Sustainability report 2022 - 3i Group plc
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3i Group plc Sustainability report 2022
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer 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 performing on environmental, social and
Introduction 03 governance (‘ESG’) matters. There have been no
A responsible investor 10 significant changes from previous reporting periods
in the material topics we are reporting on and no
A responsible employer 24 comparative information has been restated. The
report relates to the financial year to 31 March 2022.
A good corporate citizen 35
We have chosen to report in accordance with the
GRI and SASB 51 Global Reporting Initiative (‘GRI’) and Sustainability
Contacts 58 Accounting Standards Board (‘SASB’) standards.
READ MORE
51 GRI and SASB
A guide to using this report
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A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
03
Introduction
Our purpose Our business at a glance 04
We generate attractive returns for our shareholders Message from the Chief Executive 05
and co-investors by investing in private equity and Responsibilities and accountabilities 07
infrastructure assets. Governance framework 08
External benchmarking 09
As proprietary capital investors we have a long-term,
responsible approach.
We create value through thoughtful origination,
disciplined investment and active management
of our assets, driving sustainable growth in our
investee companies.
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer 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 value Total assets under management
Infrastructure, in core investment markets
in northern Europe and North America.
Our Private Equity and Infrastructure
£14,305m £22.9bn
(2021: £16.9bn)
(2021: £10,408m)
businesses manage a mix of proprietary
Private Equity Private Equity
and third-party funds. We generate
a capital return from our proprietary £12.4bn £16.7bn
capital investments, as well as fee income Infrastructure Infrastructure
from the funds we manage on behalf of £1.4bn
third parties.
£5.7bn
Scandlines* Scandlines*
3i listed on the London Stock Exchange in £0.5bn £0.5bn
1994 and has no controlling shareholders.
* Scandlines is an investment held for its ability to deliver long-term capital returns while generating cash dividends.
Our international reach
Office Number of employees
7 21 236 London (head office)3
Male Female Total1,2
81 69 150
Offices Nationalities Employees Amsterdam 9 3 12
Frankfurt 12 7 19
Luxembourg 3 4 7
New York 19 5 24
Data as at 31 March 2022 Paris4 13 8 21
1 Including seven employees on a fixed-term contract, of whom four were females and three were males.
2 Including 20 who were on a part-time contract, of whom 18 were females and two were males.
Mumbai5 1 2 3
3 Including five employees on a fixed-term contract.
OUR BUSINESS MODEL IS DESCRIBED 4 Including two employees on a fixed-term contract.
IN DETAIL IN OUR ANNUAL REPORT 5 We no longer make new investments in Asia, and our Mumbai office is responsible for managing
www.3i.com/investor-relations our legacy portfolio in that region.
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
05
Message from the Chief Executive
We invest with the objective A responsible approach to managing our Our sustainability strategy is defined by three key priorities
of generating attractive returns business and our portfolio has been key
1. Invest responsibly
to how we have operated since 3i was
through the cycle for our founded in 1945. Our purpose at that time
shareholders and co-investors. was to contribute to rebuilding post-war We believe that a responsible approach to investment adds
We aim to achieve this objective Britain by providing growth capital to small value to our portfolio. Our responsible investment principles are
businesses. The responsibility that came embedded within our investment and portfolio management
sustainably by behaving responsibly with that original purpose still guides our processes and inform our investment decisions and our
as an investor, an employer and as behaviour today. behaviours. We rigorously assess and manage ESG risks at all
an international corporate citizen. stages of our investment and value creation processes. We
Over the years, we have built a strong make a limited number of investments each year, allowing
reputation and track record by investing and us to be very selective in our approach to new investment,
Simon Borrows, Chief Executive managing our portfolio responsibly and by including considering the impact on global sustainability of
operating according to high standards of investee companies’ activities. We adopt a thematic approach
conduct and behaviour. We have achieved to origination and portfolio construction, backing businesses
this through a relentless focus on strong benefiting from structural trends which can support long-term
governance, both at 3i itself and in our sustainable growth in our portfolio.
investee companies. This has allowed us
to earn the trust of our shareholders,
co-investors and investee companies,
and to recruit and develop employees 2. Recruit and develop a diverse pool of talent
Our people are our main asset. Accordingly, recruiting, retaining
who share our values and ambitions. and developing our talent is one of our most important priorities.
