WHY RESPONSIBLE INVESTING IS IMPORTANT TO US
For HgCapital, responsible investing means growing sustainable businesses which create jobs, have low environmental impacts and are good corporate citizens, whilst generating superior risk adjusted returns for the millions of pensioners and savers who are invested with our clients.
Through our investments we look to create quality jobs in sectors with low carbon emissions and to create value through revenue growth over the long-term. We want the businesses we invest in to be genuinely focused on doing well for all stakeholders (employees, customers, suppliers and other partners as well as shareholders). We firmly believe that businesses that behave this way generate superior long term performance.
|Organic growth in employment across HgCapital’s portfolio companies in 2015.||People employed by HgCapital-backed companies (as at December 2015).||Jobs created in HgCapital-backed companies in 2015.||Number of underlying pensioners benefitting from HgCapital's investments.|
We have created an award-winning Framework for looking at the ways the businesses we invest in can be more responsible and how we can help them. We also use this framework to assess businesses both before and during our ownership. To support this approach we have developed a suite of KPIs and monitoring systems across our portfolio.
HgCapital’s investment philosophy is based on creating value driven by sustainable growth. We believe that this approach will allow HgCapital to deliver superior returns for our clients by investing in the provision of services and resources from which entire communities can benefit.
To support this philosophy and our approach to responsible investment, HgCapital considers five RI focus areas in making investment decisions and evaluating portfolio companies, namely: Environment, Workplace, Marketplace, Governance, and Community.
To HgCapital, responsible investment (‘RI’) is about investing in opportunities that seek to generate both financial value and sustainable growth. We believe that businesses which actively engage with the social responsibility agenda achieve higher performance than their peers, which do not do so and this enhances returns for our investors. Our RI approach supports the backbone of our investment philosophy which is to invest in growth companies and sectors, rather than turnaround or distressed investing: we aim to make excellent investment returns for our clients by growing high-quality, socially responsible businesses, which create lasting, value-adding jobs in Western Europe and elsewhere. Furthermore, one of our investment teams is dedicated to investing in renewable energy projects through a dedicated fund.
We believe that businesses must preserve the trust of stakeholders in order to create long-term value for investors. As part of our RI approach, we take an active interest in how companies in our portfolio manage environmental, social, and governance (‘ESG’) issues and, on behalf of our clients, encourage and support companies to adhere to standards of best practice for responsible business.
HgCapital is a signatory to the United Nations Principles for Responsible Investment Initiative (‘PRI’).
As part of this commitment to RI, HgCapital strives for continuous improvement in the ESG impacts of our own operations by:
- Minimising the negative impacts of our activities on the environment by actively managing our direct footprint – in particular by reducing our greenhouse gas emissions, for which we are in the process of obtaining Certified Emissions Measurement and Reduction Scheme (‘CEMARS’) certification;
- Being a responsible employer, by creating an equal opportunities culture in which we develop a diverse pool of high calibre employees and staff, and having a commitment to talent management and development to give everyone at HgCapital the opportunity to perform to the best of their ability; and
- Upholding the highest standards of business conduct.
When considering potential new investments, HgCapital will:
- Screen them against the following Exclusion List, which identifies the sectors, businesses and activities in which HgCapital will not invest. HgCapital will not invest in a company which:
- has production or other activities that involve harmful or exploitative forms of forced labour or child labour;
- produces any illegal products or engages in any illegal activities under applicable local laws;
- manufactures, distributes or sells arms or ammunitions primarily designed or primarily designated for military purposes;
- manufactures or sells pornography;
- is involved with products and activities that are banned under global conventions and agreements, such as certain pesticides, chemicals, wastes, ozone depleting substances and endangered or protected wildlife or wildlife products;
- is involved in the supply or purchase of sanctioned products or goods to or from countries or regions covered by United Nations sanctions;
- is, in the opinion of HgCapital’s Investment Committee, exploitative of vulnerable groups in society.
- Assess them from an RI perspective to identify material ESG risks and opportunities, and potential consequent actions, prior to any commitment of capital.
- Over the period of our investment, HgCapital will monitor investee companies’ performance in relation to the management of ESG issues. Since 2012, we have asked all our portfolio companies to report annually against a set of ESG Key Performance Indicators. We also support investee companies in improving the management of ESG issues on a continuous basis to reflect evolving international and industry best practice. For example, all HgCapital portfolio companies are required to commit to the highest standards of business conduct through implementing a Code of Conduct applicable to all employees. We also actively encourage all our portfolio companies to manage and reduce their greenhouse gas emissions by obtaining CEMARS certification.