Only a few years ago the acronym ESG (environmental, social and governance) would have meant very little to most private equity practitioners. Today the reverse holds true with ESG firmly established in the lexicon of industry terms. ESG is now an established part of day-to-day working life for private equity firms and the funds and companies they invest in around the world.
Pioneering ESG in private equity
As one of the first private equity practitioners to sign the UN Principles for Responsible Investing (UNPRI) we are convinced that sustainable investment practices help drive long-term value creation for our clients, employees, and society at large.
Reducing risk and increasing performance potential
We also believe that private equity is the best method of delivering ESG-influence changes to underlying companies and investments. Increasingly investors in private equity have come to recognize the importance of ESG too. They have come to recognize that actively managing sustainable investments can reduce risk and may increase performance potential.
ESG fully integrated into the investment process
Today, ESG analysis is integrated into all steps of Adveq’s investment process. Which means that we conduct ESG audits throughout our investment evaluation. Over the years we have rejected a number of investments purely for ESG reasons. Once investments have been made we monitor the underlying managers and companies with regard to ESG criteria.
In fact, ESG at Adveq has developed from being a compliance and risk management topic to being strategic value creation lever.
We encourage and embrace the efficient use of natural resources and continuously look for the best ecological solutions for Adveq’s operations. We believe that economic criteria in isolation do not provide sufficient guidance for environmentally conscious decision-making that balances the interests of individuals, communities, and future generations. As natural resources and the environment often lack an appropriate pricing structure due to their nature as common goods, we support market-based mechanisms that lead to the creation of a price for the use of natural resources and that promote their efficient and responsible allocation.
We treat all our employees and other stakeholders who affect and are affected by Adveq’s activities fairly and without prejudice to gender, race, ethnic or national origin, socioeconomic status, age, religion, sexual orientation, or disability. We also take the necessary actions to safeguard their health, safety, and general well-being. We seek to ensure that Adveq’s underlying fund managers and their portfolio companies comply with ethical standards with respect to social matters, interpreted in the context of the respective value systems of the societies in which they operate.
We ensure that our business practices comply fully with all applicable laws and regulations, and we incorporate best practice governance measures into our processes. We also strive to maintain Adveq’s reputation by exhibiting diligence, honesty, fairness, and openness in all of our business dealings. While embracing transparency, we recognize the need to respect commercial and personal confidentiality. We also seek to ensure that our target fund managers and their portfolio companies have appropriate frameworks and measures for corporate governance in place.