We promote an open communication culture and provide an
Maintaining a strong reputation
inclusive and supportive working environment with opportunities
requires us to adopt a transparent
for training and career development. We value diversity and
approach to corporate reporting,
believe that a variety of perspectives enhances our decision
including on our progress on driving
making. Our employees are recruited, promoted and rewarded on
the sustainability agenda through
the basis of merit. We are an equal opportunities employer and
our operations and portfolio. We are
prohibit all forms of unfair discrimination.
committed to communicating in a clear,
open and comprehensive manner and
to maintaining an open dialogue with
stakeholders. This report is important
in ensuring that transparency. It should
3. Act as a good corporate citizen
We strive to embed responsible business practices throughout
our organisation by having robust policies and processes in place
be read in conjunction with our 2022 and by promoting the right culture among our people. We expect
Annual report and accounts, which also our employees to act with integrity, to be accountable for their
contains our Taskforce on Climate-Related behaviour, and to approach their roles with ambition, rigour and
Financial Disclosures (‘TCFD’) report. energy. All employees are formally evaluated against our values as
part of our appraisal process every year.
DOWNLOAD OUR ANNUAL REPORT READ MORE READ MORE READ MORE
www.3i.com/investor-relations
10 A responsible investor
24 A responsible employer
35 A good corporate citizen
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
06
Message from the Chief Executive continued
Strengthening our focus We are now working on a number of • Skills and training: we are organising Russia’s invasion of Ukraine has brought new
on climate initiatives which we have already set in train. bespoke training programmes for the challenges. The Group has no operations
These include: Board, executive and investment teams or employees in Russia or Ukraine, and
FY2022 was an important year in on climate change physical and transition our portfolio companies have very limited
progressing our sustainability agenda. • Investment assessment: we are refining
our investment screening process to risks and opportunities, with the objective direct operational exposure. We will work
In recognition of the importance of the of equipping everyone in the organisation with portfolio companies to manage the
management of sustainability issues for include an earlier assessment of climate
risks and opportunities, with third-party with the knowledge required to assess secondary impacts of the war, including
the Group and our portfolio, we set up a and manage these appropriately. disruption to supply chains and increases in
formal ESG Committee, with membership input as required;
commodity and energy prices. The conflict
drawn from across the business, to advise • Data: we are now completing the process Please refer to our TCFD disclosures in
has caused a humanitarian emergency.
me, directly and through the Group Risk of collecting GHG emissions data from our the Annual report and accounts for more
In response to this crisis, in March 2022,
and Investment Committees, on all ESG- portfolio companies and improving our information on this topic.
we donated £1 million to UNICEF and the
related matters. Our ESG work during the processes and tools to ensure that this
The Covid-19 pandemic has continued Médecins Sans Frontières/Doctors Without
year has focused in particular on developing data can be easily analysed. Our objective
to have an impact on our operations and Borders Emergency Fund.
strategy, policy and governance for is to measure the carbon footprint of our
portfolio, despite the easing of restrictions
assessing and managing climate-related entire portfolio by the end of FY2023 We have always managed our sustainability
that followed the roll-out of vaccines in our
risks and opportunities across the Group (except for a small number of legacy strategy and objectives proactively. Our
markets. Throughout the pandemic we have
and its portfolio, a topic of increasing minority assets with negligible value and work in this area is now harnessing the
focused on protecting the wellbeing of
urgency and prominence in society and a for new investments made in FY2023), to expertise and perspectives of an increasing
our own employees and contractors. After
focus area of governments and regulators facilitate the reporting of portfolio carbon number of employees from all parts of the
two years of working mostly from home,
and our stakeholders. emissions in line with TCFD guidelines by organisation. We expect that next year
we have now successfully implemented a
FY2024. This data will also allow us to we will make further material progress
As part of this, we have been working hybrid working model which supports a
improve our engagement with portfolio in the advancement of our sustainability
on preparing the Group for reporting in strong collaborative culture while providing
companies on this topic and set objectives, with particular focus on
alignment with the TCFD framework by employees with a degree of flexibility
appropriate targets; the climate and diversity, equity and
the 2024 deadline set by the FCA for asset to manage non-work commitments
• Scenario analysis: we are carrying out inclusion agendas.
