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Exponent LLP

PRI reporting framework 2020

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.

It is the responsibility of the deal team to identify and raise material ESG issues i.e. those that carry financial or reputational risk that could impact the company, early in the transaction process.   These need to be discussed with the Investment Committee and, where necessary, commission specialist due diligence.  All members of the deal team and attendees of the committee are encouraged to contribute to the Investment Committee (β€œIC”) debate and, in particular, raise and express a view on ESG-related matters.  Furthermore, a section headed "Responsible Investment" must be included in at least one Investment Paper.  This section should consider the ESG issues that are relevant to the particular business, Exponent's judgement of their significance, any due diligence that has been carried out and, where necessary, a description of how the Firm plans to address any issues post-investment.

 A note of the IC discussion is held on the deal file together with a formal minute of the decision taken.  The Managing Partner and the COO sit in on all IC meetings to ensure that ESG factors are considered as part of the decision-making process.

Investment opportunities that are declined due to ESG/RI issues tend to be rejected early in the investment process before any significant work is undertaken (e.g. due to specific exclusions).

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.

It is the responsibility of the deal team to consider all of the above when the ESG risks are deemed material. We encourage the team to engage external consultants to assist with ESG due diligence to assist with this analysis. 

PE 07. Encouraging improvements in investees (Private)

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