Our Responsible Investment Approach
At Hg, our purpose is to improve the future of millions of investors by building sustainable businesses for tomorrow. We take an active role in how our portfolio companies manage ESG risks and opportunities and support them to meet high standards of social and environmental responsibility.
ESG is embedded in the entire deal process from screening to exit:
Deal screening
Avoiding
- Forced labour
- Pornography
- Mining
- Illegal activity
- Arms
- Banned products & activities
- Tobacco & alcohol
- Sanctioned products
- Manufacture of coal
- Cryptocurrency
- Exploitative behaviour
Due diligence
- ESG DD red-flag review
- Cybersecurity DD
- Legal DD
Onboarding
- Cybersecurity assessment
- ESG diagnostics
- Legal review and post-investment remediation
- Climate change risk assessment
- Data privacy review
Value Creation & Active Onwership
- Annual ESG and cybersecurity diagnostics
- Cyber programme enhancement
- Kick-start materials, tool kits and proven practices
- Legal teach-in sessions
VDD & exit
- Realisation committee
- Performance reviews
- Exit readiness and preparation
Communication & Engagement
Forums, webinars, HIVE online community, affiliate networks and public reporting
Our Sustainable Business Framework
At Hg, we believe that financial and ESG performance are interconnected, and we are committed to driving improvements in our portfolio across the most material ESG topics. To this end, in 2017 we developed a bespoke ESG Framework centred around key ESG focus areas for software and service companies. Hg’s Sustainable Business Framework was developed off the back of extensive research, including interviews, benchmarking and external standards and forms the basis of Hg’s ESG diagnostic. The ESG diagnostic is completed with portfolio companies during onboarding and annually thereafter. Hg reviews the Sustainable Business Framework on an annual basis to reflect key ESG trends, regulations, opportunities and risks. With ESG continuing to be such a prominent topic for businesses and regulators, our 2022 review resulted in an increased number of questions, including questions relating to the SFDR Principal Adverse Impacts (PAIs), ESG DCI, SASB Standard and ILPA’s Diversity in Action initiative. Our 2022 assessment was the most comprehensive assessment so far, covering 188 questions across three areas.