managers such as 3i, which will require and improve their quality of life. We
us to expand our current TCFD reporting our first climate scenario analysis for our have continued to work closely with our Simon Borrows
to include portfolio emissions metrics. portfolio companies to help us assess the portfolio companies to ensure the safety Chief Executive
To this end, in January 2022 we started impacts on portfolio companies of and wellbeing of their employees and to May 2022
an engagement with EY’s sustainability different climate warming scenarios. manage the range of operational issues
practice to establish a roadmap to We will iterate these analyses periodically they have faced as a result of public health
achieve alignment, refine our process for to help us better understand and manage measures, and provided financial support
ESG data collection and perform a first climate-related risks and opportunities in where required. The £5 million Covid-19
climate scenario analysis to advance our our portfolio; and charitable fund we set up in FY2021 to
understanding of climate-related risks and alleviate the hardships suffered by many as
opportunities in our portfolio. a result of the pandemic has now been fully DOWNLOAD OUR ANNUAL REPORT
deployed to support a range of charities www.3i.com/investor-relations
across the countries in which we operate. READ MORE
10 A responsible investor
READ MORE
47 Community
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
07
Responsibilities and accountabilities
The Board of Directors as a whole is
responsible for sustainability, directly
and through its Committees within Our values
their specific remits. It has adopted
and promotes corporate values and Rigour and energy
Group standards which set out the Clarity of vision supported
behaviour expected of all employees by practical execution
in their dealings with shareholders, Thorough analysis leading to clear decision
other investors, existing and potential making and effective implementation
portfolio companies, colleagues, High levels of energy, a strong work
Ambition ethic and effective team working
suppliers and others who engage
Focus on generating value
with 3i. for all our stakeholders
The Executive Directors and business and Strive for excellence and
functional leaders (together, the ‘Executive continuous improvement
Committee’) are responsible for ensuring
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
Integrity
of conduct.
Doing the ‘right thing’
All employees are required to be aware of, even when difficult
and abide by, 3i’s policies and procedures.
Relationships built on trust,
These are available to all staff through the
intranet portal and reinforced through regular
Accountability candour and respect
training. Employees are encouraged to make Personal and collective responsibility
suggestions to improve them. for protecting and enhancing
3i’s assets and reputation
An ownership mentality in managing
costs, resources and investments
An aversion to building hierarchy
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08 Governance framework
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
08
Governance framework
The Board of Directors is
responsible for the oversight of Board of Directors Chief Executive
Ownership and oversight of the Group’s ESG and Day-to-day accountability for sustainability
the Group’s sustainability sustainability approach and policies
approach and policies, including
the Responsible Investment
policy. It delegates day-to-day Principal Board Committees Chief Executive Committees
accountability for sustainability Audit and • Financial and non- Executive Sustainability responsibilities include:
to executive management and, Compliance financial reporting Committee • Assisting the Chief Executive in setting the Group’s strategy,
Committee (including reporting on Meets monthly including its sustainability aspects
in particular, the Chief Executive. Met six times ESG and sustainability • Human rights and employment legislation
Assists the
in the year matters), risk, internal Chief Executive
The Chief Executive has established a • Employee incentives and remuneration
controls and assurance in managing
number of committees to support him in • Recruitment and retention
• Oversees ESG risks for 3i the business
overseeing and monitoring policies and and its portfolio through
procedures and to address issues if they regular reports from the Investment Sustainability responsibilities include:
arise, including an ESG Committee, which Group Risk Committee Committee • Implementation of the Responsible Investment policy
