3i Group plc Sustainability report 2021
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3i Group plc Sustainability report 2021
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
02
Contents About this report
This report aims to provide the information that is
material and relevant for our stakeholders to form
a view on how 3i Group plc (‘3i’ or ‘the Group’) is
Introduction03 performing on environmental, social and governance
(‘ESG’) and sustainability matters. There have been no
A responsible investor 11 significant changes from previous reporting periods
in the material topics we are reporting on. This report
A responsible employer 30 relates to the financial year to 31 March 2021.
A good corporate citizen 43 This report was submitted to an internal verification
process. Our GHG emissions data was externally
GRI and SASB 63 verified.
We have chosen to report in accordance with the
Contacts71 Global Reporting Initiative (‘GRI’) and, for the first
time this year, Sustainability Accounting Standards
Board (‘SASB’) standards.
A guide to using this report
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GRI and SASB
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3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
03
Introduction
Our purpose
We generate attractive returns for our Our business at a glance 04
shareholders and co-investors by investing Message from the Chief Executive 05
in private equity and infrastructure assets. Responsibilities and accountabilities 08
Our values 08
As proprietary capital investors we have Governance framework 09
a long-term, responsible approach. External benchmarking 10
We create value through thoughtful origination,
disciplined investment and active management
of our assets, driving sustainable growth in our
investee companies.
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
04
Our business at a glance
Founded in 1945, 3i is an investment
company specialising in Private Equity and Proprietary capital Assets under management
Infrastructure, in core investment markets in
Private Equity Private Equity
northern Europe and North America.
Our Private Equity and Infrastructure £8.8bn £11.6bn
businesses manage a mix of proprietary Infrastructure Infrastructure
and third-party funds. We generate a
capital return from our proprietary capital
£10.4bn £1.2bn £16.9bn £4.9bn
investments, as well as fee income from the Scandlines Scandlines
funds we manage on behalf of third parties.
Scandlines is an investment held for its ability £0.4bn £0.4bn
to deliver long-term capital returns while
generating cash dividends.
3i listed on the London Stock Exchange in Our international reach
1994 and has no controlling shareholders.
7 21 234 Number of
Offices Nationalities Employees Office employees
London (head office) 152
Amsterdam 11
Frankfurt 19
Luxembourg 6
New York 22
Paris 19
Mumbai 1
5
+ www.3i.com/investor-relations
Our business model is described Data as at 31 March 2021
in detail in our Annual report 1 We no longer make new investments in Asia, and our Mumbai office is responsible for managing our legacy portfolio in that region. At 31 March 2021, only five of our employees
were located outside of Europe and North America and only c.0.2% of our AUM was invested outside of those regions. Our office in Singapore was closed during the year.
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
05
Message from the Chief Executive
Maintaining a strong reputation requires Our sustainability strategy is defined by three key priorities
us to adopt a transparent approach to
We invest with the objective corporate reporting, including on our
of generating attractive
returns through the cycle
for our shareholders and co-
progress on driving the sustainability
agenda through our operations
and portfolio. We are committed to
1. A responsible investor
We believe that a responsible approach to investment adds value
communicating in a clear, open and to our portfolio. Our Responsible Investment policy is embedded
investors. We aim to achieve comprehensive manner and to maintaining within our investment and portfolio management processes.
this objective sustainably by an open dialogue with stakeholders. To It informs our investment decisions and our behaviours as a
behaving responsibly as an that end, we presented our approach to responsible manager of our assets. We are rigorous in assessing
investor, an employer and as an sustainability and responsible investment and managing ESG risks in our portfolio. Equally, we are keen
in our capital markets seminar, which was to invest in opportunities that contribute to the development of
international corporate citizen. webcast for the benefit of all stakeholders solutions to global sustainability challenges. We make a limited
Simon Borrows, Chief Executive in September 2020. number of investments each year, allowing us to be very selective
This report is important in ensuring in our approach to new investment.
A responsible approach to managing our
that transparency. It should be read in
business and our portfolio has been key
2.
conjunction with our 2021 Annual report,
to how we have operated since 3i was
which also contains our Taskforce for
A responsible employer
founded in 1945. Our purpose at that Our people are our main asset and recruiting, retaining and
Climate-Related Financial Disclosures
time was to contribute to rebuilding post- developing our talent is one of our most important priorities.
(‘TCFD’).
war Britain by providing growth capital
We promote an open communication culture and provide an
to small businesses. The responsibility We are committed to evolving our
that came with that original purpose still disclosures continuously to improve inclusive and supportive working environment with opportunities
guides the Group’s behaviour today. their relevance for all stakeholders. for training and career development. We value diversity and our
employees are recruited, promoted and rewarded on the basis
Over the years, we have built a strong of merit, ability and performance. We are an equal opportunities
reputation and track record by investing employer and prohibit all forms of unfair discrimination.
and managing our portfolio responsibly
and by operating according to high
standards of conduct and behaviour. We
have achieved this through a relentless
focus on strong governance, both at 3i
3. A good corporate citizen
We strive to embed responsible business practices throughout
our organisation. We do this by having robust policies and
itself and in our investee companies. This
has allowed us to earn the trust of our processes in place and by promoting the right culture among
shareholders, co-investors and investee our staff. We expect our employees to act with integrity, to be
companies, and to recruit and develop accountable for their behaviour, and to approach their roles with
employees who share our values and ambition, rigour and energy. All employees are formally evaluated
ambitions for the future. against our values as part of our appraisal process every year.
