31 August 2021
ALTERNATIVE INVESTMENTS
Growing Schroders’ private assets capabilities a key strategic focus
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chroders has united its specialist private assets investment capabilities under the newly launched Schroders Capital brand, created to deliver an enhanced service for our clients. Growing Schroders’ private assets capabilities continues to be a key strategic focus for the business. This has been achieved so far through a combination of organic growth and specialist acquisitions. Schroders Capital will encompass the existing range of private equity, securitised products and asset-based finance, private debt, real estate, infrastructure, insurancelinked securities and BlueOrchard (impact specialist). In light of its significant role shaping the impact investing industry over the last 20 years, BlueOrchard will maintain its independent brand identity. Schroders Capital’s approach to building change in a sustainable way is summarised by the following core attributes: Intent We strive to ensure that sustainability and/ or impact are well represented in the investment objectives and complement the achievement of financial returns. We aim to select
partners that are like-minded in terms of the change we target. Contribution Our integrated investment process seeks to contribute to ESG, sustainability and impact investing via a range of strategies and themes, including sustainable cities, climate mitigation and adaptation, financial inclusion, healthcare, industry and innovation, job creation and economic growth, among others. Active ownership and engagement expand our principles and their implementation across the entire value chain of intermediaries and stakeholders with whom we work. Measurement We collect an extensive range of sustainability and impact metrics to measure the effectiveness of our investments in achieving the goals we set for each strategy, theme or sector. We track positive and negative changes generated over time to enhance the effectiveness of our active ownership efforts and inform future investments. Peter Harrison, Schroders Group Chief Executive,
“The launch of Schroders Capital will increase the visibility and strengthen the position of our private assets offering”
Peter Harrison, Schroders Group Chief Executive
Georg Wunderlin, Global Head of Schroders Capital
comments, “Schroders is further delivering on its growth strategy with the launch of Schroders Capital, a new brand for all our private assets businesses. It will continue to provide clients with a local approach to investing across a diversified range of private asset strategies, supported by a global perspective and the longestablished Schroders business.” Georg Wunderlin, Global Head of Schroders Capital, comments, “The launch of Schroders Capital will increase the visibility and strengthen the position of our private assets offering, while also underscoring our ambitions as a leading player in private markets.” Kondi Nkosi, Country Head - South Africa, comments, “We have always been of the view that providing our investors with diversified sources of returns is paramount, especially given the challenging times we
Kondi Nkosi, Country Head - South Africa
anticipate for markets. “The unification of our $65bn1 private assets capability under the Schroders Capital brand, we believe, will promote knowledge-sharing and innovation across our private assets businesses and showcase our diversified range of investment strategies for our investors.” Schroders Capital provides access to investment opportunities managed by teams with a long and consistent track record of robust investment performance. Each asset class within Schroders Capital will continue to maintain a high level of autonomy, while also benefiting from enhanced knowledge-sharing and collaboration with the other asset classes within the new brand and across the Schroders Group. 1
As at 31 December 2020
Private equity sees ESG as a strategic value driver, finds PwC survey
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he management of environmental, social and governance (ESG) issues is moving up the board agenda for private equity (PE); however, climate risk exposure requires greater scrutiny, according to a new survey released by PwC. The Private Equity Responsible Investment Survey 2021 draws upon the views of 209 respondents from 35 countries and territories, including 198 PE houses. It finds that, compared with 2019, there is a shift from 35% to 56% of respondents stating that ESG features in board meetings more than once a year. ESG factors are now routinely evaluated by private equity firms when making investment decisions. Three quarters (72%) of respondents always screen target companies for ESG risks and opportunities at the pre-acquisition stage, and more than half (56%) have turned down a potential investment or refused to enter into an agreement on ESG grounds. The 2021 survey finds that nearly 95% are concerned about specific governance issues – business ethics, corporate values and culture; prevention of bribery and corruption; and cyber and data security. However, on issues that are fast becoming business-defining, such as net zero, climate risk, biodiversity and emerging technologies, there is a significant gap between those who express concern and those who act. 91% consider climate risk within a portfolio as a concern, yet 47% have not undertaken any work around understanding the climate risk exposure of the portfolio. More than half stated they intend to in the next year. With respect to due diligence, the survey found that only 36% consider climate risk at this stage. “Over recent years, PE firms have radically reassessed the importance and value of ESG to their business,” says Will Jackson-Moore, Global Private Equity, Real Assets and Sovereign Funds Leader, PwC UK.
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“The attitude and approach of PE firms has matured. ESG factors are reshaping the global economic landscape and will undoubtedly impact the investment success of PE in the coming years. Understanding both the big picture and specific portfolio ESG risks and opportunities will be key to delivering sustainable value creation.” 66% of respondents ranked value creation as one of their top three drivers of responsible investment and ESG activity, followed by corporate values (52%) and investor pressure (41%). Private equity is embracing a more proactive approach to ESG; in 2019, risk management was the biggest driver for activity. When it comes to social issues, such as diversity and inclusion, 92% of respondents consider it a concern. Yet less than half (46%) have set some form of gender and ethnic or racial diversity targets. Encouragingly, of those that have set targets, 77% said that diversity is a core value for the organisation. “Like all industries, private equity needs to adapt in order to meet the societal and economic challenges of the day, and recruiting the right talent is crucial in this regard,” says Jackson-Moore. “This means hiring for specific ESG expertise and, in general, more diverse teams – in terms of gender, ethnicity and age, but also socioeconomic background and training.” The Private Equity Responsible Investment Survey 2021 is available to read online at https://www.pwc.com/responsibleinvestment
