture for each material matter, as well as matters of general concern for any company, such as good Governance. We not only seek to identify ESG risks but also opportunities that might help to create value if the deal goes ahead. The output of Tool 3 is an ESG scorecard accompanied by commentary to note significant findings.
All investment papers have a detail section on ESG reporting the findings of the tools and tool 3 will be reviewed by the IC.