+ www.3i.com/investor-relations Page 11 Page 30 Page 43
Download our Annual report A responsible investor A responsible employer A good corporate citizen
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
06
Message from the Chief Executive continued
Managing our business and Protect the wellbeing of our Maintaining staff engagement has gained Employees across the business also
our portfolio through the employees and contractors new importance while working remotely, launched a ‘Business as unusual’ hub
and senior managers and team leaders on the staff intranet to access these
Covid-19 pandemic Our focus has been on keeping our have made a particular effort to keep staff resources and which also provides
Throughout the Covid-19 pandemic we employees safe, motivated and able to informed through regular updates and details of virtual social events, internal
have focused on protecting the wellbeing fulfil their roles effectively. Since the start virtual meetings. We have had to on-board competitions and other initiatives set
of the pandemic, 3i offices have been several new recruits in this new environment, up to facilitate staff engagement.
of our own employees and contractors, as
closed in accordance with local guidance including the three new graduate trainees
well as those of our portfolio companies. In addition to our direct employees,
and regulations, our employees have who joined us in September 2020.
We have worked closely with our portfolio been working mostly from home and we employ a number of contractors for
companies to ensure that they remain able international travel has been cancelled with In recognition of the potential mental a range of services, including reception,
to operate and contribute positively to very few exceptions. We have been able health consequences of working remotely cleaning and maintenance services.
their communities, and provided financial to re-open some of our offices for brief through prolonged periods of lockdown, Even though we have only used our offices
support where required. In addition, we periods, in accordance with local guidance. we engaged a specialist mental health and sporadically since the pandemic first started,
have set up a £5 million Covid-19 charitable During these periods, attendance at the wellbeing consultancy to run a series of we have decided to maintain this third-party
fund to alleviate the hardships suffered office has been optional, we have taken webinars and virtual workshops for all staff outsourced support, even during periods of
by many, which we have been deploying steps to make the offices safe and reduce on how to deal with anxiety and stress. office closures.
the risk of transmission as far as possible. We also ran specific mental health training
across our markets. Support our portfolio
The transition to remote working was sessions for managers to help them to
3i’s approach to the pandemic has been seamless, thanks to the great co-operation identify the first signs of mental ill health operationally and financially
driven by three priorities. and work ethic of all our employees and in their teams and offer support where Most of our portfolio companies have
consistent investments in our IT and remote needed, and provided specialist training shown great resilience to the challenges
working infrastructure over the years. Our for c.20 mental health first aiders across the posed by the pandemic and its economic
employees have been given the flexibility business. Finally, we arranged a number of consequences. This underpinned a strong
to reconcile their work commitments with virtual seminars on mindfulness and stress 22% return for the year to 31 March 2021.
other personal and family commitments management for all staff. Nevertheless, a small number of our
such as childcare and elderly care. Throughout this period, we have ensured portfolio companies, particularly those
that our employees have the resources to exposed to the travel and automotive
continue to focus on their physical health. sectors, have experienced some difficulties.
Bi-weekly fitness and nutrition consultations
previously offered in our London office
have been made available virtually to
all employees.
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
07
Message from the Chief Executive continued
Our investment teams have been engaging Ensuring that our portfolio companies In May 2020 we set up an additional SaniSure has been contributing its expertise
actively with our portfolio companies in remain financially sustainable through the £5 million charitable fund to help alleviate and products to the development and
order to support the management of a crisis is the right thing to do over the long the impact of Covid-19. The £5 million was production processes for several of
range of operational challenges that have term for all stakeholders involved, including funded from performance-based awards the leading Covid-19 vaccines to have
arisen as a result of Covid-19, including portfolio company employees, those of due to Private Equity and Infrastructure been approved for inoculations globally,
making sure that their employees and their supply chains, the communities in investment team members which had been including several of the leading FDA
customers, where applicable, remain safe which they operate, as well as our own provided for through the income statement and CE approved vaccines. Ionisos has also
and healthy. The other key area of focus has, shareholders and co-investors. in prior periods. The aim of the fund is been contributing, notably by sterilising
of course, been the financial health of our to support charities particularly affected primary packaging components for
portfolio companies and we have provided Support the communities in which by the pandemic, focusing on the most vaccines, swabs and sample containers for
liquidity support where necessary. In April we and our portfolio operate vulnerable communities in countries where PCR tests.
2020 we provided an equity injection of We focus our charitable activities principally 3i and its portfolio companies operate.
