We are responsible investors
- Our Policy and Methodology
Our Responsible Investment Policy and Methodology
Partners Group’s Responsible Investment Policy highlights two reasons for integrating ESG factors:
- Investment-related: to mitigate investment risk and, where possible, enhance investment returns.
- Reputation-related: to ensure that the assets in which we invest on behalf of our clients respect and, where possible, benefit society and the environment.
To ensure that this policy is applied consistently, we take a systematic approach to integrating ESG factors throughout the investment cycle in all types of investments and private markets asset classes.
For each investment opportunity, our investment teams are required to identify and consider the relevant ESG factors during due diligence. Partners Group's responsible investment experts support the investment teams in assessing the weight that should be given to these considerations and in recommending possible courses of action.
During ownership, we initiate projects in our portfolio companies and assets to improve their performance in managing ESG factors and integrate reporting on their ESG performance into our overall client reporting.
Our transparent responsible investment framework recognizes that there are different levels at which ESG factors can be relevant in the decisions we make throughout the investment process.
Mitigate ethical and reputational risks
Assets can create reputational risk for investors if they provide a product or service that harms, or is perceived to harm, society or the environment, or if their business practices are irresponsible. Our Responsible Investment Framework provides a clear basis for assessing investments that could create ethical or reputational risk.
Mitigate investment risks
ESG factors can create significant risks to investment returns if they are mismanaged by companies and their investors. We therefore support our portfolio companies in mitigating potential investment risks created by ESG factors.
Direct investment in Latin America
One of Partners Group’s direct investments in Latin America partnered with the state government to offer employment opportunities to prisoners nearing their release dates. The government-sponsored program is designed to reduce relapses into criminal behavior by developing marketable job skills among the prison population. While the company’s prisoner employment program complies with local regulations, we saw an opportunity to enhance the effectiveness of the program by adhering to a higher set of standards for prisoner employment, as set out by the International Labor Organization (ILO). An independent assessment against these standards identified opportunities to enhance training and health & safety procedures, which the management team subsequently implemented.
Create positive environmental and social benefits
Assets can benefit society and the environment through the products or services they provide and through the way they are operated. Examples of Partners Group investments that have positively contributed to society include:
KinderCare Education provides early childhood education and care to over 160'000 children daily in the US. This is beneficial as an estimated 70% of a person’s brain development occurs in the first three years of life.
Japan Solar is one of Japan's leading independent solar power producers, with over 400MW of projects under construction or development. Solar power contributes to the carbon emissions reduction goals agreed on at the December 2015 Paris climate change conference.
Affordable Care, Inc.
Affordable Care, Inc. is the largest denture and implant services provider in the US, providing high-quality, low-price dental prostheses with same-day service to over 400'000 patients annually.
Create additional value from investments
ESG factors can enable assets to enhance financial performance and investment returns, while delivering environmental or social benefits. Our investment in the development of a 13-story building in Hong Kong, shows how an asset can be reconfigured to deliver environmental or social benefits as well as increased investment returns.
In May 2015, we sold our investment in Kowloon East, a conversion of a former industrial warehouse in Hong Kong, generating an IRR of 45%. The building was awarded a BEAM rating, a green building standard recognized by the Hong Kong Green Building Council. The building’s environmental performance contributed to returns in two ways: by reducing costs and facilitating the exit process. The building’s energy efficiency is 20% higher than comparable properties. In addition, an estimated HKD 2.4m of technical costs were saved by a special waiver due to the BEAM certification.
Identify investment opportunities
Environmental and social trends are powerful drivers of change. They therefore often create opportunities for business growth. Investments that Partners Group made that were identified via an environmental or social trend, or where the trend deepened our conviction in the investment based on Partners Group research, include:
A series of high-profile food contamination incidents in China, including in baby foods, have increased consumer focus on buying high-quality products for their young children. In addition, following the Chinese government’s ending of the one-child policy in October 2015, the number of babies born in China is expected to increase by 500'000 to 1 million per year. These trends reinforced our decision in 2015 to invest in Aiyingshi, one of China’s leading retail chains of maternity, baby and child products.
Ararat Wind Farm
In 2015, Australia’s two main political parties agreed on the goal of doubling large-scale renewable energy capacity by 2020. This target was a strong contributing factor in our decision to invest in Ararat Wind Farm, which will be Australia’s third largest wind farm once it becomes operational in 2017.