Sustainability

Sustainability in investment process

Assessment and management of ESG factors in our investment and portfolio management processes.

The active management of ESG risks and opportunities is integral to our investment, portfolio management and value creation processes. We embed an assessment of the long-term sustainability profile of existing and new investments in our processes. Once invested, we support companies as they develop strategies and respond to stakeholder expectations, and we gather data to measure progress against ESG objectives. This enables us to prepare companies ahead of any exit opportunity.

 

Pre-investment

During investment

Exit

Assessment and action planning

Use of influence and engagement

Data collection and monitoring

Preparation and communication
  • Screen each opportunity against the requirements of the RI policy at the first stage of our process
  • Identify and give due consideration to the most material ESG factors inherent in each investment opportunity
  • Commission specialist due diligence on ESG matters where required 
  • Include ESG considerations in Investment Committee materials 
  • Integrate relevant action points into the post-investment action plan
  • Implement robust governance and procedures at the portfolio company to ensure that ESG risks and opportunities are assessed and managed appropriately
  • Use active participation and influence on portfolio company boards to ensure they are addressing the ESG risks in respect of their businesses 
  • Leverage the 3i portfolio and network to provide introductions to other companies, useful contacts and advisers and share best practice
  • Engage with portfolio companies and provide support as they devise their sustainability strategies and implement and deliver related projects
  • Collect ESG data from portfolio companies on an annual basis to understand the baseline and measure progress over time 
  • Prepare detailed quantitative and qualitative ESG assessments annually as part of the portfolio company review process 
  • Discuss ESG assessment during portfolio company review meetings, involving investment teams, Investment Committee members and selected 3i Board members
  • Set and monitor progress with portfolio-wide objectives in line with ESG minimum requirements set in the RI policy
  • Consider the data collection, reporting and governance structures which may be required in advance of a sale process 
  • Work with advisers to communicate relevant sustainability information to potential buyers

 

Objectives

 

The Investment Committee may decline investment opportunities where red flags are raised in the pre-investment ESG risk assessment that cannot be remedied post investment. Further specialist due diligence may be commissioned to assess whether a situation can be remedied.

We use our influence to assess and mitigate risk and ensure value creation opportunities are captured.

Data is used to develop our understanding and management of ESG matters, to enhance our decision making, to facilitate better financing opportunities and to identify key themes, trends and opportunities across the portfolio.
It is also used to comply with our reporting obligations.

Good ESG performance can protect and potentially enhance the value achieved in an exit.
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