We are proud of the hard work, ingenuity
€23 million to support Hans Anders, a value- on the disadvantaged, the elderly, on Within this, our donations have targeted a
and community spirit displayed by our
for-money optical retailer with shops across young people and on education. Most of number of areas, including food provision,
employees and those of our portfolio
North West Europe, whose stores had been the charities that we support have played education, domestic violence, advancement
companies throughout this crisis. Despite
closed in the initial phase of the pandemic. a key role in protecting a range of different of minorities and disadvantaged groups,
the difficulties we will continue to face
Since then, Hans Anders has been able vulnerable groups from the worst impacts community development and mental health.
until the worst of the crisis is over, we do
to operate a service by appointment and of the pandemic and of living under Our portfolio companies have also been not intend to change our approach and
has seen good performance and earnings lockdown. In addition, we have encouraged doing their part in supporting their local will continue to conduct our business in
growth. In April 2020 we also provided our employees to volunteer their time with communities and, as majority or significant accordance with our purpose and values,
£46 million of liquidity support for Audley nationally-sponsored schemes or with local minority shareholders, we have encouraged with a focus on the interests of the broader
Travel, a provider of travel services, charities to provide assistance to vulnerable this. Importantly, some of our portfolio group of stakeholders that we serve.
which has had no meaningful departure groups throughout this difficult period. companies have been able to contribute
revenues since the start of the pandemic. Simon Borrows
Our charity budget for the financial year to directly to the immunisation effort.
The bookings trajectory since our further Chief Executive
investment has been positive, driven by 31 March 2021 increased by approximately May 2021
improving sentiment following the progress 40% to respond to the additional demands
with vaccines. for support arising as a result of the
pandemic.
Page 30
A responsible employer
Page 11
A responsible investor
Page 55
Community
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
08
Responsibilities and accountabilities
The Board of Directors as a whole is Our values
responsible for sustainability. It has
adopted and promotes corporate
values and Group standards which
set out the behaviour expected of
all employees in their dealings with Ambition Rigour and energy
shareholders, other investors, existing Focus on generating value Clarity of vision supported
and potential portfolio companies, for all our stakeholders by practical execution
colleagues, suppliers and others who Strive for excellence and Thorough analysis leading
engage with 3i. continuous improvement to clear decision making and
effective implementation
The Executive Directors and business and High levels of energy, a strong
functional leaders (together, the ‘Executive work ethic and effective
Committee’) are responsible for ensuring team working
compliance with 3i’s corporate values and
standards. Our values and corporate culture
promote accountability and, together with
our compliance, behaviour and environmental,
ethical and social policies and procedures,
are designed to ensure consistent
standards of conduct.
All employees are required to be aware of,
Accountability Integrity
and abide by, 3i’s policies and procedures.
These are available to all staff through the Personal and collective Doing the ‘right thing’
intranet portal and reinforced through regular responsibility for protecting even when difficult
and enhancing 3i’s assets
training. Employees are encouraged to make and reputation Relationships built on trust,
suggestions to improve them. candour and respect
An ownership mentality
in managing costs, resources
and investments
An aversion to building hierarchy
Page 09
Governance framework
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
09
Governance framework
The Board of Directors and its
Board of Directors Chief Executive
Committees review our approach Ownership and oversight of sustainability approach and Day-to-day accountability for sustainability
to sustainability, corporate policies, including the Responsible Investment policy
responsibility and related
policies and address specific Principal Board Committees Chief Executive Committees
issues if they arise.
Audit and Compliance • Financial reporting, risk and Executive Sustainability responsibilities include:
Day-to-day accountability for sustainability Committee internal controls Committee • Assisting the Chief Executive in setting
rests with executive management and, in Met six times in the year • Oversees the assessment and Meets monthly the Group’s strategy, including its
particular, the Chief Executive. The Chief management of ESG issues and risks, Assists the sustainability aspects
Executive has also established a number including those related to environmental Chief Executive • Human rights and employment legislation
legislation and regulation, climate change, in managing
of committees to support him in overseeing • Employee incentives and remuneration
governance and compliance and the business
and monitoring policies and procedures reputation through the Group Risk
and to address issues if they arise. Our Committee reporting, delegating Investment Sustainability responsibilities include:
governance framework is outlined opposite day-to-day responsibility to the Chief Committee • Implementation of the Responsible
and more information is provided in our Executive Meets frequently Investment policy
Annual report. • Oversees the approach to tax policy and as required
• Assessment and management of ESG risks
strategy Acquisition, and opportunities in the portfolio, including
management and the management of risks resulting from Covid-19
Remuneration Committee • Director and senior management disposal of investments
Met five times in the year remuneration and Group remuneration • Due diligence of ESG risks and opportunities
structure in the investment process
• Oversees the implementation of • Compliance with applicable ESG regulation in the
fair remuneration for employees portfolio (eg Modern Slavery Act, environmental
regulations)
Nominations Committee • Diversity and composition of the Board
Met five times in the year Group Risk Sustainability responsibilities include:
Committee • Oversight of the Responsible Investment policy
Valuations Committee • Valuation policy Meets four times
• Oversight of relevant environmental legislation
Met four times in the year Valuation of the investment portfolio per year
• and regulation
Responsibilities includes the consideration Oversees the
• • Assessment of ESG risks for the Group and
of the valuation impact of sustainability- Group’s risk
the portfolio
related matters management
framework • Assessment of regulatory and compliance risks,
including financial crime and bribery
• Assessment of operational risks, including
cyber security and people risks and recently
Covid-19
• Review of incident management, business
continuity and disaster recovery plans
+ www.3i.com/investor-relations
Download our Annual report
3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
10
External benchmarking
We believe that it is important
to evidence our commitment Sustainability indices CDP
We have been a member the FTSE4Good Index Series CDP (formerly Carbon Disclosure Project) is an international,
to operating responsibly and since 2011. In addition, 3i became a member of the Ethibel not-for-profit organisation providing a framework which enables
to show how we are performing. Sustainability Index (‘ESI’) Excellence Europe in September 2016 businesses to disclose their greenhouse gas emissions and
Accordingly, we provide a and was reconfirmed as a constituent of that index in May 2020. other metrics voluntarily. 3i has been making annual submissions
wealth of relevant information to CDP since 2006.
