Apax Partners has a well-defined Responsible Investment policy which is guided by its fundamental values.
Since adoption of the PRI Principles (see below), sustainability has been embedded in Apax’s investment process as a tool to help release the full potential of the businesses in which Apax Funds invest. This means that issues relating to sustainability are raised at an early stage in any potential investment opportunity and are monitored throughout Apax Funds’ ownership of the company.
The Firm coordinates its sustainability efforts through a sustainability committee consisting of six members from different functions within the Firm. The committee meets on a monthly basis and reviews all matters relating to Apax’s internal and external sustainability-related activities. The committee ensures that implementation of sustainability matters is achieved across the investment team, the Apax Fund portfolio and the Firm.
Pre-investment activity focuses on the identification of ESG risks, the company’s ability to manage ESG considerations and its performance related to ESG in the past.
Apax investment professionals undertake pre-investment ESG due diligence for each new investment made by the Funds. The due diligence will cover the ESG areas that Apax believes are key to understanding the ESG profile of the particular company in which the Funds are considering an investment. During such time, the Operational Excellence Practice’s extensive knowledge and expertise is routinely tapped into by Apax investment professionals for insight into how a target company’s existing operations might be optimised, ESG risks can be addressed and mitigated, and avenues for value creation can be unlocked during the Funds’ ownership.
Prior to the closing of each new investment by the Funds, the findings of the ESG due diligence process are reviewed by a member of the Apax Sustainability Committee and incorporated into the final Investment Committee documentation. Key ESG issues, representing either a risk to the portfolio company’s business or an opportunity for value creation, are highlighted as part of this process.
Post investment the Apax Fund portfolio companies contribute to the Firm’s ESG processes by monitoring and reporting on key environmental, social and governance indicators. These in turn are reported in the Apax Partners Sustainability Report to provide transparency for investors in Apax Funds.
The pre-investment due diligence is backed up post investment by an annual Environmental, Social and Governance KPI collection cycle. Through this Apax is able to capture the ESG footprint of the Funds’ portfolio companies and establish the possible areas of materiality which require further focus from the investment team to create value or mitigate risk.
For Apax Partners, the key goal of the data collection is to get a better understanding of the materiality of certain KPIs to the overall operations of a portfolio company. This helps the team to put in place value creation or risk mitigation initiatives in a far more focused manner, in conjunction with the Apax Operational Excellence Practice, in order to drive the value relevant to the particular material issues (such as natural resource efficiency programmes).