Becoming a B Corp, plus due diligence in the age of increased climate risks

Austrialian Investment Council to 'set the pace globally' on highlighting importance of ESG due diligence; Helios achieves B Corp status.

Helios becomes a B Corp: Pan-African firm Helios Investment Partners has become the largest emerging markets-focused private equity firm to be awarded B Corporation status. The certification, which is verified by non-profit organization B Lab, assesses participating companies on certain impact criteria, including environment and governance, resulting in an overall score. A minimum score of 80 is required to pass – Helios scored 97.9. TowerBrook became the first “mainstream” PE firm to become a B Corp last year, and with Ambienta and Alpine Investors following suit, it looks as though this might be a trend to keep an ESG eye on.

Climate due diligence: The horrific fires in Australia may have had some of the country’s politicians trading insults and generally denying the reality of climate change, but the profundity of the damage caused has private equity professionals taking a more proactive approach, including heightening due diligence processes in the face of increasing climate change-related risks. “There is no doubt that changes in climate have already begun to drive deeper and wider assessments of risks as part of diligence processes,” chief executive of the Australian Investment Council tells Private Equity International. He adds that the AIC plans to use the country’s exposure to natural disasters to “set the pace globally,” saying that, “Australia should serve to remind everyone in our industry globally of the importance of taking a proactive approach to ESG.”

Adamantem Capital is among firms responding by reviewing their due diligence processes and “engaging climate change experts and advisors to assess where there may be more risk exposure” across its portfolio, according to the firm’s director of responsible investing.

An interesting facet of LP/GP dynamic, when it comes to climate change, is that while some major players have been pushing for greater DD on climate risks for some time, a recent survey by PEI showed that the share of LPs who say evidence and consideration of ESG form a major part of their DD processes has actually decreased, year on year.

Email prepared by Graham Bippart and Philippa Kent