to shareholders and other 3i’s climate change score in the 2020 CDP assessment was
B and its supplier engagement rating was A-.
interested stakeholders.
+ www.ftse.com/products/ + www.cdp.net
indices/FTSE4Good
+ www.forumethibel.org
ESG Transparency – a Private Equity Index UN Principles of Responsible Investment
3i ranked as the top performer in Orbis Advisory and Since 2011, we have been signatories to the UN Principles
ITPEnergised’s first annual transparency index analysing for Responsible Investment.
160 private equity firms’ ESG reporting performance, based 3i’s scores for the 2020 UNPRI assessment report were
on public disclosures. A for Strategy and Governance, and A+ for both Private Equity
and Infrastructure.
+ www.itpenergised.com/esg- + www.unpri.org
transparency-private-equity-
index-2020/ Page 11
A responsible investor3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
11
A responsible
investor
With fewer than 240 employees globally Our approach to responsible investment 12
and a small office footprint, 3i has a Our Responsible Investment policy 13
relatively small direct impact in terms of the Our RI policy and the Sustainable
environment and other sustainability issues. Development Goals14
Governance framework and
However, with assets under management implementation of the RI policy 15
of £16.9 billion, we have the influence and Our ESG assessment tool 17
opportunity to have a greater positive Sustainable growth opportunities 18
impact through the decisions we ESG risks 27
make across our portfolio. Private Equity case study – SaniSure 28
Modern slavery risk in 3i’s portfolio 293i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
12
Our approach to responsible investment
We believe that a responsible • we make a limited number of new
investments each year, allowing us
approach to investment is a
to be very selective. We have the flexibility
material lever for value creation to screen out opportunities that have an
in our portfolio. unsustainable impact on the environment
and societies in which they operate,
We are well positioned to have a positive inconsistent with generating long-term
impact through the decisions we make value.
across our portfolio:
We are committed to evolving our approach
• we carry out our investment activities
to responsible investment continuously, and
according to our Responsible Investment
have an interdisciplinary sustainability
policy, which is embedded in our
project team devoted to that task. full policy
olicy
tment p
3i’s
processes. We have also been signatories This is
a summ
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ver
Inves
sion of
to the UN Principles of Responsible Res ponsible
Page 13
Investment since 2011; Our Responsible Investment policy sponsib
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Page 27 3i will us e its inf
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investme3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
13
Our Responsible Investment policy
We have a clear and comprehensive Our RI policy is integrated into our Objectives of our RI policy
investment and portfolio management
Responsible Investment (‘RI’) 3i’s objectives as set out in the RI policy are to
processes and procedures and is supported invest only in businesses which are committed to:
policy which is embedded into by detailed guidance notes, external
our investment and portfolio advisers and dedicated internal resource.
monitoring processes and sets 3i commits to use its influence as an investor The environment Fair and safe
out our stewardship approach. to promote a commitment in its investee A cautious and responsible approach to working conditions
companies to: the environmental management of their Respecting the human rights of their
In our experience, companies with • comply, as a minimum, with applicable business operations by making efficient workers; maintaining safe and healthy
high ESG standards are typically local and international laws and use of natural resources and mitigating working conditions for their employees,
better run, better at identifying regulations and, where appropriate, environmental risks and damage. contractors and suppliers; treating their
and managing their business risks relevant international standards (such as employees fairly; upholding the right to
the IFC Performance Standards and the freedom of association and collective
and opportunities for growth and ILO Fundamental Conventions), where bargaining; and respecting the health,
generate higher quality earnings these are more stringent than applicable safety and wellbeing of those affected
growth. This policy sets out the laws; by their business activities.
businesses in which 3i will not invest, • mitigate adverse environmental and social
impacts and enhance positive effects on
as well as minimum standards in the environment, workers and relevant
relation to ESG matters which we stakeholders; and
Business integrity Good governance
expect new portfolio companies to • uphold high standards of business
Upholding high standards of business Clear accountability with defined
meet, or to commit to meeting over integrity and good corporate governance.
integrity, avoiding corruption in responsibilities, procedures and
a reasonable time period. The policy all its forms, ensuring strong data controls and appropriate checks and
applies to all our investments, management and cyber security and balances in company management
irrespective of their country or sector. compliance with applicable anti-bribery, structures.
anti-fraud, anti-money laundering and
data protection laws and regulations.