assists and advises the Chief Executive, • Oversees the approach Meets frequently • Assessment and management of ESG risks and opportunities
to tax policy and strategy as required in the investment, divestment and portfolio management activities
directly and through the Investment and
Acquisition, in accordance with the Responsible Investment policy
Group Risk Committees, on all relevant
Remuneration • Director and senior management • Due diligence of ESG risks and opportunities in the investment process
environmental, social and governance risks Committee management and disposal • Compliance with applicable ESG regulation in the portfolio
and matters, including developing and Met five times remuneration and Group of investments (eg Modern Slavery Act, environmental regulations)
proposing the Group’s ESG approach. in the year remuneration structure
This Committee, which had been operating • Oversees the Group Risk Sustainability responsibilities include:
for some time as an advisory steering implementation of fair Committee • Oversight and review of the Responsible Investment policy
committee and was established as a remuneration for Meets four times • Oversight of relevant environmental legislation and regulation
formal committee of the Chief Executive employees per year • Oversight of ESG risks for the Group and the portfolio
in March 2022, co-ordinates the Group’s Oversees the • Assessment of regulatory and compliance risks, including financial crime
Nominations • Diversity and Group’s risk and bribery
various sustainability activities, including the Committee composition of the management • Assessment of operational risks, including cyber security and people risks
management of ESG risks and opportunities Met four times Board framework • Review of incident management, business continuity and disaster recovery plans
across the portfolio. Our governance in the year
framework is outlined opposite and more ESG Committee Responsibilities include:
Valuations • Valuation policy
information is provided in our Annual report Meets formally four • Reporting on relevant ESG matters to the CEO and proposing strategies for
Committee • Valuation of the times per year managing ESG risks
and accounts.
Met four times investment portfolio Assists and advises • Oversight of 3i Group’s approach to ESG and ensuring 3i Group’s compliance
in the year with relevant legal and regulatory requirements, industry standards and
• Responsibilities includes the Chief Executive
the consideration ESG on all relevant guidelines applicable to ESG matters
impacts on portfolio environmental, • Monitoring market developments, trends and best practice in relation to ESG
valuation social and matters as relevant to the Group and its portfolio
governance risks • Reviewing and recommending changes to the Group’s ESG approach and to
DOWNLOAD OUR ANNUAL REPORT and matters related policies and procedures
www.3i.com/investor-relations
• Co-ordinating ESG-related activities and initiatives across the Group
• Reviewing and monitoring performance in relation to ESG KPIs
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
09
External benchmarking
We believe that it is important
to evidence our commitment to Sustainability indices CDP
operating sustainably. Accordingly, 3i is a member the FTSE4Good Index Series CDP (formerly Carbon Disclosure Project) is an
and of the Solactive Europe Corporate Social international, not-for-profit organisation providing
we provide a wealth of relevant Responsibility Index, as well as a number of a framework which enables businesses to disclose
information to shareholders and other established ESG indices. their greenhouse gas emissions and other metrics
other interested stakeholders. voluntarily. 3i has been making annual submissions
to CDP since 2006.
3i’s climate change score in the 2021 CDP
assessment was B and its supplier engagement
rating was A-.
FOR MORE INFORMATION
FOR MORE INFORMATION
www.ftse.com/products/indices/FTSE4Good
www.cdp.net
www.solactive.com
ESG Transparency – UN Principles of
a Private Equity Index Responsible Investment
3i ranked as one of the top performers in Since 2011, we have been signatories to the
Orbis Advisory and ITPEnergised’s annual UN Principles for Responsible Investment.
transparency index analysing 155 private equity 3i’s scores for the 2020 UNPRI assessment report
firms’ ESG reporting performance, based on were A for Strategy and Governance, and A+ for
public disclosures. Private Equity and Infrastructure. The scores for the
2021 assessment have not yet been published.
