We are delighted to once again be recognised as a top performer in the Orbis Advisory Private Equity ESG Transparency Index 2023. The report analyses firms’ ESG reporting performance, profiling top performers across multiple categories and sharing insights from firms on their ESG journey and the benefits of implementing practices.
The index, now in its third edition, assessed 161 PE firms listed in the BVCA directory across six categories: global buy-out funds; mid-market private equity; growth equity; alternative lenders; direct investors; and infrastructure funds.
This year, we are proud to have achieved fourth place overall out of 161 firms and third place in the mid-market category, a testament to our responsible investment practices and internal policies. Key things which the panel highlighted included our disclosure of quantitative ESG portfolio KPIs; our in-house reporting on environmental and social KPIs and annual progress against these; reporting on our decarbonisation plan through to 2050 with four distinct stages; collaborating with the BVCA on their ESG toolkit and engaging in many ways to show a commitment to education of PE firms earlier in their journey.
It’s also great for NorthEdge to be recognised amongst some of the key firms within the private equity sphere, which further demonstrates our culture, processes, and behaviours are consistent with those of much larger firms and managers.
Speaking on the release of the Index, Lucie Mills said: “We’re extremely proud to once again be recognised as one of the top performers in our industry. We are committed to continually improving our ESG performance, so the Index is a great platform for us to receive feedback and highlight areas where we can improve, as well as understanding the initiatives other firms in our industry have implemented successfully.
“We believe initiatives like the ESG Transparency Index help to promote a culture of collaboration amongst our peers and encourages collective responsibility for ESG across the private equity community – helping us to build better businesses, together.”
At NorthEdge, our mission is that every investment we make will have a positive impact. Having embraced ESG since our inception, it has evolved to become a key component of our investment process and portfolio management approach – as well as being core to how we run our business. We take our responsibilities as employers and investors seriously, because we want to be a great place to work for our people and because our job is to create sustainable value for all stakeholders.
During the production of the Index, Orbis Advisory conducted research assessing each firm against 83 questions over two components: Responsible Investment and In-house ESG.
Responsible Investment reviews the transparency of the company’s ESG engagement across the investment lifecycle and is defined as the strategy and practices used to incorporate ESG factors into investment decisions and active ownership. Focuses include:
- Pre-investment due diligence
- Post-investment engagement
- Exit plan
In-house ESG reviews the effectiveness with how investment firms integrate ESG in-house across five key criteria and the role ESG plays in the GP business operations. Focuses include:
- Reporting
- KPI setting
- Practicable initiatives
- Policies
- External certification/benchmarking
Since the last report, Orbis Advisory also updated some of the criteria used to include sections on future alignment to legislation, biodiversity, ESG data management and ESG performance measurement at exit.
Other more specific ESG KPIs were also tightened for this year’s Index including making adjustments on the general performance and environmental sections to become more focused and extending the scope to capture more information on the emerging trends within the ESG landscape.
Orbis Advisory also shared that ESG disclosure continued to improve with an average score increase of 6% in 2023, likely due to the release of ESG-focused regulations and frameworks and the rising importance of keeping businesses accountable for their commitments in light of the climate change crisis and COP28 in November 2023.
In summary, the Index highlighted four key trends moving forward: the increasing adoption of voluntary ESG frameworks; disclosing ESG KPIs in the portfolio and in-house; a rise in standardised ESG methodologies and software usage; and biodiversity shifting into clearer focus.
Rupert Clark-Lowes, Director of Orbis Advisory, said: “We all at Orbis Advisory are delighted to release the 3rd edition of our ESG Transparency Index. I believe the importance of this report is especially critical this year as, having worked in the industry my whole career, I have never seen so many moving parts in the ESG voluntary and compliance spare.
“For me however, the real joy of delivering this report is the strong reminder of how far the industry has come: the passion, perseverance and progress seen among the top performers is always an inspiration to see, and NorthEdge are a firm which truly understand ESG’s value and importance, propelling their PortCo’s forward with true innovation. Furthermore, it is fantastic to hear that the index has fed into NorthEdge’s ESG strategy, with the firm proactively listening to and responding to the specific feedback we offer to all those included in the ranking. Private equity might be seen as a late adopter of ESG when compared to its listed counterparts, but the top performers drive towards a net zero and socially conscious world has never been clearer.”
Reflecting on the last 12 months at NorthEdge, we have embedded a number of initiatives to the portfolio; focused on reporting (both publicly and Board reporting); calculated our carbon emissions; continued to build cyber resilience; and ensured our companies remain great places to work.
Internally, we released our Net Zero plan; formalised our charity committee; updated our website to include more portfolio case studies; published our updated remuneration policy, which now includes ESG progression as part of our annual performance reviews; and issued our first Principle Adverse Impact (PAI) report – despite not yet having a fund in scope of the Sustainable Finance Disclosure Regulation (SFDR) regulation. We have also won a number of awards over the last 12 months, which we’re incredibly proud of.
View our latest ESG Report to learn more about our approach to ESG and our commitments so far.
For further information and to read the full ESG Transparency Index, please visit www.orbisadvisory.com.