+ www.3i.com/sustainability
Summary of our Responsible Investment policy3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
14
Our RI policy and the Sustainable Development Goals
Our RI policy pre-dates the We invest in businesses that benefit
Systematic screening from sustainable growth trends. Many of
publication of the United Nations’
The systematic pre-investment screening of opportunities, which our businesses already make a positive
Sustainable Development Goals ensures that we only invest in companies that commit to adopting impact on the environment and societies
(‘SDGs’) and was therefore not a responsible approach to the environment, to respecting the rights in which they operate, including on some
designed to align with that of their workers and to engaging fairly with all stakeholders. of the themes highlighted by the SDGs.
For example, many of our portfolio
framework. In practice, however, companies contribute to improving health
we believe our approach and wellbeing, to the transition to a lower
supports the achievement of the carbon economy, or to the achievement
goals through: of a more sustainable consumption model
through a circular economy. The impact
Investment in growth we are making across these themes is
described on pages 18-27.
Our emphasis on generating returns by driving long-term, sustainable
growth in our portfolio companies, creating value through investment In addition, many of our portfolio companies
in innovation, international expansion and buy-and-build acquisitions, have made public statements on how their
while considering the interests of all stakeholders. business activities align with specific SDGs.
These include, for example, Action, Hans
Anders, Audley Travel, Scandlines, AES Seal,
Attero, ESVAGT, Infinis, Ionisos, Joulz,
Tampnet, TCR and Valorem.
Page 18
Strong governance Sustainable growth opportunities
Our engaged management of portfolio companies through active
participation on their boards, setting strategy and encouraging the
development of more sustainable business practices. This is supported
by our influence as a majority or significant minority shareholder,
combined with our emphasis on upholding the highest levels of
governance at 3i itself and in the companies that we invest in.3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
15
Governance framework and implementation of the RI policy
The Board of Directors is The management of ESG risks and Due diligence Ongoing portfolio monitoring
opportunities is key to driving value
responsible for the RI policy, Early-stage assessments typically result Our investment teams carry out a detailed
from our investments. It is also key in recommendations as to which issues review of each of our portfolio companies
for ensuring it is implemented to safeguarding our reputation as a should be subject to more comprehensive, on a semi-annual basis, in March and
across the organisation and for responsible investor. We therefore have ‘deep-dive’ due diligence pre-investment September. The March reviews include
the review and approval of any robust processes in place to ensure that and which should be progressed post- a detailed ESG assessment which seeks
the overall long-term sustainability of each
material changes. The Investment investment is considered before making an
investment. Among the key areas of focus to track progress in relation to existing,
Committee is responsible for the for us is governance, to ensure that the identified ESG risks and opportunities,
investment and on an ongoing basis. potential investee company’s management including those related to environmental
implementation of the RI policy, team contains the talent, knowledge and and social impact, as well as identifying
and for ensuring that it is executed Investment screening experience necessary to manage the potentially new and emerging risks and
in a meaningful way by 3i’s All new investment opportunities are particular risks and opportunities facing opportunities. An update is received in
subject to a high-level review of their ESG that business, including those across the September, when progress against action
investment teams in all investment profile early in the investment assessment ESG spectrum. We will also assess the points and relevant KPIs raised in March is
and portfolio management process and prior to commissioning other material ESG issues relevant to reviewed and new action points may be set.
processes. comprehensive due diligence. Early that business, including climate risk and
screenings involve a review of the business’s environmental and social factors. Where
ESG risk profile, including an assessment of necessary, we engage with external
longer-term sustainability trends, based on consultants to assist with specialist
each company’s sector and end markets. due diligence.
For Private Equity investment opportunities,
The key findings from the in-depth
a full review of each potential investment
assessments and due diligence are included
is also completed by an external specialist
in the body of each investment paper
ESG adviser as part of the investment
submitted to the Investment Committee.
assessment process.
The material issues and overall sustainability
profile of the business are considered by
the Investment Committee, which may raise
questions with the investment team and/or
require further work to be done as part of its
investment decision.
Any material findings from the due diligence
process which require remedial action or
attention in the near term are integrated
into 180-day post-investment plans.3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
16
Governance framework and implementation of the RI policy continued
Each semi-annual portfolio company review Risk management
is discussed in a dedicated meeting that The 3i Board has delegated day-today
is typically attended by members of the responsibility for risk management to
Investment Committee, including the Chief the Chief Executive who is assisted by
Executive, the Group Finance Director and the Group Risk Committee (‘GRC’) which
Group Strategy Director, as well as by senior includes the heads of 3i’s Private Equity
members of the investment teams and and Infrastructure businesses and other
some non-executive Directors. Sustainability functional heads drawn from across the
is a standing, and typically the first, business. The GRC maintains the Group’s
discussion item at these meetings, where risk review, which identifies the principal
attendees assess each company’s ESG risks risks and new and emerging risks facing 3i,
and how these are being managed, and as well as the associated mitigating actions
also challenge the long-term sustainability and key risk indicators. The risk review is
strategy and opportunities for related value- updated quarterly.
enhancing investment.
