You joined PAI in 2017 from the corporate sector. What attracted you to the private equity industry?
After extensive corporate experience in different geographies and sectors, and in different elements of sustainability, I came to the conclusion that what really makes an impact with companies is when senior management can be encouraged to shift gears, and adopt a sustainability-minded strategy. Given that the financial sector in general, and private equity in particular, holds the purse strings, it’s uniquely placed to do that.
What are your main responsibilities at PAI?
My overarching responsibility is to ensure that ESG becomes more deeply embedded in every stage of the investment life cycle. Specifically, that involves keeping our investors’ preferences and restrictions top of mind during the investment screening process, and carrying out ESG due diligence before acquisition, to identify the most material ESG issues, ensure there are no ESG ‘red flags’, as well as identify any ESG opportunities that could provide strong upside.
Assuming investment goes ahead, that process allows us to hit the ground running with the creation of the 100-day ESG plan alongside an in-depth ESG audit. My role with the portfolio companies is to work with them to make sure that ESG becomes a transformation lever that helps us create value.
My role is to be the main point of contact between our investors, our deal teams and our portfolio companies on ESG issues, to give them comfort that we are forward-thinkers on key sustainability topics.
What are your priorities as ESG Manager?
PAI is standing at a crossroads. It’s a well-established, traditional private equity firm, but we’ve learned a lot from our latest fundraising in terms of the ambitions of our investors in regards to sustainability.
We need to demonstrate in the coming years that we can meet their expectations to be a leader on ESG and deliver value from sustainability, and that we and our portfolio companies have strategies in place to tackle the many sustainability challenges that we face.
What have been the greatest challenges you’ve faced in transitioning into the new role?
Coming from the corporate sector, I’m used to being very hands-on – assessing the safety of a factory floor in Bangladesh, for example. I’ve had to recalibrate the right level to implement sustainability practices within private equity. As an ESG manager, I’m one stage removed from the portfolio companies: the deal teams know their portfolio companies better than I do, and the country teams know the local market and regulatory conditions better, yet I am there to bring them the expertise they don’t have on sustainability matters. It’s a question of understanding how to work together to combine financial and extra-financial value creation drivers.
Private equity firms typically assume that they have the answers for their investee companies: what can the private equity sector learn from the corporate world?
I think it’s fair to say that the private equity sector has been a late adopter when it comes to sustainability and CSR.
But one of the advantages of coming later is that you can learn from the mistakes of those who have gone before, and leapfrog – skipping the fax machine and going straight to the mobile phone!
Particularly, the private equity sector can avoid lots of battles that were down to ego. The first ethical sourcing code of conduct was published in 1991 but, for the next 20 years, every company wanted its own. It led to enormous confusion.
The private equity sector can also learn that it’s all down to governance. If firms don’t have buy-in from top management, everyone trying to improve sustainability outcomes will be swimming against the tide.