Monika Nachyla, Abris

Abris Capital Partners, which focuses on Central and Eastern Europe, has begun quantifying the impact of its ESG initiatives on the financial performance of its portfolio companies.

The private equity firm has developed a methodology for calculating ESG-enabled EBITDA, according to its latest ESG report. The report states: “ESG-enabled EBITDA assesses the impact of a company’s ESG initiatives on its financial results. This might include quantifying the positive impacts of sustainability efforts, analysing cost savings from energy-efficient operations, evaluating the financial benefits of improved employee satisfaction or retention due to social programmes, or assessing the impact of strong governance on risk management and profitability.”

To conduct the analysis, Abris identified three ways in which ESG and financial value interrelate, partner Monika Nachyla told New Private Markets. These are:

  • ESG projects that can increase revenues: “Since we are building the value of portfolio companies through ESG transformation as well, we are always making sure that the management teams are looking for opportunities in their specific businesses which are riding on the waves of sustainability”, Nachyla said. She pointed to a packaging company within the portfolio that has developed more sustainable, recyclable products as an example
  • Projects that impact EBITDA: Nachyla said that the firm was monitoring the financial impact of its DE&I initiatives. She said: “Once we implemented those programmes in our companies, we calculated the impact of decreasing employee attrition and the lower hiring costs on their EBITDA”
  • ESG-related costs: this includes things such as the cost of hiring new staff to implement ESG initiatives

Abris has so far piloted the initiative in a few select portfolio companies. One of them is shipping services company Alsendo Group. The analysis found that ESG initiatives supported approximately 23 percent of the company’s 2022 EBITDA, according to the report. It will still take “two to three” more years to fully implement the process across the portfolio, Nachyla said.