We’ll start with an update from the US’s largest public pension plan. The California Public Employees’ Retirement System has made good on a five-year plan to ensure all its private equity managers have ESG policies in place, according to an investment committee presentation on Monday. “Financial markets are beginning to bring their full force to bear” on issues of sustainability, Anne Simpson, senior investment officer for board governance and sustainability, told New Private Markets’ Jordan Stutts.
More impact hints from EQT
Listed private markets firm EQT has described adding a “longer-hold impact at scale strategy to its palette of investment strategies” with the announcement last week of its re-investment in pest control business Anticimex. The business was formerly owned by EQT VI and has been acquired by EQT alongside a group of co-investors. It is the firm’s first “long hold” private equity deal.
In late May, partner and head of Nordics for EQT Anders Misund told delegates to the Impact Investor Forum that the firm had decided against having “a small impact strategy on the side”, opting instead to “do it a bit differently”.
Questions remain about how the firm is realising its stated aim of having “impact at the core” of this and other long-term investments. Certainly a case can be made for this asset to be a potential force for positive impact: it will – says EQT – drive change towards pesticide-free pest control. As to whether there is more to this strategy than selecting the right assets, EQT is declining to comment at this stage.
StepStone on impact
StepStone has launched a “bespoke taxonomy” classifying impact investments by the UN’s Sustainable Development Goals. The taxonomy has five categories derived from the SDGs: energy transition, natural capital, empowerment, health and sustainable communities.
StepStone’s clients have developed more specific impact goals over the past year, Suzanne Tavill, global head of responsible investment at the firm, tells New Private Markets. “This taxonomy is… a tool for us to translate those objectives into an investment programme for our clients,” says Tavill. “You can’t just say ‘healthcare’. You’ve got to think about what type of healthcare, who’s accessing that healthcare, whether it’s accessible.”
StepStone sources co-investment and LP investment opportunities for institutional investors. It works with clients individually to establish their non-financial goals and creates “bespoke programmes” says Tavill.
The firm will announce the taxonomy later today as part of a research paper on how impact investment opportunities and frameworks have evolved. “Our impact clients have been most interested in energy transition, sustainable agriculture and food, and D&I,” StepStone writes in the report. The paper doesn’t spell out how StepStone evaluates and classifies investment opportunities: “Although in the paper it looks quite high-level, behind that, there’s a whole level of detail,” says Tavill.
By the numbers:
Most investors in Europe and Asia believe LP remuneration should be tied in some way to the attainment of ESG goals, according to an LP survey by secondaries firm Coller Capital. Coller’s latest Global Private Equity Barometer found that this was not an opinion shared equally in North America, where only 32 percent of respondents agreed. The survey also found that across the globe 47 percent of LPs believe that adopting a robust ESG policy will lead to improved long-term private equity returns (10 percent believed it would have the opposite effect).
Berkeley Energy’s second Africa renewables fund has reached first close at €130 million from European DFIs and the African Development Bank. Berkeley is ready to start investing while it raises institutional capital over the next year to reach the fund’s €300 million target. It’s a 10-year fund with targeted returns in the mid-teens. Snehal Shah has the details.
Impact investment firm Vital Capital has approved two new loans from its Vital Impact Relief Facility (VIRF), which was launched last year to help fundamentally sound African businesses navigate short-term challenges. The two loans were made to Sollatek, a manufacturer of solar and voltage control products, and Privamnuts, a macadamia nut processor and exporter in Kenya.