Private equity industry is spearheading ESG progress for businesses: Lucie Mills

It is becoming increasingly important to have a clear and transparent approach to ESG, given its role in driving long term value creation – whether that is supporting companies to attract and retain talent, reduce operating costs or improve commercial success.

At NorthEdge, I’ve witnessed private equity play a huge role in safeguarding the future, helping companies to develop and communicate ESG agendas and share best practice across business communities.

Private equity firms have to take their responsibilities as investors and employers seriously, because our job is to create value for all of our stakeholders.

Our mission at NorthEdge is to ensure every investment we make will have a positive impact. Having embraced ESG since our inception, it’s a key component of the investment process and our portfolio management approach, while also being core to how we run our own business.

According to recent research, firms with two or more diverse board members recorded 12 per cent higher annual earnings growth than companies with fewer diverse directors.

With increasing evidence of results, as well as political intervention, private equity firms are integrating the need for Diversity, Equity and Inclusion (DEI) into their own boards, as well as within their portfolio companies.

Undertaking vital work, such as reviewing recruitment processes to minimise unconscious bias, regular colleague engagement surveys and building an inclusive culture, is an important move for businesses. For us, the results provide clarity on where we need to focus our efforts to ensure we attract, and most importantly retain, a diverse set of talent as we grow, by maintaining our inclusive culture.

Moreover, private equity investors can encourage their portfolios to do the same, helping business communities to become more diverse, ultimately encouraging wide success in this area.

ESG is paramount in business – not just for societal and environmental reasons, but because it drives growth. Due to the nature of private equity, companies such as NorthEdge have an advantage when it comes to influencing sustainability. It’s our responsibility to help businesses realise the impact of their operations and devise plans that drive long-term sustainable growth.

Private equity firms choose the companies they invest in wisely, however for NorthEdge post-investment monitoring is as much of a priority as pre-investment due diligence from an ESG perspective.

Without question, ESG and value creation are intrinsically linked. ESG shouldn’t be seen as a buzzword or a tick box exercise, or even a legislative priority. It must be perceived as something that can fundamentally support a business to improve resilience and accelerate growth.

Lucie Mills is a Partner at NorthEdge