2022 Portfolio ESG Review
Our ESG diagnostic process, which is based on our Sustainable Business Framework, is a collaborative process starting with an initial introduction session followed by a self-assessment. The ESG diagnostic is led by Hg’s ESG team, who works together with key individuals, such as the Chief Human Resource officers and Chief Compliance officers, as well as dedicated ESG professionals, from the portfolio companies.
Each portfolio company responds to 188 questions, of which 121 are scored. Once completed each business gets a score from 0-10 to benchmark their performance across the Hg portfolio and an output report which forms the basis of their ESG improvement plans. The final report, which includes a scorecard and an overview of status and actions agreed by the portfolio executives, is shared with the company’s CEO and the Board.
The diagnostic is conducted at least annually, and improvements are made year on year. Hg offers hands-on support to portfolio companies to drive progress on their ESG improvement plans i.e., by sharing templates, toolkits and hosting online webinars as well as in-person forums.
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ESG Results Overview
As part of the annual ESG diagnostic in December 2022, we assessed 40 portfolio companies, 7 of which were new to the Hg portfolio. 3 of our portfolio companies were not re-assessed at year end. We increased the level of rigour in our latest ESG diagnostic, yet we saw the average ESG score increase which demonstrates our portfolio companies have taken action to improve their ESG performance. Some of our portfolio companies’ ESG score decreased from last year, either due to M&A activity or our updated diagnostic criteria and scoring methodology with 15 new questions and a stronger focus on policies and procedures.
The ESG diagnostic requires a considerable effort by portfolio companies to complete. However, we continue to receive positive feedback from our portfolio companies on the overall process. The most common view of our portfolio is that the diagnostic clarifies what ESG means to software and services businesses, providing direction to our portfolio companies whilst also bringing ESG to attention of the Board. Our diagnostic and the support we provide to our portfolio companies is having a positive impact, driving positive actions and helping improving the ESG performance of our portfolio.
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Example ESG Portfolio Score Card
Team.blue was founded in 2019 and is a hosting firm and a leading digital enabler for companies and entrepreneurs. Team.blue has improved its ESG score from 6.3 to 9.4 by taking action across all three pillars of Hg’s Sustainable Business Framework and has scored particularly highly in the Essentials and Employees categories.
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“team.blue has taken strides to improve its performance across all ESG pillars. From committing to only using data centres powered by renewable energy, to providing unconscious bias training, and introducing an ESG committee reporting to the team.blue Board. We believe in making a real impact and are proud of our achievements which have been reflected in our latest ESG score with Hg.”
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Dawn Marriott
Partner at Hg and Executive Chair at Team.Blue
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Elona Mortimer-Zhika
“When we first joined the Hg portfolio, our ESG score was below the portfolio average. We introduced a ‘Tiger team’ to identify quick-wins and we have continued to improve on ESG year-on-year ever since. We are now very proud to be the top ESG scorer in the Hg portfolio. ESG is a topic that is very close to my heart, and I am grateful to the Hg ESG team for teaching us the way and supporting us on our journey.”
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Anne-Claire Berg
“We expected this process to be long and somewhat complex. While we were ready for that, we were extremely pleased by the streamlined and practical approach of the framework. The ESG diagnostic was easy to share across our teams to gather data and then submit once reviewed. The questions were detailed yet practical and concrete. Our regular interactions with the Hg ESG team made the process both efficient and pleasant, enabling us to start building a working relationship which will be extremely helpful as we move into action planning.”
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Thomas Christiansen
“ESG is at the very centre of Trackunit, our purpose is to eliminate downtime in the construction industry. The assessment done by Hg is a valued tool not just for our reporting but also to benchmark us against other portfolio companies. We always strive to become better and to optimise where possible. Having an annual assessment done by an external partner, helps to add focus to the areas we need to improve. Through the dedicated work and sparring we get from Hg, Trackunit is able to do exactly that, become better.”