28 November, 2018

ESG Fund Investments

 

 

  • AP6 uses its own template for sustainability assessment and monitoring of PE funds.
  • The assessment is carried out each year on most of the fund managers in AP6’s fund portfolio.
  • Structured interviews are held to collect information. They are based on the PRI Limited Partners Responsible Investment Due Diligence Questionnaire, which are sustainability aspects compiled by investors
  • AP6 uses its own ESG scorecard for the assessment
  • Structured feedback is then given to the fund managers who have been assessed
  • The average for the AP6 portfolio is estimated to be higher than the average for a global private equity portfolio. There are primarily two reasons for this. The first has to do with the fact that AP6’s portfolio primarily consists of funds managed by large Nordic and European investment teams. AP6 has concluded that they have more highly developed efforts in making responsible investments compared to other funds in the global market. The other reason is that AP6 has successfully integrated ESG assessment into the fund selection process. In addition to the requirement of long-term high returns, there must also be established ESG efforts and/or a high level of ambition for doing so.

ESG stands for Environmental, Social and Governance factors.

 

 

(Click on the image to enlarge it)

 

  • How does the private equity firm review sustainability-related risks and opportunities prior to acquisition? What processes and resources are used? How is the investment decision impacted by sustainability factors?
  • How does the private equity firm manage the portfolio companies’ sustainability-related risks and opportunities for value creation during the holding period? This is done, for example, through corporate governance and specific support on sustainability.
  • How does the private equity firm report sustainability and responsible investments? Through, for example, public reporting and regular reporting to investors.

 Read the AP6 Sustainability Report.