Vista Equity Partners’ portfolio company chief executives are often resistant to the investment firm’s carbon reduction measures, said Kirk Hourdajian, head of ESG and impact at Vista.
Vista encourages portfolio companies to reduce their carbon footprints through measures such as “data centre efficiency, figuring out renewable energy sourcing and working with supply chains”, Hourdajian told delegates at PEI Media’s Responsible Investment Forum: Europe in London this week. Hourdajian described these as “defensive mechanisms” to reduce Vista’s risk exposure.
“Some of our CEOs say, ‘We’re a software company. We’re not pollution or water or major assets or manufacturing [sic]. Why is this relevant?’
“And I say, ‘Well it’s going to be regulated. It’s going to be part of the IPO process,’” said Hourdajian. “We want CEOs to prepare for the eventuality of becoming a public company, even if they aren’t [planning to go public]. Public companies are getting ready for the eventuality of carbon counting and reporting.”
The Texas-based firm focuses on software and technology, with $81 billion in assets under management and more than 70 portfolio companies, most of which are based in the US. It released its first ESG and DEI report this week.
“In terms of energy usage and emissions, ICT is one of the fastest growing industries out there – and it is growing fast. So it has to be a significant focus. That’s more on defence. On the offence side, it’s about how you help portfolio companies drive revenue while solving environmental and social problems. Software is a very good place to be,” said Hourdajian.
On diversity, Hourdajian said: “Software is not a very diverse industry. It has a lot of improvements to be made, so diversity is a very big focus for Vista. Our goal is to ensure board diversity. And I’m proud to say 65 percent of our boards include female representation and over 80 percent include minority representation.”
When asked by a delegate if diversity was more important for Vista than the climate, Hourdajian said: “It has an equal footing with climate for us. Diversity is certainly getting a significant focus right now. But climate – there’s so much to be done.”
ESG in deal due diligence
Vista sends portfolio companies an ESG and DE&I assessment with 30 to 40 questions during their onboarding process, then annually. The firm starts collecting ESG data from portfolio companies during due diligence.
“But diligence is very fast. You have to get a lot of work done in a short time period, so if there’s any gap, we can make up for that during the ownership period,” said Hourdajian.