ESG is Apax Partners’ fourth value-creation axis

Since 2011, Apax Partners has made a point of supporting portfolio companies in the development and monitoring of a clear ESG roadmap. The objective is to make corporate social responsibility a powerful driver of financial and non-financial performance. Sophie Uzan, Head of HR and ESG, and Bertrand Pivin, Partner, discuss this ambitious objective.

Apax’s strategic approach leaves nothing to chance

Apax Partners was one of the first private equity funds to define an investment strategy that took into account the environmental, societal and corporate governance issues of its portfolio companies. “It’s our fourth avenue for improving the financial and non-financial performance of our companies”, Sophie and Bertrand declare. The investment teams apply an in-depth methodology to ESG issues, just as they do to build-ups, internationalisation and digitalisation. “We start by taking stock of the situation, and we identify the strengths and weaknesses of the companies we invest in”, Bertrand explains. Short-, medium- and long-term objectives emerge from the analysis, as well as a roadmap for achieving them. “We then regularly monitor the plan for improving non-financial performance with the company’s ESG manager and once a year with the Board of Directors”, Sophie adds.

This sounds simple in theory, but in practice it is not often. “Most companies have an awareness of the subject, and often much has already been done along ESG lines before we invest”, Bertrand says. “But the biggest challenge is getting all the company’s employees on board so that they apply the strategies that have been defined.” Sophie adds, “We can only supply the necessary boost by supporting executives and helping them structure their approach.”

You won’t be scolded for copying INSEEC U.’s good example

And it works. Accompanied by Apax Partners, the INSEEC U. network of schools has an exemplary ESG approach. Since 2014, the higher education group has been bringing all of its stakeholders on board with its projects. Everything revolves around five major commitments: (i) participative corporate governance, (ii) raising awareness about social responsibility among students and employees through training, (iii) participating in research to advance ESG knowledge, (iv) controlling and reducing environmental impact, and (v) developing a social policy that is favourable to the geographical areas in which the group’s schools are located.

Creating a disability policy, granting need-based scholarships and organising conferences on environmental and societal issues are among the numerous initiatives deriving from these five commitments. “Recycling in every school and eco-mobility solutions have become a part of everyday life”, Sophie is pleased to report.

For that matter, the exemplary behaviour of INSEEC U.’s schools on ESG topics has not gone unnoticed. INSEEC U. has received sustainable development and social responsibility (SD&SR) certification in France from higher education and research institutes. This distinction was “confirmed” when INSEEC U. placed first among all French institutions in the global UI GreenMetric ranking.

Europe Snacks makes healthier products and easier-to-recycle packaging

Europe Snacks, based along the Atlantic coast of France, is another example. “Even though the savoury snacks manufacturer was already subject to its sector’s very strict environmental regulations, it wanted to go even further”, Sophie recalls. Analysis carried out with the help of Apax Partners’ ESG team revealed two avenues for improvement: selecting more natural products, limited in salt and fat, and reducing the volume of packaging or making packaging easier to recycle. Tubes for stacked crisps are now 98% recyclable, and packaging for crackers has been reduced by 60% by eliminating the cardboard stiffener”, Sophie notes.

Alongside these avenues for improvement, Europe Snacks also forged a partnership in 2018 with Ren’Bocc, a company specialised in the production of renewable energy. The idea was to run Europe Snacks’ ca. 340 metric tonnes of fatty substance waste through Ren’Bocc’s methanisation unit and use the recovered energy to heat the water used to clean its production lines. An example of cooperation between two companies that benefits the planet.

Extending responsible practices to the entire portfolio … and beyond

While INSEEC U. and Europe Snacks operate in totally different sectors, they have both successfully deployed their ESG strategy by assigning it to the right people. “ESG heads must be close to management and at the same time be ambassadors of the new policy throughout the company. They must develop and structure projects, and centralise and roll out the action plan”, say Bertrand and Sophie, who plan to share these good practices. The successful experiences of the portfolio companies that are furthest ahead on ESG topics will be extended to all of the fund’s investments.

But Apax Partners is looking even further afield. “We will try to emphasise the importance of responsibility and non-financial performance criteria in the growth and development of companies beyond those in our portfolio”, Bertrand explains. “Given the major problems facing the world today, it is important for the investment community to pursue and achieve the United Nations’ sustainable development objectives through the companies in which it invests.”

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