Engaging with our GPs on ESG

Amplifying our impact by engaging with GPs in our Secondaries & Primaries portfolio

Mark Benedetti

Co-Head of Ardian North America, Member of the ASF Management Committee and Member of the Executive Committee

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There are strong signs that GPs’ engagement with portfolio companies is intensifying. The proportion who agree individual ESG roadmaps with their portfolio companies and monitor progress regularly has increased sharply – from around a third of GPs in 2020 to almost half last year.

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198

GPs RESPONDED TO OUR 2021 SURVEY, REPRESENTING 91.5% OF THE NET ASSET VALUE OF OUR SECONDARIES PORTFOLIO

INDIVIDUALIZED FEEDBACK SESSIONS WITH GPs DURING OUR 2021 CAMPAIGN

As part of Ardian’s policy of developing tailored approaches to Responsible Investment for our different investment activities, we have been conducting regular ESG monitoring surveys of the Ardian secondaries portfolio since 2011. Over that period, we have observed a major evolution of GPs’ ESG practices.

Our questionnaire contains more than 40 questions covering all aspects of GPs’ policies and practices, and for our 2021 campaign we introduced new questions and modified the range of possible answers to others to give a more detailed picture of areas of key concern, including climate change and diversity. We provide each GP that takes part with a score for their ESG performance at the corporate level and for their investment practices.

In the latest survey, a record 198 GPs responded, representing 91.5% of the Net Asset Value (NAV) of our secondaries portfolio. Some 12.5% of the GPs who responded achieved our highest ESG rating, A+, and this group now manages 39% of our portfolio by NAV, illustrating the concentration of our assets in the hands of top-rated sponsors. The proportion of our secondaries NAV managed by A+ rated GPs has increased by 12.5 percentage points compared with the 2020 survey.

Our results also demonstrate that GPs are rapidly adopting climate-related guidelines as part of their investment process, with 35% of respondents in our 2021 survey having done so, up from 13% the previous year. The proportion of GPs with a proactive diversity policy at the corporate level has also increased sharply, advancing 11 points to 64% in 2021. At the investment level, two-thirds of GPs that assess the ESG performance of their portfolio companies during the holding period monitor the proportion of women employees and Executive Board members.

The dataset that we have assembled over the past decade gives Ardian a comprehensive overview of how GPs’ ESG practices are evolving. Our ESG monitoring also brings significant value to the sponsors in our secondaries portfolio, since our feedback after each monitoring campaign helps them to benchmark their progress against peers and to learn from the best practices we observe from other GPs across the portfolio.