Case study by SWEN Capital Partners

Data collection and dialogue

SWEN Capital Partners (SWEN CP) is a private markets investor specialising in responsible investing and the French subsidiary of OFI and Federal Finance Gestion. It monitors its GPs’ ESG practices through two different approaches: constant dialogue; and regular monitoring of KPIs.

SWEN CP regularly communicates with its GPs on ESG and responsible investment issues through private meetings, conferences and other modes of ad hoc communication.

In addition, it conducts an annual ESG data collection campaign, using a customised ESG questionnaire, to assess changes in the practices and performance of its GPs. The ESG questionnaire includes approximately 35 KPIs (there are separate questionnaires for private equity and infrastructure). The KPIs were developed internally and were carefully selected according to what is relevant to monitor on an aggregate basis as an investor in multiple asset classes. When selecting the relevant KPIs, SWEN CP took its cue from how ESG KPIs are monitored by listed funds. If SWEN CP judges that it is not getting relevant responses to a KPI over time, it will remove it from the questionnaire.

Using an online reporting tool that SWEN CP designed with software company eFront, the questionnaires require completion from both the private equity firms and the underlying portfolio companies.

These approaches allow SWEN CP to prepare detailed ESG reports of each fund in which it invests. The reports highlight the ESG profiles of each GP and provide consolidated information at the level of the underlying portfolio assets. The reports include an assessment of GP progress year-to-year since subscription. They are also used to identify areas of improvement or topics to be further discussed through dialogue between SWEN CP and the GP. Furthermore, this regular monitoring over the past five years has enabled SWEN CP to develop a benchmarking system, and GPs are therefore benchmarked by their investment strategy (small cap LBO, mid-large cap LBO, venture capital, mezzanine debt, impact investment, infrastructure greenfield and infrastructure brownfield).

Since 2014, SWEN CP has run an annual awards ceremony as a way to recognise ESG best practices by GPs who participate in the annual ESG data collection campaign, and to give market players a view of outstanding ESG practices in private equity and infrastructure.

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    ESG monitoring, reporting and dialogue in private equity

    June 2018