Following the six-monthly portfolio reviews,
In addition to the company-specific actions detailed reports are prepared by the Private
identified we use the data collected through Equity and Infrastructure businesses and the
our detailed ESG assessments to: managers of Scandlines, which summarise
• identify key trends and opportunities the short, medium and long-term ESG risk
across the portfolio on which to build. profiles and trends across their respective
For example, we held a portfolio plastics portfolios as well as detailed summaries of
roundtable in 2019 and a carbon the specific ESG risks and opportunities
roundtable in 2021; relevant to each material portfolio company
• identify themes where specific portfolio and any material ESG incidents in the
companies could benefit from period. The reports are presented to the
collaboration; GRC by the Private Equity and Infrastructure
• enhance our decision making process for
businesses and the managers of Scandlines.
new investments; and The GRC reports to the Audit and
Compliance Committee and an overview of
• provide a positive feedback loop to
the findings is also presented to the Board.
further develop and enhance our
management of future ESG risks and
opportunities.
+ www.3i.com/investor-relations
A detailed description of our risk management
framework is set out in our Annual report
Page 27
An overview of our portfolio ESG risks3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
17
Our ESG assessment tool
Developed over a number of years, and
subject to annual review and refinement,
our proprietary ESG assessment tool
provides a framework for our investment
teams to consider the inherent ESG risks
and opportunities in each investment and Assessment Action plan and strategy development
to develop detailed, company-specific completion
remediation and long-term value creation
plans. After making the initial investment,
this tool is used by our investment teams Deal team
in conjunction with portfolio company
management teams to ensure that we Portfolio company Proprietary Aggregation Output
achieve engagement and accountability management assessment tool & analysis engine
on these matters throughout our period of Regularly refined and Developed and calibrated
ownership. A great deal of care is taken to benchmarked against external against historic portfolio
ensure consistent processes and procedures tools and research performance
Asset review dashboard
are put in place across the portfolio to
improve the accuracy and comparability of Environmental questions
Comparison to 3i
the data and information that we receive. Action log
minimum standards
The assessment tool is refined on an Social and Policy questions
ongoing basis, with the input of several Trend analysis Portfolio dashboard
stakeholders, to reflect emerging themes
and impact areas and to ensure that we Governance questions
Risk scoring and
3i-wide output
remain abreast of best practice. Over the Assessment categorisation
past few years, we have improved the databank
granularity of our assessment across a Investment decision
support Feedback loop
number of areas, including environmental
impact, cyber security and diversity and Investment case Opportunity tracking
inclusion. As a result of these more granular and monitoring
reviews we have been able to identify a
Risk log
number of themes across the portfolio
which will allow us better to manage the
various sub categories of ESG risks and Historic assessment
responses
opportunities on a portfolio-wide basis.
For example, in March 2021 we held a
portfolio carbon roundtable, to discuss Risk weighting/analysis
the commercial benefits and opportunities
arising from the measurement and
abatement of carbon emissions.3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
18
Sustainable growth opportunities
We believe that the systematic assessment of the
sustainability profile of our investments can help us
not only to manage risks, but importantly can also
bring about value growth and opportunities for new
or further investment in our portfolio.
Many of the businesses we invest in stand to benefit
from sustainable growth trends and a number of our
portfolio companies already make a positive impact
on the environment and societies in which they
operate, including on some of the themes highlighted
Improving health Transition to a Circular economy
by the SDGs. For example, several of our portfolio
and wellbeing lower carbon
companies contribute to improving health and
economy
wellbeing, to the transition to a lower carbon
19 22 25
economy or to the achievement of a more sustainable
consumption model through a circular economy.3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
19
Sustainable growth opportunities continued
Improving health Private Equity
and wellbeing Cirtec Medical
Demographic shifts and societal changes Curing illnesses with interventional Structural heart procedures
are intensifying pressures on health systems: or implantable medical devices Cirtec Medical’s products are used in transcatheter
aortic and mitral valve replacement surgery, where
populations in the developed world are Technological developments are opening up
artificial heart valves are inserted into the body
opportunities to treat life-threatening illnesses
becoming older, and developing countries with minimally invasive procedures. This serves
or chronic conditions with interventional or
are experiencing greater urbanisation and as a lifesaving alternative for patients too weak
implantable medical devices. The use of such
to undergo open heart surgery and is increasingly
growth in their middle class, with middle- devices often delivers better patient outcomes
being investigated for lower risk patients as it
class comforts promoting increasingly than traditional drug therapies or invasive
reduces complications and recovery times.
surgery, resulting in fewer side effects and
sedentary lifestyles. Combined, these shorter recovery times. Diabetes
demographic changes are leading to a Cirtec Medical’s ultra-high precision, micron-scale
Cirtec Medical is a global provider of
rising prevalence of chronic disease which outsourced medical device and components thin film sensors are used for the manufacture
will demand new thinking in the delivery of design, engineering and manufacturing. It serves of wearable sensors used in conjunction with
healthcare, innovation in therapeutics and customers in the most innovative and fastest continuous glucose monitoring devices, which
growing therapeutic end-markets and product monitor glucose levels 24 hours a day. When paired
an increased focus on prevention. with an insulin pump, these sensors can moderate
platforms. These are examples of applications for
Cirtec Medical’s products: the flow of insulin to ensure glucose levels remain
within a healthy range.
