Responsible Investment Policy
CGE Partners is a private equity fund investing in and partnering with high growth, mid-market businesses across Europe. We have a thematic and sector-based approach. Our sector-focused investment strategy is driven by the long-term growth potential of key non-cyclical mega trends in which we invest including resource efficiency, compliance and transparency, life sciences advancement, and productisation of intelligence. Through our investments in these mega trends and how we operate as a firm, we seek to be a force for good and a force for change, and to generate positive societal value. We believe that central to this is incorporating the consideration of material Environmental, Social and Governance (ESG) factors throughout the investment cycle which creates value for all stakeholders and is also key to fulfilling our fiduciary duty to our clients.
The businesses we partner with are providing mission critical solutions to global problems and increasingly these will contribute to societal and environmental benefits, by for instance facilitating investment into renewable energy and supporting the decarbonisation of the economy, and minimising environmental, health and safety hazards. We are committed to investing responsibly and ESG and ethical considerations are integral to our investment decisions, the way we manage our portfolio companies, and how we operate as a firm. To demonstrate this, CGE has made a number of commitments.
- We are a signatory to the UN Principles for Responsible Investment (UNPRI) and commit to its six Principles.
- As members of the Initiative Climat International (iCI), we commit to effectively analyse, manage and mitigate climate-related financial risk and emissions in our portfolio, in line with the recommendations of the FSB’s Task Force for Climate-related Financial Disclosures (TCFD). In this way, we seek to play our role in supporting the transition to a net-zero emissions economy and the goals set out in the 2015 Paris Agreement on climate change.
- We commit to contributing towards the realisation of the Sustainable Development Goals through our investments and have aligned our Key Performance Indicators with these global targets to track our progress in our portfolio activities.
At the firm level, we are proud to be a Certified B Corp, highlighting our commitment to meeting exceptional standards of corporate governance, transparency, accountability, and social and environmental responsibility. To ensure we are being mindful of our environmental footprint, we undertake an annual assessment of our environmental impact and amongst other activities have since achieved carbon neutrality. We have also worked hard on our diversity agenda and invested in the health and wellbeing of our colleagues. Our people are the driving force of our business, and we want to foster a happy, healthy, and diverse workforce both within our firm and in our portfolio companies. It is important to us that the standards and vision we set at the firm level translate to the portfolio level as well.
We have developed an ESG Framework which considers the material issues for the businesses we invest in. We incorporate these ESG factors at every stage of our investment cycle – to ensure ESG matters are considered from screening to exit:
Our investment strategy seeks out opportunities in areas where solutions are needed to address global problems across the sectors we have identified. Pre-investment we screen all potential investments to ensure we only invest in companies that are in line with our core values and investment mandate. We will not invest in companies including (but not limited to) those which are linked to:
- An illegal economic activity (meaning any activity which is illegal under the laws or regulations applicable to CGE)
- The production and trade of tobacco products
- The production of any weapons and ammunition
- The production or distribution of pornography
- Illegal access to electronic data networks and associated data
- Businesses solely acting as operating companies in primary industries (extraction, agriculture, oil & gas, timber)
- Highly regulated financial services, such as banks
- Technology businesses facing binary adoption/approval outcomes
- Any other activities which (in our opinion) conflict with our core values or which we feel is exploitative of vulnerable customers, communities, or habitats
If a company passes our pre-investment screening, it goes through our due diligence process to carefully assess the material ESG risks and opportunities for the specific company and whether it meets our minimum requirements to demonstrate good corporate citizenship. The findings from the due diligence are reported in our investment committee papers.
ESG factors identified at this stage are considered as integral to our investment decision-making process. This step in the investment cycle also provides us with the baseline information that we need to go on to successfully manage ESG issues amongst our portfolio companies.
Active ownership and stewardship
CGE Partners believes that for businesses to thrive and grow, they need to have responsible sustainability practices embedded throughout their operations. Based on pre-investment findings, we work with all portfolio companies to establish ESG KPIs and a roadmap for improvement to support them in the development of their sustainability practices – no matter where they are in their sustainability journey. We put ESG on the board agenda for our portfolio companies, to ensure identified material ESG factors are monitored and managed appropriately. As a B Corp we have seen the benefit that a focus on sustainability issues can bring to a growing organisation.
Through active ownership and engagement with management teams, we can ensure that roadmaps are being successfully implemented and followed, and we encourage the sharing of best practice throughout the portfolio to help drive improvements.
Disclosure and reporting
We require our portfolio companies to provide us with regular and suitable ESG disclosure to enable us to monitor and actively manage the material ESG factors identified for each company. We report quarterly to our investors on the ESG performance of the portfolio through a dedicated section in our investor reports.
Governance and implementation
It is the responsibility of every member of the investment team to ensure that ESG considerations are integrated at each stage of the investment cycle. ESG training needs for team members are reviewed bi-annually and appropriate training is provided on an at least annual basis to ensure that colleagues have the knowledge and tools they need to comply with this policy. Annual performance reviews and appraisals will include a review of identified ESG objectives for each member of the investment team, and this will help to inform remuneration decisions. Additionally, our Code of Ethics sets out the standards of conduct expected of our staff and details policies and procedures for addressing certain potential conflicts of interest, including those that arise in conflict with this policy.
Nick Heslop, Managing Partner, has primary responsibility for overseeing the implementation of, and compliance with, this policy. This policy has been approved by CGE Partners LLP’s Board on 3 December 2021 and will be reviewed annually.