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Bridges Fund Management

PRI reporting framework 2020

You are in Direct – Private Equity » Outputs and outcomes

Outputs and outcomes

PE 14. ESG issues affected financial/ESG performance

14.1. Indicate whether your organisation measures how your approach to responsible investment in Private Equity investments has affected financial and/or ESG performance.

Describe the impact on:
Impact
Financial performance of investments
Describe the impact on:
Impact
ESG performance of investments

14.2. Describe how you are able to determine these outcomes.

In general, we select only investments whose ability to generate positive societal impact is integral to their success as a business. As a result, we consider ESG issues to be at the heart of strong financial performance, to build more sustainable businesses.
In terms of measuring specific ESG interventions, we quantify the financial impact of our ESG approach wherever possible (e.g. cost savings through energy efficiency) and we support this with qualitative assessments, such as the role upskilled personnel may have played in improving productivity and customer satisfaction within portfolio companies. 


PE 15. Examples of ESG issues that affected your PE investments

15.1. Provide examples of ESG issues that you identified in your potential and/or existing private equity investments during the reporting year.

Investment Stage
ESG issues

ESG issues

          Waste monitoring and recycling
        
Sector(s)
          Healthier Lives
        
Impact (or potential impact) on the investment

In 2018, Bridges Fund Management created the Impact Food Group (“IFG”). It comprises two school caterers, Innovate & Cucina, who serve high-quality, nutritious meals to over 146,000 children at more than 185 primary and secondary schools, sixth form and university technical colleges across England. The business has combined annual sales of over £45m. Given the scale of the business’s operations, a key way for IFG to mitigate negative externalities is by monitoring and managing waste. A recent survey at schools identified waste reduction, increased recycling and single-use plastics reduction as three of the top sustainability priorities. Waste management plays a major role in the food industry and it's a key material ESG factor that, if monitored and effectively managed, can reduce cost and improve operational efficiencies.

Activities undertaken to influence the investment and its response

The impact management team is actively involved in supporting the team to find viable solutions to some of its waste-related challenges. For instance, IFG has worked with its suppliers to ensure that 100% of the packaging used across its menus is either recyclable or compostable; the challenge is now to realise that recycling/composting potential. In September 2018, IFG started work with 19 secondary schools to pilot a plastic bottle recycling initiative. Collectively the 19 schools consumed more than 663,000 plastic bottles in 2017-18. Working with a national waste management company, IFG provided the capacity to recycle 778,000 bottles per annum across these schools. Each of the schools involved in the pilot has committed to working closely with IFG to promote the initiative and educate students on sustainability, the environment and recycling, to encourage use of the recycling bins. IFG is rolling-out the initiative across 52 additional schools in the 2019/20 academic year.

Investment Stage
ESG issues

ESG issues

          Employees' retention
        
Sector(s)
          Healthier Lives
        
Impact (or potential impact) on investment

The Sustainable Growth Fund invested in Alina in April 2014. Alina Homecare provides high-quality homecare to the elderly and disabled and a stable and supportive environment for its carers. Alina’s mission is to significantly improve standards of care within the home setting. To do so, it provides its care staff greater and more specialised training, leading to improved service for clients. Alina works closely with clients, local authorities and the NHS to create better services and work as a catalyst for the much-needed integration between health and social care. Alina has high user satisfaction at 96% and CQC ratings consistently high with 96% of services being rated ‘good’ compared to 83% in the market.

Carers retention is a key success factor in the sector: effective recruitment and retention of a caring and skilled workforce are central to delivering high-quality care.

Activities undertaken to influence the investment and its response

Over the past few years, the Alina team focused on specific HR initiatives to improve carers' retention rates. Results are extremely good and attrition rates decreased by over 11 percentage points in the period 2018-2019, reaching rates that are around half of the attrition rate of the industry.

The team took a "marginal" approach, they identified key satisfaction drivers for the carers and for each they identified specific initiatives. All these initiatives combined are driving carers' retention and engagement. Please see below some examples:

  • Alina launched the Alina academy which is the in-house training and recruitment academy. Personal development is an important driver of carers' engagement in the industry.
  • As part of the benefits package, they introduced a discount platform which provides access to discounted services and products for the carers
  • To increase engagement, Alina's team focused on communication via monthly newsletters, staff forums and established feedback sessions 
  • As transparency is highly valued by the carers, during onboarding the Alina team provide clear pay & benefits information and clarity on career development opportunities.

 

15.2. Describe how you define and evaluate the materiality of ESG factors.

First, depending on the sector in which the business operates, the investment team (supported by the impact team) identifies appropriate ESG issues to be reviewed. In order to make this as practical as possible, Bridges makes it a conversation about operational excellence-using this analysis as a basis for an ESG opportunities workshop with management, which explores existing and potential ESG issues in relation to material stakeholders (e.g., customers, employees, regulators, the local community). In selecting what is material, we consider implications for revenue growth, risk mitigation, the potential for cost savings and productivity (including talent recruitment and retention) and enhancing brand value (including license to operate). The high likelihood / severity (risk) and high potential (return) issues identified through this process are captured in an ESG materiality analysis, which details priority issues and action points which arise. We normally recommend our investment teams to use the SASB materiality map when starting to identify ESG risks and opportunities.

Over the last few years, Bridges has actively supported the development of a common ESG measurement and benchmarking standard by working closely with the non-profit B Lab in developing the B Impact Assessment - the questionnaire that powers the B Corp certification. A partner of Bridges is an active member of the B Lab UK Standards Advisory Council, ensuring this US-founded benchmark is accurately applied in a UK context. The use of the tool has now been incorporated into our assessment of ESG issues.


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