Chronic conditions
We have continued to support Cirtec Medical since
Cirtec Medical is among the leaders in the
our initial investment in 2017 through a number of
manufacturing of implantable neuromodulation
buy-and-build acquisitions, integrating with new
devices, used as an alternative to long-term
capabilities, adding product verticals and investing
drug therapy for the symptomatic relief of
in high-value intellectual property.
persistent or chronic conditions such as chronic
pain, incontinence, sleep apnoea, migraine,
Parkinson’s disease or epilepsy.
+ www.cirtecmed.com
For more information3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
20
Sustainable growth opportunities continued
Improving health and wellbeing continued
Private Equity
SaniSure
Development of biologic
drugs and vaccines
Biologic drugs and cell & gene therapy
are the fastest growing area of the drugs
market. They have proven successful in
the treatment of many major and chronic
diseases, such as some types of cancer
and autoimmune diseases, with many
more applications in the pipeline.
SaniSure is a manufacturer of single-use
fluid management products and systems
used in the bioprocessing of biologics and
vaccines. SaniSure has been contributing its
expertise and products to the development
and production processes for several of the
leading Covid-19 vaccines.
Our investment in SaniSure is described in
more detail in a case study on page 28.
Page 28
SaniSure case study
+ www.sanisure.com
For more information3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
21
Sustainable growth opportunities continued
Improving health and wellbeing continued
Infrastructure Private Equity
Ionisos Havea
Ensuring product safety Focus on wellbeing and prevention Headquartered in France, Havea is a leader in the
through sterilisation through natural consumer healthcare natural consumer healthcare industry in Europe.
It manufactures, designs and distributes a wide
Sterilising medical and care equipment There is a growing global consumer trend towards range of products from functional and natural food
is an essential, non-discretionary part of natural healthcare and personal care products. This supplements to natural personal care products.
the manufacturing process of a number of is driven by multiple factors, including an increasing The business operates in a highly regulated
medical and pharmaceutical goods. Cold awareness of the issues posed by the use of environment with strict health, safety and quality
sterilisation is often required for products certain synthetic chemicals in some products, standards under the European Food and Safety
that contain heat-sensitive ingredients or a desire for accountability and transparency in Agency, which checks all products and validates
components. ingredients, packaging and sourcing, a rising their health claims. Havea’s products are made with
incidence of allergies and an ageing population. sustainable, ethically sourced ingredients and are
Ionisos is the leading independent
As a result, health authorities are increasingly increasingly also sustainably packaged.
European provider of cold sterilisation
focusing on prevention through the promotion
services. The business treats a wide range We have continued to support the business since
of healthy lifestyles and nutrition. As consumers
of medical and pharmaceutical goods, we first invested in 2017, notably through a number
become more informed and aware, they increase
such as gloves, implants, surgical kits and of bolt-on acquisitions, which have increased the
their consumption of natural and organic products
dialysers, ensuring that they are sterile business’s critical mass and its ability to develop
that contain fewer potentially harmful ingredients
and safe to use, for example, in surgical and market more sustainable products.
and are more sustainable, in terms of sourcing,
procedures. Since the start of the Covid-19
manufacture and packaging.
pandemic, Ionisos has contributed to the
fight against the virus, notably sterilising
primary packaging components for
vaccines, swabs and sample containers
for PCR tests.
+ www.ionisos.com + www.havea.com
For more information For more information3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
22
Sustainable growth opportunities continued
Transition to Infrastructure
a lower carbon Infinis and Valorem
economy Generation of renewable energy
Energy production and use and transportation We have continued to support Infinis since first
Tackling climate change is are currently responsible for the vast majority of investing in 2016, funding further investment and
recognised as one of the defining EU greenhouse gas emissions. Renewable power a number of bolt-on acquisitions.
generation remains one of the areas of focus for
issues of our times. Transitioning our Infrastructure business, as most countries
Valorem is a fully integrated, independent
to a lower carbon economy will renewable energy operator which develops,
across the world try to increase the proportion
owns and operates onshore wind farms, hydro
involve increasing the weight of of renewables in their electricity generation mix.
projects as well as photovoltaic systems across
renewables in the generation mix Infinis is the leading UK generator of low carbon Europe. Today the company is the fourth largest
and reducing the carbon emissions power from captured methane. Methane is a highly wind developer (and the largest independent) in
associated with our economic and potent greenhouse gas, with a contribution to France and has developed over 2.4GW of installed
global warming over 20 times greater than that of capacity across wind, solar and hydro. The business
day-to-day activities. carbon dioxide. Infinis’ operations in the year to has built an impressive future pipeline of 4.9GW
March 2021 captured 300,000 tonnes of methane, of wind, solar and hydroelectric projects across
preventing more than an equivalent of 6.5 million European geographies, of which 2.1GW is at an
tonnes of carbon dioxide (CO2) escaping into the advanced development stage.
atmosphere.
