Exponent is committed to developing and promoting strong ESG principles across all portfolio investments. It is the Firm’s ambition to make credible and tangible ESG improvements at each investment during the course of the Funds’ ownership. While it is often difficult to measure progress accurately and set quantitative ESG targets, the Firm’s aim is to ensure that all businesses embrace ESG and make it a core tenet of their culture that will survive the Funds’ ownership period.
An ESG issue that is considered material (e.g. it carries financial or reputational risk that could impact on the company, Exponent or its investors) must be reported to the deal team immediately. It is then the responsibility of the deal team to ensure that such matters are reported to the appropriate member(s) of the Exponent team.
Exponent has implemented the following post-acquisition ESG focussed processes and procedures to help the Firm drive the ESG agenda to all of our businesses
1. We ensure that the ESG must be included on the portfolio board meeting agenda.
2. Each portfolio company must track a set of ESG KPIs that must be reported to the Firm. The ESG KPIs include a set of standard KPIs that apply to all companies in the portfolio and a set of 4 to 5 bespoke KPIs that are specific to the business.
The standard KPIs are as set out below:
- Compliance with all applicable environmental legislation
- Anti-bribery and corruption policy
- Modern Slavery Act
- ESG Policy
- Corporate Criminal Offence Policy and Procedures
- GDPR and Data Protection compliance
- Gender Pay Gap reporting
- Energy Usage
- H&S Reporting
- ESOS Phase II Compliance (undertaken in 2019)
- Streamlined Energy and Carbon Reporting Compliance
3. The Firm reviews the portfolio's ESG KPIs through quarterly team discussions.
Unless a consultant was engaged to consider ESG risks during the investment analysis and decision-making phase, the company must engage, as part of its “100-day” post-acquisition plan, an independent ESG review. This review may form the basis of and assist with the company’s ESG program during the period of the Funds’ ownership. This report helps identify the business's key risks and opportunities and suggests material ESG KPIs for the business to track. This independent review must be repeated on a three-year basis as a means of tracking progress against the identified ESG issues and opportunities.
1. The company CEO/CFO must report to Exponent’s Partners on ESG as part of the annual budget review process.
2. Exponent has recently committed to conducting annual ESG portfolio visits to ensure that ESG is a priority for the Management Teams of our businesses.
3. Exponent to produce an annual ESG Report to highight the Portfolio and Firm's ESG developments during the past year and to set objectives for the coming year.