Adinah Shackleton, head of ESG at Permira, describes her firm’s sustainability priorities for 2024.
Where have you reached on your portfolio decarbonisation/climate journey? What is next on the to-do list?
At Permira we’re a global investment firm that backs leading, scaling business and we’ve committed to a science-based target and are currently undergoing the SBTi validation process. We’re hoping our target will be validated by early 2024. In any case, we’re already operationalising the target, as our baseline year is 2022.
As well as SBTi’s we’re also developing our approach to valuing carbon, inspired by guidance launched by the Sustainable Markets Initiative’s Private Equity Taskforce. As part of this, we’ve piloted applying a carbon price to the existing private equity portfolio and a selection of new investments. This has helped us to take a view on the extent to which portfolio companies could be affected by potential regulated carbon pricing in the future, and allows us to identify the key opportunities to reduce this risk. We’re excited about taking this further in 2024.
ESG data: Do you think the industry has now reached a good place in terms of data frameworks?
There has been a huge amount of progress on ESG data over the last few years, with initiatives such as the ESG Data Convergence Initiative, a partnership of private equity stakeholders committed to streamlining the industry’s historically fragmented approach to collecting and reporting ESG data. Initiatives such as these are driving for more convergence on portfolio company to GP to LP data requests. While this doesn’t negate the need for material metrics, it is helping to address the issue of proliferation of data requests in varying formats.
In terms of whether the industry is in a good place, the space is still fast-evolving. Companies are starting to tackle the KPI and disclosure requirements of the EU Corporate Sustainability Reporting Directive which entered into force in January 2023, which significantly raises the bar for companies, particularly for those that are less mature when it comes to ESG metrics and external reporting.
What is the next step in your ESG journey for human rights and supply chain risk?
We are currently working with external consultants on a review of our responsible investment policy and framework, to identify opportunities to strengthen the commitments of and guidance for investment teams and portfolio companies around human rights. Whilst we have already included human rights and supply chain risks in our approach for many years, using a materiality lens, we recognised there was an opportunity to revisit this given the evolving expectations within this space.
What is the next step in your ESG journey when it comes to nature?
We are at an early stage in terms of taking a fund or portfolio-level approach to biodiversity risks. Whilst we have examples of integrating biodiversity in pre-investment due diligence and post-investment engagement, where there were potential material risks, we haven’t undertaken a portfolio-wide assessment in the same way we have for climate risks. We’re currently working with an external academic to build out our approach, drawing from some of the great guidance published by the Sustainable Markets Initiative’s Private Equity Taskforce.
What is the first item on your DE&I to-do list in 2024?
On DE&I we have been encouraging portfolio companies to work with specialist consultants to undertake DE&I assessments. This entails companies completing an online DE&I assessment and receiving guidance on the steps they could take to improve their practices. Portfolio companies opt in to complete the assessment in cohorts and sharing knowledge and experiences with one another and with us along the way. As we move into 2024, we will continue to work with companies on this important topic.