Gresham House has a clear commitment to sustainable investment as an integral part of its business strategy. Sustainable investment considerations are applied across the investment process for all assets and involve the integration of ESG factors as well as the application of active stewardship responsibilities, including engagement and voting (where applicable).
Our Sustainable Investment Framework is based on ten core ESG themes and is used as the basis for the ESG assessment during the due diligence stages before an investment decision is made, as well as being used as a way to structure engagement activity carried out throughout the holding period.
The asset class specific ESG Decision Tools builds on these themes by supporting the investment teams in identifying potential, material ESG risks that need to be managed and mitigated, and to help shape the due diligence process for individual companies prior to investment. The Tools also provides a way of summarising material ESG issues, which can then be tracked and monitored over time, and include actions that can be taken to mitigate those risks throughout the holding period.
At Gresham House, our approach to sustainable investment is embedded across our business and involves ESG analysis, active stewardship, and outcome measurement.
Our commitment is demonstrated through the integration of sustainable investment practices across our strategies, through our proactivity in seeking to make a positive social, economic, or environmental impact alongside delivering strong financial returns and by being a responsible and ethical employer.
Our approach to sustainable investment across each asset division is based on five core components:
01 Sustainable Investing Committee (SIC)
02 Sustainable investment commitments
03 Sustainable investment policies
04 Sustainable Investment Framework (SIF)
05 Asset class specific ESG Decision Tools
We also are also members of a range of industry bodies which inform and support our sustainable investment approach, and work with some service providers who develop and implement certain aspects of our sustainable investment activities.
These aspects are all managed within our sustainability governance structure which includes our Board, Management Committee, and Sustainable Investing Committee.
Our Public and Private Equity teams target superior long-term returns, by applying an active private equity approach, engaging with companies, and applying rigorous due diligence and developing a deep understanding of each investment.
The ‘G’ (Governance) of ESG is the most important factor in our investment processes for public and private equity. Board composition, governance, control, company culture, alignment of interests, shareholder ownership structure, remuneration policy etc. are important elements that will feed into the fund manager’s analysis and the company valuation.
The E and S (Environmental and Social) are assessed as risk factors during due diligence to eliminate companies that face environmental and social risks that cannot be mitigated through engagement and governance changes.
We integrate ESG considerations into the lifecycle of each investment as follows:
01 Initial appraisal
Identify material ESG matters requiring further investigation during the due diligence stage. If certain risks are unlikely to be sufficiently managed or mitigated, then we may choose not to proceed at this stage.
02 Due diligence
The ESG Decision Tool and meetings with management are used to assess material ESG risks that need to be mitigated and ESG opportunities that could drive value. Specialised consultants may be used to provide additional information.
03 Investment appraisal
A summary of the ESG analysis is included in every Investment Committee submission. Appropriate risk mitigation approaches will be referenced and assurance that the business is open to making improvements is sought.
04 Holding period
During this stage, our periodic engagement with the management teams of our investments includes discussion of ESG performance and progress aimed at identifying key concerns and to give us a clearer view of ESG management within our portfolio.
Public Equity: We engage regularly with boards, focusing on strategic, financial, and operational matters, including ESG factors, and consistently use our voting rights.
Private Equity: A 100-day post-investment plan will be developed to address shorter term risks uncovered in our due diligence stage. We will then use our position as a board member and active investor to influence management to proactively address longer term risks and opportunities.