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Paine Schwartz Partners

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.

ESG has been integrated into the "PSP Way", which is an effort to codify Paine Schwartz Partners' approach to delivering successful outcomes in investments and includes an aspiration for how portfolio companies operate, and how the Firm's various stakeholders work together to achieve common objectives. ESG is included in one of PSP's core “Principles for Success”, and as one of its “Portfolio Foundational Elements.” While each portfolio company will have its own unique agenda, the Portfolio Foundational Elements seek to promote execution of each of PSP’s core principles.

To ensure the integration of ESG considerations in the pre‐investment phase, and subject to the Firm's determination of what is reasonable and appropriate for each transaction, the Firm will undertake ESG due diligence screening to conduct an initial assessment of potentially material ESG risks and value creation opportunities that may have an impact on the investment decision‐making process. This screening is typically done in concert with a third‐party expert and the use of industry standards such as the Sustainability Accounting Standards Board (SASB). The Firm uses peer benchmarking, industry standards (e.g., SASB), and expert third-party judgement to identify material ESG focus areas for its portfolio companies. Over the years, the Firm has evaluated several such areas, including greenhouse gas (GHG) emissions, energy use, water, waste, fair labor practices, and others. When material ESG issues are identified, they will be included in discussions with the Investment Committee, and external advisors may be engaged to carry out additional ESG‐related due diligence as needed.

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 has been integrated into "The PSP Way", which is an effort to codify Paine Schwartz Partners' approach to delivering successful outcomes in investments and includes an aspiration for how portfolio companies operate, and how the Firm's various stakeholders work together to achieve common objectives. ESG is included in one of the Firm's “Principles for Success”, and as one of its “Portfolio Foundational Elements.” While each portfolio company will have its own unique agenda, the Portfolio Foundational Elements seek to promote execution of each of PSP’s core principles. When material ESG issues are identified, they will be included in discussions with the Investment Committee (IC) (including IC memos), and external advisors may be engaged to carry out additional ESG-related due diligence as needed. In IC memos, ESG is included as a separate slide in the opening "Deal Scoping Overview" template. This slide provides an overview to the IC of the investment, including diligence findings, and classifies risk associated with findings (in a red, yellow, green construct). This provides the IC with an executive summary of the proposed investment. Additionally, ESG is included in PSP's Driving Five "Gotta Believes", which describe the primary reasons and rationale for proceeding with an investment.


PE 07. Encouraging improvements in investees (Private)


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


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