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Ninety One

PRI reporting framework 2020

Export Public Responses

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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.

Our ESG framework is implemented through the investment process in three distinct phases, the pre-Transaction, Transaction and post-Transaction stage. The pre-Transaction stage involves the initial screening for ESG risk categorisation, application of ESG toolkit and scoping of ESG issues. The Transaction stage refers to the period of the investment process which is characterised by the Fund - to - counterparty negotiation, due diligence, legal drafting of agreements and technical implementation of an investment. This stage also identifies and scopes potential ESG action areas and ESG action plans. Finally, the post-Transaction stage focuses on monitoring and reporting to the Ninety One investment committee as well as the client. The Private Equity team has documented this process and applies it to all their investments.

05.3. Additional information. [Optional]

An operational manual has been drafted and signed off by limited parties in the fund, with dedicated resources allocated to ensure compliance with the investment process requirements.

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.

For all investments the following actions are undertaken to obtain ESG related information:

  • site visits
  • desk top review
  • external consultant review
  • interview with management
  • interview with work force
  • interview with community members
  • Industry standards

Due diligence findings are presented to the investment committee and minuted. Due diligence documents are kept for annual performance reports.

PE 07. Encouraging improvements in investees

07.1. During deal structuring,what is the process for integrating ESG-related considerations into the deal documentation and/or the post-investment action plan?.

If yes

07.2. Describe the nature of these improvements and provide examples (if any) from the reporting year

Ninety One  legally binds portfolio companies to the IFC performance standards as well as establishing an Environmental & Social Management System (ESMS). The ESMS requires the company to integrate continuous improvement measures to ensure that risks and mitigation measures remain relevant and effective.

07.3. Additional information. [OPTIONAL]

While ISO 14001 system certification does form the basis of every investment requirement, companies that would benefit from an additional Kainzen  improvement system can be drafted as part of their overall management systems. Energy and water efficiencies are also includes in the corrective action plan as value addition items.

PE 08. ESG issues impact in selection process

08.1. Indicate how ESG issues impacted your private equity investment selection processes during the reporting year.

08.2. Indicate how ESG issues impacted your private equity investment deals during the reporting year.

08.3. Additional information. [OPTIONAL]

Through the due diligence process, ESG risks are identified and opportunities assessed. As part of the shareholder subscription agreement the corrective action plan is incorporated as a schedule of undertaking. This legally binds the company to undertake corrective actions on ESG related risks to mitigate the risk to acceptable levels. The undertakings change in accordance with the risk identified and are based on the IFC Performance Standards. The corrective action plan is included in the 100 day plan, and in some cases in the conditions precedent in the purchase agreement.