Financial solutions provider Apex Group has announced a new ratings and scoring portal as part of its ESG offering. The portal helps the group provide customized ESG analysis across firms’ entire portfolios and compare their various metrics to global benchmarks.
Apex began its foray into providing ESG solutions to PE clients in 2019, but has made transmitting such data from GPs to portfolio companies easier and faster with this online portal, said Andy Pitts-Tucker, managing director of Apex ESG Ratings and Advisory. The former head of institutional commodity sales at Deutsche Bank, Pitts-Tucker was hired to oversee the product.
Sister publication Private Funds CFO recently reported that ratings agencies are beginning to dip into private markets, and that the lack of information on private companies in the public domain requires a heightened level of disclosure and trust from participants.
Apex’s new portal also relies on GPs’ participation. It is sent to GPs, who are then tasked with administering it to their portfolio companies. Each company answers various questions and populates the required criteria.
The group also requires portfolio companies to provide proof of any ESG claims via internal policy documents or excel spreadsheets, according to Pitts-Tucker. Apex then verifies the answers against the information companies have uploaded into the portal.
“The private company will log in through a web-based login and will be presented with a series of questions. They then answer those questions, and the more they can answer, the more dependent questions then pop up,” said Pitts-Tucker. “We do this to encourage everybody at whatever level [in their ESG progression] to answer what they can.”
The group then works directly with organizations and portfolio and management companies to help grow their ESG matrix at whatever level they may be at.
The resulting report is aimed at making companies and their PE investors make better decisions, Pitts-Tucker said. “We’re not deciding if they’re good or bad. We’re just collecting the data, helping to analyze that data and presenting it in a usable format so that the investor and investee company can make positive and proactive decisions to help make that company a better organization.”
Apex also provides ratings and advocacy to private companies that wish to have their own ESG reports, in order to remain competitive for example, or to prepare for an IPO.
The ratings themselves, which are measured on a scale of one to 100, are decided upon based on the benchmarks set by major global organizations like the Sustainability Accounting Standards Board, the Financial Sustainability Board’s Task Force on Climate-related Financial Disclosures, the UN Global Compact, the Global Reporting Initiative, and others. It represents where each company sits against those global standards.
“Every single one of the questions we ask of a portfolio company is directly mapped to a data point of one of these global standards,” Pitts-Tucker said.