No consideration of sustainability adverse impacts
Sustainability and consideration of Environmental, Social and Governance (“ESG”) factors lie at the heart of Foresight’s business. We believe that acting conscientiously and investing responsibly are critical to the long-term success of our business and society as a whole. In order to promote market-leading sustainability practices the Infrastructure and Private Equity investment teams have each developed a tailored approach to tracking, measuring and reporting sustainability performance.
Foresight Group does not currently gather and report on the principal adverse impact metrics detailed in EU Sustainable Finance Disclosure Regulation. Many of the required metrics in the draft legislation are not readily available and are not relevant to our investors or our Sustainability and ESG strategies. It would be unduly burdensome and disproportionate to require our investments (most of which comprise SMEs and standalone renewable energy and infrastructure assets) to produce the required data. We will review this decision when the detailed regulatory technical standards have been finalised.
Both Foresight’s Infrastructure and Private Equity investment teams have developed a bespoke approach to Sustainability and ESG, summarised below. And you can learn more about Foresight's approach to Sustainability in Infrastructure and Foresight's ESG approach to Private Equity.
ESG assessments are undertaken during due diligence on any new investment. Each initial investment submission to the Investment Committee includes a summary of the ESG due diligence conducted, with a description of any risks and opportunities identified. The private equity team has adopted a five-principle framework, which has been identified by Foresight as the main areas where it is possible to evaluate, monitor and encourage portfolio companies to develop their ESG standards. Over the last couple of years, we have increasingly aligned our investment approach with the UN Sustainability Development Goals ("SDGs"), recognising that small businesses play a crucial role in delivering the targets set under these goals to bring about an end to poverty and protect the planet. More recently, we have evolved our investment strategy further to an outcome-orientated approach that identifies and measures the contribution our companies have towards four systemic challenges based on the SDGs: quality employment at scale, health, research and development, and sustainable, inclusive, local infrastructure and the environment.
For each material risk identified during due diligence, the Investment Manager formulates a mitigation plan and these actions form part of the portfolio company’s “100-day” plan post-investment. Analysis of ESG issues is incorporated into the regular monitoring of all investments. Monitoring includes a particular focus on areas of weakness identified in due diligence.
Foresight takes an active role in improving awareness at its portfolio companies through regular attendance at Board meetings. Foresight holds a non-executive directorship position on the majority of portfolio company boards to influence, support and, where necessary, challenge management to ensure ESG values are maintained.
Investments made by our Infrastructure team support the global decarbonisation agenda and in particular the energy transition. Before any investment is made, and throughout the investment cycle, we evaluate and score the project's sustainability credentials against a number of sector-specific assessment parameters underlying five predetermined criteria, as part of Foresight’s proprietary Sustainability Evaluation Criteria (“SEC”), which takes into account a wide variety of Sustainability and ESG factors.