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Foresight Group LLP

PRI reporting framework 2019

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

Pre-investment (selection)

PE 05. Incorporating ESG issues when selecting investments

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

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

Foresight has adopted a regional strategy focusing on a structural gap in private equity funding of UK SMEs with an investment focus under £5m. It does this through a number of different funds including those with institutional investors, Venture Capital Trusts (“VCTs”) and EIS schemes.  It therefore has to address the demands of both institutional and retail investors whilst also balancing the different mandates of the funds themselves. 

Foresight’s regional, small cap investment approach has been developed through the Foresight Nottingham Fund LP, the Foresight Regional Investment LP and MEIF ESEM Equity LP and complements Foresight’s long and substantial track record of investing through VCTs. With this approach, the Fund seeks to deliver commercial returns to investors and socio-economic benefits. 

Since May 2018, all new companies in which Foresight invests through its institutional funds and VCTs have been subject to a detailed ESG assessment during due diligence and will then be required to report on their progress on an annual basis. This programme will be extended to the Foresight Williams EIS Fund investments during the course of 2019 and any other new funds raised going forward.

Given the nature of the companies in which Foresight invests, it has to take into account the relative scale of operations of the investee company. Indeed, in many cases there are limited governance and reporting structures and, post-investment, Foresight works with the management team to improve these to meet wiht Foresight's ESG requirements. 

05.3. Additional information. [Optional]

PE 06. Types of ESG information considered in investment selection

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

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

ESG assessments are undertaken during due diligence and are the responsibility of the relevant deal team, who are held accountable by the Investment Committee.

Each investment team member is provided with an evaluation template in order to conduct effective ESG due diligence and is required to submit an ESG Assessment to the IC alongside the Investment Submission.

PE 07. Encouraging improvements in investees (Private)

PE 08. ESG issues impact in selection process (Private)