Ahead of the Private Equity Wire European ESG Summit, Marta Jankovic, Head of Sustainability at Stafford Capital Partners, talks to us about her vision of sustainability within the firm and the broader industry, trends to look out for this year and why GP outreach is key to net zero alignment.
Private Equity Wire (PEW): Tell us about your background and how you got into sustainable investing.
MJ: I’ve been in the world of sustainable investing for well over a decade, having started this part of my career at a large institutional LP, where I was responsible for ESG integration in alternative assets. I had the opportunity to translate LP expectations to GPs and observe the leaps that Private Equity made in a short period of time.
I’ve also had the benefit of working with a large commercial asset manager – on the listed side – that taught me about the value of ESG data: not just in terms of collecting and analysing it, but also being able to leverage data for product development and stewardship activities. I joined Stafford Capital Partners last August as Head of Sustainability.
PEW: What were your primary objectives when you joined Stafford?
MJ: What I really liked about Stafford — even before joining — was the strong focus on sustainability and net zero leadership. Stafford is committed to delivering on its responsibility as a genuine long-term steward of capital, and there is a real sense of partnership to meet the needs of likeminded clients. The firm sits between the LP and GP concept, being a fund of funds model. This means you can engage with the GPs in your portfolio as well as have dialogue with the ultimate asset owners to create meaningful change and offer clients additional benefits to their investments.
We service the institutional end of the market so most of our clients are pension funds. Such LPs are often universal owners: they must maintain a long-term perspective. We want to align with that long-term perspective, listen to our clients and help them achieve their sustainability goals, especially on climate in the pursuit of net zero.
PEW: You’ve been with Stafford for six months. Talk us through the ups and downs on that journey so far.
MJ: In the first 100 days of my new role, there was already a huge focus on net zero and our own climate targets: when I joined last August, we were about to submit our PRI report as well as produce the TCFD report and our own sustainability report, all around the same time. That focuses your mind on where the firm stands and also what best practices are at the moment. You’re also reviewing what the firm was publishing or disclosing in the past, how far it has progressed and where it still needs to go. Actually, a great time to start in a new role!
One of the biggest challenges in the evolution of sustainable investing in private markets is the availability and accuracy of ESG data. We monitor progress on an annual basis and are keen to get data that is as accurate as possible, so we can understand how our portfolio evolves over time. With carbon emissions , investors still often rely on estimates. . There’s nothing wrong with using estimates if portfolio level data is not available, but it is of course second-best, so there is currently a big push to acquire portfolio level data and initiatives like the EDCI, the Invest Europe reporting template and regulatory requirements are changing this landscape fast. Stafford signed up to the EDCI at the beginning of 2024 and I expect this will also help us with our data collection and reporting efforts. We need more LPs to come together around industry templates.
PEW: Looking forward, what trends are you expecting to see in the ESG and sustainable investing space in 2024?
MJ: With regards to action on climate, we’re likely to see LPs increasing pressure on investment managers to showcase how they are integrating climate considerations into diligence, monitoring and risk management of portfolios, but also more nuanced engagement with GPs and portfolio companies on setting targets and creating decarbonisation roadmaps, while not forgetting about best practice across all relevant ESG issues, including topics like biodiversity
Portfolio decarbonisation is going to be even more important in 2024, given last year’s issuance of two key pieces of guidance relevant to the private equity industry: the IIGCC’s Net Zero Investment Framework Component for the Private Equity industry and the Private Markets Decarbonisation Roadmap, the latter of which came out of a collaboration between the Initiative Climat International (iCI), the private equity task force of the Sustainable Markets Initiative (PESMIT) and Bain & Company. Stafford is a member of both the IIGCC and iCI, so we are naturally looking at integrating these frameworks into our investment and GP engagement practices.
PEW: With these trends in mind, what is Stafford planning to do this year to adapt?
MJ: We will be taking a close look at our net zero targets and transition plan to ensure that we are aligned with the newest guidance and to see what we can do better. I feel that our leadership is truly aligned on the importance of tackling climate challenges. We will also maintain and improve how we integrate ESG issues in the investment process. More broadly, we will stay abreast of the emerging topics and expectations from our clients.
PEW: Next month, you’ll be joining our Private Equity Wire European ESG Summit to speak about opportunities in decarbonisation. Could you give us a sense of the themes you’ll be discussing?
MJ: Both PGGM Investments and Stafford have GPs in our portfolios that we would like to engage with in moving towards better alignment on decarbonisation and target setting. We’d want to kickstart the conversation by asking: what challenges do GPs face on the road towards net zero? How can we concretely support the transition? How can we model the path ahead?
Taking the right approach to GP outreach is another important point to tackle. There are certain parts of the world where this is easier to work on than in others. This can in turn influence the type of engagement pursued. An important step is to map the universe of GPs in our portfolio as well as amongst our existing relationships. Armed with this knowledge we get a picture of the differences between strategies, geographies and industries and can be more effective in engagement and portfolio construction.
I also hope to discuss with the conference participants the influence the LPs and GPs can have depending on their own structure. For example: what is the difference between what a VC can do versus a large buyout fund? If you’re an LP and you’re investing in secondaries, your approach might be different from a direct primary investment where you came into the first closing of that fund. The same applies to GPs and their approach to majority/minority stakes in portfolio companies. It will be a good discussion I believe.
PEW: Overall, what are you hoping to gain from the summit?
MJ: I’m keen to understand the landscape GPs operate in regarding net zero and ESG ambitions more broadly: in terms of the evolving nature of ESG expectations from their clients and more generally, the pressures from the regulatory environment that they find themselves in.
In Europe, I think we’re seeing a huge impact from legislation like the SFDR and upcoming CSRD and CS3D. Within the UK, I’m particularly keen to understand how the market is addressing the FCA’s approach to TCFD reporting and the impact of the SDR regime.
I’ll also be looking for opportunities around aligning approaches to ESG data management. As I said earlier, improving our understanding of how to simplify and make things easier for the entire value chain is key: starting with the ultimate owners all the way down to the portfolio company. That’s the kind of insight you can get from interacting with people at a great event.
Want to learn more? Join us at the Private Equity Wire European ESG Summit on Wednesday, 28 February at 116 Pall Mall, London. Register for your complimentary pass here.
* Please note that registration for this summit is only open to senior executives at fund managers and investors. If you are a service provider and would like to attend, please get in touch with us on [email protected].
