DH has long recognised that environmental, social and governance (ESG) issues can have a significant impact on private equity investment, in terms of making investments, creating value in each portfolio company and raising funds.
These issues are integral to our business, both our own operations and those of our portfolio companies. We have long held the view that firms with an environmentally sustainable and socially responsible way of operating significantly de-risk their business model and, therefore, achieve greater cost efficiencies and profitability, leading to higher valuations.
In June 2007, DH became the first private equity signatory to the United Nations Principles for Responsible Investment (PRI) in Europe. As part of the Firm’s commitment to the PRI, DH was actively involved in the creation of the PRI document “Responsible Investment in Private Equity: A Guide for Limited Partners” and as a Firm we remain close to and actively involved with the PRI.
DH’s longstanding commitment to ESG has been recognised by awards from the European Private Equity and Venture Capital Association (EVCA) in 2008, and the British Private Equity and Venture Capital Association (BVCA) in both 2011 and 2013.
Our ESG policy continues to reflect a range of codes and standards, including the PRI, the United Nations Global Compact, the requirements of our Anti-Bribery and Corruption Policy, and the expertise gained from implementing our original ESG policy in 2009.
Our ESG policy statement
The DH team will, to the best of our ability:
- Comply with relevant regulations and appropriate best practices governing the protection of human rights, occupational and public health and safety, the environment, and the labour and business practices of the jurisdictions in which we conduct business.
- Adhere to the highest standards of conduct intended to avoid even the appearance of negligent, unfair or corrupt business practices or practices involving conflicts of interest.
- Regard implementation of our ESG engagement activities as an integral part of how we do business.
- Provide for the assignment of and accountability for ESG responsibilities to senior managers at companies we control.
- Instruct DH investment professionals in the identification and management of ESG risks and opportunities, and provide them with appropriate support (including external resources when needed).
- Identify ESG risks and opportunities as part of the evaluation of whether to invest in companies, seeking both to respect human rights (including by avoiding investment where there is the use of child or forced labour or discriminatory policies) and manage ESG risks and opportunities following acquisition, including those arising through supply chains. The diligence we carry out reflects industry guidance as a minimum.
- Establish appropriate ESG policies and practices for portfolio companies we own comparable to the standards adopted by DH, including in relation to human rights, sanctions, anti-corruption, health and safety, the environment and climate change, labour practices and, where appropriate, consider similar issues in relation to the portfolio company’s supply chain.
- Monitor and oversee the implementation and operation of such policies and practices in portfolio companies, recognising that establishing an appropriate compliance culture is an essential part of effective implementation, require the establishment of systems to measure ESG performance and encourage the disclosure of ESG matters for public review and engagement with relevant stakeholders.
- Require reporting and corporate governance best practices in our portfolio companies to ensure that DH is able to assess compliance with the policies and procedures referred to above, to ensure that the board of directors is appropriately constituted so that it has the authority, expertise and information required to take strategic and major operational decisions, to establish appropriate committees of the board to consider issues relating to audit, risk and remuneration, and to instigate rigorous procedures to identify and manage conflicts of interest.
- Recognise that our ESG activities are of an ongoing nature and encourage continual improvement in ESG performance both in our operations and at the portfolio companies we own.
- Distribute this policy to all DH employees and appropriate employees of portfolio companies we own.
- Ensure appropriate disclosure and encourage dialogue on ESG with our Limited Partners and other stakeholders.
We will review the policy’s effectiveness and implementation on a regular basis, and report relevant findings, progress and recommendations to our fellow team members.
Please visit www.unpri.org for more information on the PRI.