Apax Partners has a well-defined Responsible Investment policy. Since adoption of the PRI Principles, sustainability has been embedded in Apax’s investment process as a tool to help release the full potential of the businesses in which Apax funds invest. This means that issues relating to sustainability are raised at an early stage in any potential investment opportunity and are monitored throughout Apax’s ownership of the company.
Pre-investment activity focuses on the identification of ESG risks, the company’s ability to manage ESG considerations and its performance related to ESG in the past.
Prior to the closing of each new investment by the Funds, the findings of the ESG due diligence process are reviewed by a member of the Apax Sustainability Committee and incorporated into the final Investment Committee documentation. Key ESG issues, representing either a risk to the portfolio company’s business or an opportunity for value creation, are highlighted as part of this process. Where necessary, investment professionals will work with the relevant company’s management team to develop an improvement plan to address findings post-investment, either in the 100-day planning process or shortly thereafter.
Apax has integrated ESG considerations into its investment processes and ownership practices, in particular, for those portfolio companies where Apax has the ability to control and influence the integration of ESG initiatives. In cases where the Funds are a minority shareholder or where other circumstances affect Apax’s ability to assess or monitor ESG-related performance goals, it may not necessarily be feasible to implement ESG-related principles; however, in such instances, Apax will aim to incorporate ESG-related considerations as much as reasonably possible.
Post Investment Approach
To monitor and manage portfolio company ESG performance following an investment, Apax will annually collect ESG Key Performance Indicator (“KPI”) data from all portfolio companies of the Apax Buyout Funds where Apax has the ability to control and influence the integration of ESG considerations.
Through this post-investment monitoring process, Apax is able to capture the ESG footprint of the Funds’ relevant portfolio companies and determine areas of materiality where input from investment professionals will create additional value or mitigate risk throughout the life of the investment. This involvement enables the investment professionals to thoughtfully put in place the appropriate people, processes, and technology to strive for value creation or risk mitigation in a more focused and effective manner. Apax’s Operational Excellence Prfactice (OEP) is an integral partner to the investment professionals during this process, working together to drive value or mitigate risk relevant to a particular portfolio company’s material ESG issues (e.g., natural resource efficiency programmes) and realize the potential opportunities for value creation that were discussed pre-acquisition.
In the case of Funds that are not considered Apax Buyout Funds, which generally includes Funds with a focused regional or sectoral investment strategy (such as AMI Opportunities Fund or Apax Digital Fund), the monitoring of ESG integration and progress within a portfolio company will be performed by the investment professionals of the specific Fund independent of the OEP. This monitoring will be in-line with the findings of the pre-investment ESG due diligence. Additionally, these Funds will be excluded from the annual ESG KPI data collection system.
Based on the information from the annual ESG KPI collection, the Operational Excellence Practice (OEP) can hone in on ESG opportunities in the portfolio companies.
Examples of ESG engagements supported by the OEP include:
Engaging in projects to reduce the costs and consumption of natural resources or reducing risks through improved governance and policy implementation. The ESG KPI collection process also provides insight into corporate policies and governance practices. Based on the findings in the data collection, the OEP and Compliance group will work together to address specific opportunities for enhanced policy implementation or risk management in areas like anti-corruption and anti-money laundering.
Portfolio company specific ESG issues are managed on a day-to-day basis by the companies themselves and a large number of the Apax portfolio companies have well developed ESG initiatives in place. In addition, Apax investment team members are involved in ESG matters when they are tabled during Board meetings for the companies for which they are responsible.
ESG Organisation & Reporting
Sustainable investing is core to what Apax does and ESG is a dedicated focus area within the Operational Excellence Practice (OEP). A main ESG lead is responsible for the day to day implementation of the Firm’s responsible investment efforts which in turn are co-ordinated through a Sustainability Committee consisting of eight members from different functions within the Firm. The committee meets on a monthly basis and reviews all matters relating to Apax’ internal and external sustainability related activities and ensures that implementation of sustainability matters is achieved across the investment teams and the Firm.
Apax Partners maintains multiple channels of communication on ESG matters with its LPs, both in its fund update reports to its investors and also through its annual sustainability report which discloses ESG information on the Firm and the Apax Funds portfolio companies on an annual basis. This report is publicly available and can be downloaded from the Apax website, it is also sent to all LPs in Apax Funds.
ESG within Apax Partners
Apax is committed to reducing its own environmental footprint. Apax has significantly consolidated its IT infrastructure with the use of virtualisation technology, bringing overall energy usage levels down. Apax’ primary datacentre is housed at Telecity, who are recognised for their strong focus on sustainability and environmental leadership.
Finally, Apax contributes to the communities in which it invests through the Apax Foundation, a charitable Foundation which provides grants to support social entrepreneurship projects in countries where Apax has a presence and also to charities which are supported by Apax employees, not only on a monetary basis but also with a time commitment.