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Oak Hill Capital Partners

PRI reporting framework 2020

You are in Strategy and Governance » Innovation


SG 18. Innovative features of approach to RI

18.1. Indicate whether any specific features of your approach to responsible investment are particularly innovative.

18.2. Describe any specific features of your approach to responsible investment that you believe are particularly innovative.

As one of the early adopters of ESG in private equity in the United States, particularly in the middle market, we have sought to "open source" the development of our program. In 2010, we began this process with a partnership with Environmental Defense Fund. We set out to create a methodology to map private equity portfolio companies according to environmental metrics, financial opportunities, and management readiness in order to focus on those that were capable of making the greatest impact. This process was then highlighted by EDF in public communications (press release, blog posts) and private meetings with other private equity firms to share the lessons learned. In that same spirit of transparency, we have publicly released the firm's ESG report each year since 2013 to provide similar firms with a blueprint for the development and implementation of an ESG program.

Our partnership with Business for Social Responsibility (BSR) is another example of how we have utilized nonprofit expertise to develop innovative approaches to ESG integration in the private equity sector. We engage with BSR to integrate ESG factors into our analysis of potential investments. Over the past five years, we have embedded ESG analysis into Phases I through IV of our diligence process for new investments and publicly released the framework. Every potential investment presented to our Investment Committee includes a detailed analysis of potential ESG risks and opportunities. We research and analyze both macro-level and company-specific issues with a focus on environmental sustainability, responsible sourcing, and employee relations. In certain cases, this early focus on ESG in the due diligence process has enabled us to more accurately value potential investments.

In 2017, the firm joined the Ceres Investor Network on Climate Risk and Sustainability, the leading nonprofit organization addressing investment risks and opportunities related to climate change in North America. Through this membership, we can participate in investor working groups and collaborate on ESG issues to advance leading investment practices, corporate engagement strategies, and policy solutions.

In 2018, Oak Hill catalyzed an innovative effort to reduce global deforestation through a market-based solution. The firm became a founding supporter, along with the Packard and Rockefeller Foundations, of the mission-driven investment and advisory firm Emergent Forest Finance Accelerator ("Emergent") to support the development of a new fund that will deliver financial incentives to make protecting forests more valuable than destroying them. 

In 2019, we introduced a new partnership to address the underrepresentation of women in the asset management industry.  Oak Hill hosted two scholars from Girls Who Invest (GWI), the leading nonprofit that provides training and realworld experience in front-line investing. We introduced this new partnership as part of our commitment to improve gender diversity at our firm. Founded in April 2015, GWI is dedicated to inspiring and empowering young women to pursue careers in investment management — a field challenged by a lack of gender diversity. 

To spearhead our GWI initiative, we assembled a cross-functional team composed of professionals of all levels of seniority from the
investor relations/marketing team and several investment verticals. The team developed three key components to the internship: a core content checklist of key learnings, full membership on an investment team, and a capstone project and presentation. Through their integration with an investment team, the interns gained a better understanding of the private equity industry as well as Oak Hill’s
distinctive culture and approach to investing.

By leveraging the power of partnerships to improve our ESG efforts we have another lens to view potential investments and an additional tool to create value during our ownership period. It has also helped to differentiate the firm in the marketplace as a reputable and trustworthy partner, particularly for new investment opportunities.