Sustainability

ESG is in our DNA

As our planet and society faces unprecedented challenges, we see private equity as a force for good.

Doing the right thing has always been part of our makeup. Some call it ESG. We call it our DNA.

This means doing more than simply being good corporate citizens. We are focused on driving positive outcomes across our portfolio, to scale businesses sustainably so that they have a positive impact on society, the environment and the economy alike.

Our role as a sustainable investor allows us to use our expertise and network to inspire, guide and educate mid-market management teams to make ESG improvements which drive financial performance and deliver strong returns.

We’ve been doing it for over a decade and have never looked back.

 

Why it matters

Doing the right thing and acting sustainably is no longer a nice-to-have. We are in the decisive decade for tackling climate change, making sustainability an existential concern for every business. Consumer and societal expectations around business ethics have also never been higher.

As the regulatory environment strengthens, our focus has always been on thinking beyond compliance, pushing boundaries and improving outcomes – not just because it’s the right thing to do, but because it’s a financial imperative.

There is a clear correlation between companies with a high ESG rating and strong financial performance. Our own experience over the last decade has shown us first-hand that improved ESG outcomes contribute to sales growth, talent retention, brand value and strong returns.

Sitting still is not an option if you want to build a profitable business today, with a lasting legacy for tomorrow.

How we do it

We have led the way in the UK mid-market private equity industry, pioneering an award-winning ESG framework and successfully integrating our ESG programme across our portfolio for over a decade. ESG is embedded throughout Palatine with all our teams contributing to making it a key focus in what we do and stand for as a business.

Over that time, our approach to sustainability in applying our ESG lens has evolved from risk mitigation to value enhancement, and it is now embedded in every strategic growth plan across our portfolio.

By implementing, monitoring and evaluating ESG initiatives forensically across a diverse range of businesses and industries, we have armed ourselves with a genuine depth of knowledge and a tried-and-tested approach.

An award-winning ESG Framework

Our comprehensive pre-deal to exit framework enables material ESG matters to be identified and proactively managed by our investment and value enhancement teams and means that we start identifying opportunities to improve performance right from the due diligence stage.

At the outset of an investment, each company undergoes a baseline review against our ‘Six Pillar’ ESG strategy, which includes everything from climate impact to diversity and inclusion and employee wellbeing.

From here, we set outcome objectives and bespoke key performance indicators (KPIs), so that we can monitor success and recalibrate when we need to.

Continuous improvement

Our in-house sustainability, investment and value-enhancement teams support management teams on their proactive ESG journey. Working collaboratively, we ensure continual improvement throughout the lifetime of our investment and help create value to produce resilient, sustainable companies that generate the best returns for our investors.

In addition to our own team, we draw on our network of sustainability experts to ensure that we innovate and evolve our approach, and tackle challenges as they arise.

Robust evaluation

The depth and transparency of our monitoring and reporting are unique for a private equity firm of our size.

By annually monitoring improvements from the baseline assessment to exit, we are able to evidence and communicate successful outcomes and tackle underperformance. We regularly review our strategy to ensure that the most pressing and relevant environmental and social challenges are being addressed in our ESG programme.

In addition to bespoke KPIs for each portfolio business, we also map performance against the UN Sustainable Development Goals (SDGs) to help us achieve the greatest positive outcomes across the portfolio.

Outcomes

Good intentions are one thing, but our approach to sustainability is grounded in a commitment to transparency regarding how we evidence the outcome we generate to our investors, stakeholders and portfolio companies.

Recent successes include:

  • 2.7 tCO2e/person (down 3.6 tCO2e/person compared to 2019 data)
  • 83% of our portfolio have taken steps to reduce travel emissions
  • Resource efficiency initiatives across six companies in our portfolio have generated £1.9m in savings
  • 83% of our portfolio companies have employee absence rates that are below the national average
  • 87% of companies have one woman or more on the Board of Operations
  • People in our portfolio spent 2,297 hours supporting community initiatives in 2020

Impact Investing

Building on our award winning ESG strategy we raised a returns focused impact fund in 2017. Through this fund we invest in companies with the intention to create social or environmental change and, importantly, measure and report the change they are creating.

Learn more about the Impact Fund

Meet Steph, who leads our Sustainability team

We’re absolutely facing a humanitarian and environmental crisis on planet earth, whether that’s through climate change, environmental degradation, and biodiversity loss, broadening inequalities. The timeframe in which we can act is shortening. I think now more than ever, businesses need to step up to the sustainability table and take action. We need to act fast, and we need to act with responsibility.

It’s never seen as the sustainability team’s role to deliver sustainable outcomes. The investment team and value enhancement team are very knowledgeable in this area. As Board directors, they will encourage and inform management teams to ensure sustainability is high on the agenda, monitored and that it’s embedded within the strategic growth plan from the outset. Ultimately, as a team we work collaboratively to help ensure a long-term positive outcome.

 

Steph Wall

Sustainability Director – Palatine

OUR OWN ESG MANAGEMENT