Since first investing in 2016, we have supported
The business operates from 148 geographically investments across Valorem’s portfolio, including
dispersed sites across the UK, located close to the expansion in the solar and hydro markets.
end-user demand and thereby avoiding both the
electrical losses and associated charges from use
of the national transmission network. By burning
captured methane to generate power, Infinis
provides an efficient, secure and non-intermittent
source of power generation, which is highly
complementary to other renewable sources such
as solar and wind, which are intermittent in nature.
+ www.infinis.com
www.valorem-energie.com
For more information3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
23
Sustainable growth opportunities continued
Transition to a lower carbon economy continued
Infrastructure
ESVAGT and the Offshore
Transmission Owners
Infrastructure to support The further development of services for
the renewable energy sector the offshore wind industry is a key pillar
of our investment case for ESVAGT. As
Increasing the importance of renewable investment managers we have supported
power generation within the overall power the company’s growth in that segment.
generation mix requires the development Services to the offshore wind industry
of broader, supporting infrastructure. contributed c.64% of ESVAGT’s pro forma
ESVAGT is a leading provider of emergency 2020 EBITDA compared to c.7% at the
rescue and response vessels and related time of acquisition in 2015.
services to the offshore energy industry In addition, 3i made investments through
in and around the North Sea and the its Infrastructure investment vehicles in a
Barents Sea and the market leader in the number of Offshore Transmission Owners,
fast growing segment of service operation which own critical infrastructure connecting
vessels for the offshore wind industry. offshore wind farms to the onshore grid in
ESVAGT’s service operation vessels the UK, and are therefore key to the roll-out
provide full time accommodation to wind of offshore wind power generation.
farm engineers, allowing safe and efficient
conduct of continuous maintenance
programmes which maximise electricity
generation from turbines, improving
overall uptime, and ensuring operational
robustness of the wind farms for the long
term. This is increasingly important for
the offshore wind industry as operators
are focused on their ability to lower the
total cost of energy produced in order
to reduce dependency on Government
support schemes.
+ www.esvagt.com
For more information3i Group plc Sustainability report 2021
Introduction A responsible investor A responsible employer A good corporate citizen GRI and SASB
24
Sustainable growth opportunities continued
Transition to a lower carbon economy continued
Group portfolio and Infrastructure
Scandlines and Joulz
Reducing carbon emissions from Since first investing in 2007 we have Scandlines has committed to continue to
transportation infrastructure supported the investments made by make targeted investments with the aim
Scandlines in a cleaner fleet of vessels, of making the Puttgarden – Rødby route a
Successfully achieving a transition to a and in particular in hybrid propulsion and zero-emissions crossing in the foreseeable
lower-carbon economy will require the sulphur emissions reduction technology. future and realising its zero emission
abatement of emissions associated with The business pioneered hybrid ferries and vision in the longer term. As a significant
public and private transport. has invested more than €300 million in this shareholder, 3i continues to support these
Scandlines operates two high-frequency technology since 2013. All six of Scandlines’ objectives.
and large-capacity crossings between passenger ferries now have hybrid
Through 3i Infrastructure plc, our main
Germany and Denmark: between propulsion technology and are equipped
Infrastructure investment vehicle, we
Puttgarden and Rødby and Rostock and with state-of-the art scrubbers to reduce
invested in Joulz, a Dutch company which,
Gedser. Its ports and ferry routes constitute particulates emissions.
among other services, also designs, installs,
a crucial piece of infrastructure that Scandlines continued along this path in leases and maintains medium voltage
connects motorways E47 and E55 between 2020, despite the Covid-19 emergency, electricity infrastructure and charging
Europe and Scandinavia. with several investments and activities to infrastructure for electric vehicles. This is a
future proof its fleet and further reduce its growing business for Joulz, which we have
impact on the environment. The business supported notably through the acquisition,
made green investments of around announced in April 2020, of GreenFlux’s
€6 million in 2020, including: electric vehicle charging station business.
• the fitting of a 30-meter high rotor sail on Alongside charging infrastructure for
one of its ferries to harness wind power electric vehicles Joulz has also recently
and provide supplementary propulsion; acquired a rooftop solar developer,
further strengthening its development
• the installation of new thrusters on two
into a leading integrated energy transition
ferries (having already installed one in
solutions provider.
2019) which produce less noise and
vibration, and ultimately reduce CO2
emissions by up to 10-15%; and
• the re-painting of one of the ferries with
silicone antifouling paint, which improves
+ www.scandlines.com/about-scandlines/about-
scandlines-frontpage/finance energy efficiency.
For more information
+ www.joulz.nl
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