Sustainable companies allocated resources better during the crisis – PEWlive day two

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Being at the forefront of ESG today means fully integrating it into the investment process rather than viewing ESG as a ‘parallel process’, according to Elin Ljung, director of sustainability and communication at Nordic Capital, one of the most prominent private equity firms in the Nordic region.

Therefore, said Ljung, it’s important to have the right skills within your own organisation in order to sustain its ESG focus. She spoke at PEWlive’s Operational Impact panel, during day two of the event that continued today.  

From an LP perspective, Egle Sakalauskaite, vice president at Bregal Investments, said that consistency is important; to have overarching KPIs around factors such as climate and diversity.

“Some tailoring is also critical in order to get the buy-in from management teams. It’s not very useful to have only one set of KPIs, because each company is different and operates in a different environment,” added Sakalauskaite.

Kate Hodson, partner & head of ESG funds at law firm Ogier, mentioned that not everyone is currently at the stage where they view ESG as an essential factor in the investment process. “Regulation is catching up, however,” she said.

Moderator Alexandra Daly, founder & CEO of AA Advisors, who works with increasing the amount of funding to female entrepreneurs, raised the issue of diversity within the private equity industry. Sakalauskaite, whose firm sponsors the industry wide Level20 initiative for increased gender diversity, commented: “The troubling events in the US, and subsequent rise of the global racial equality movement highlighted that we should do more.”

“In light of the current events, we need to take more proactive steps. Going forward, we want to revise our stance on gender diversity by providing training both internally and externally around unconscious bias,” she said.

Ljung added that diversity inclusion can definitely be improved within the private equity industry. She said: "We also need to lead by example, private equity is behind many industries in this matter. We encourage recruiting more females, but also diversity in terms of age, nationality, and background. It’s part of the strategic agenda for every PE firm today. If not, it should be.”

How will the pandemic affect ESG? “It highlighted the S in ESG”, said Sakalauskaite. “There’s a risk that ESG will be put aside after the crisis. It’s up to governments now how to implement change faster,” she added.

Sustainable companies with a high ESG performance navigated the crisis better, in Ljung’s view. “This is super important when it comes to societal macroeconomic impact on businesses. Companies that had defined their purpose and role in society were much better in reallocating their resources.”

Hodson commented that since globally we were already on a trajectory towards increased ESG consideration, [the crisis] is more likely to serve as an accelerator now than it might have done a few years back.         

According to Paulina Pietkiewicz of CEE-focused private equity firm Abris Capital -speaking on an earlier panel- this has been a ‘crisis management year.’ The first panel of the day discussed exploring new synergies during the pandemic induced crisis.