Donna Riley Bebb, head of ESG at Thoma Bravo, reflects on the past year and looks forward to 2023.
Looking back at 2022, what pivotal events, moments or developments in terms of sustainability in private markets stood out to you?
We’ve seen ESG evolve from a ‘nice to have’ to a ‘must have’. It’s at the forefront of discussions with LPs and portfolio companies, and GPs have responded by increasing their focus on ESG. Not only are firms seeking to further support their portfolio companies to pursue more sustainable business practices, but they are also taking an important, additional step to incorporate material ESG risks and opportunities analysis into potential investment evaluations. As regulations, customer preferences and supply chains continue to shift, we think GPs that develop innovative approaches to ESG will deliver outperformance.
Has the private funds industry made progress on climate in the last year? Where are the bright spots? Where has it disappointed?
One of the longstanding challenges the industry has faced is the lack of standardised and transparent ESG reporting. Data is essential to driving progress and LPs are looking for a common framework to track data across all the GPs they work with. At the same time, gathering meaningful and comprehensive data on ESG metrics continues to prove challenging despite substantial efforts across the industry.
This year, we reached a critical mass of private equity firms, including Thoma Bravo, becoming UN PRI signatories. There is great potential for the UN PRI’s reporting requirements to help solve this industry-wide problem through more standardisation.
Looking ahead to 2023, what is your firm’s next priority in terms of the climate? What would you like to have completed over the next 12 months?
I joined Thoma Bravo in July and am eager to build upon the work the firm has already done on integrating ESG into its investments. From a climate perspective, we’re focused on examining the risks across our portfolio and assessing how best to support our companies as they navigate these risks.
My priority for the year ahead is to create a more robust ESG framework and to deepen relationships with our portfolio companies to better serve as a resource and adviser on their ESG practices, especially as regulations around climate reporting continue to evolve in the US and around the rest of the world.
Aside from climate, which other areas of sustainability will be prominent on your agenda and why?
At Thoma Bravo, we’re focused on engaging with our portfolio company management teams to integrate ESG considerations through governance and transparency. In the new year, we are looking forward to continuing to refine and enhance metrics used to track and benchmark ESG-related progress across our portfolio and the firm to enhance sustainability goals and capabilities. Some of the areas we’re looking at with our portfolio include employee engagement and diversity, equity and inclusion efforts.
How are more emerging topics like nature/biodiversity occupying your time and resources?
ESG is always evolving, and as long-term investors, we need to stay ahead of new and emerging topics to help our portfolio companies see around corners. It’s one of the things I find most exciting about this job. For example, the topic of human rights has been garnering more attention in the software and technology space and we will be working with colleagues in the UN PRI private equity group to share information and develop potential solutions.