FOR MORE INFORMATION
www.unpri.org
FOR MORE INFORMATION
READ MORE
www.itpenergised.com/esg-transparency-a- 10 A responsible investor
private-equity-and-venture-capital-index-2021/
A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
10
A responsible
investor
With fewer than 240 employees globally, 3i has a Our approach to responsible investment 11
relatively small direct impact on the environment and Our Responsible Investment policy 12
other sustainability issues. However, with assets under Thematic approach to origination and
management of £23 billion, we can achieve progress on portfolio construction 13
many sustainability issues through the actions we drive Assessment and management
in our portfolio companies. of ESG factors 14
Our ESG assessment framework 15
Proactive engagement with our portfolio 16
ESG risks and risk management in
our portfolio 21A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
11
Our approach to responsible investment
We believe that a responsible • Careful portfolio construction We do not manage thematic ESG funds
We approach investment origination and it is not our intention to do so.
approach to investment is a
and portfolio construction with Nevertheless, we are committed to evolving
material lever for value creation great care. We make a limited number and improving our approach to responsible
in our portfolio. Our approach of new investments each year, with a clear investment. In FY2022 we set up an ESG
is based on four pillars. focus on sectors and geographies where Committee to advise the Chief Executive
we have built a strong track record, on ESG-related matters and co-ordinate
• Long-term stewardship in-house expertise and comprehensive the Group’s sustainability-related activities
Thanks to our permanent capital our networks. We can screen out (see pages 6 and 8).
holding periods are not limited and we opportunities that have an unsustainable This is a
summarise
d versio
n of 3i’s
impact on the environment and societies Responsi
full policy
have a medium to long-term investment 12
READ MORE
ble Invest
Our Responsible Investment policy ment polic
horizon. We have majority or significant in which they operate, inconsistent with y
READ MORE
minority stakes in our portfolio companies generating long-term value. 13 Thematic approach to origination The follow
ing is a summa
and are represented on their boards.
ry of the
and portfolio construction full 3i Re
• Rigorous assessment and management
References sponsible
system wh throughout this Investme
nt policy.
ich is acc Policy to
essible by the ‘Porta
This gives us the influence to drive The rigorous assessment and 14
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READ MORE
Proactive engagement with our portfolio
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Standard Laws) and, wh
s) where ere
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more string evant inte
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• Thematic origination investment, portfolio management and READ MORE ▪ Uphold hig
ent, worke
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h standard .
We invest in businesses that benefit from value creation processes. Our Responsible 21 ESG risks and risk management in our portfolio Scope
s of busin
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positive eff
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ong corpo
This Policy rate gover
structural trends which can support Investment policy, as interpreted and
nance.
by 3i’s bu applies, subject
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geographie ess lines (and the certain exception 2
s from No fun s , to
vember 20 ds which they ma all new investme
long-term sustainable growth in our implemented by our Investment 3i’s resp
11 (the da
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onsible in licy becam tor
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portfolio. Our approach is flexible and can Committee, provides clear guidance to 3i will: vestmen
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).
our investment professionals. We have
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be adapted to take into account market,
▪
consisten
t practice
and adhe
▪ Provide suf rence to
this Policy
they can ficient informatio
regulatory, policy, societal or also been signatories to the UN Principles eff
ment act
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n,
their invest ectively manage instruction, trainin
environm g
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ental, soc and resources to
investme
nt busines
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environmental developments. of Responsible Investment since 2011. 1
The Inte
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vernance
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ensure th
matters wit
h
Bank and al Labour Organis include the
For example, over the last few years
its atio relevan
environme Performance Sta n (ILO) Fundam t IFC Performanc
ntal and ndards are ental Con e Standa
reference soc ven rds and ass
document ial standards. The intended to provide tions. The IFC ociated Gui
rights hav s with gen IFC’s Env a is the deli
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identified been codified by eral and industry ironmenta reference for bus private sector arm nes and th
we have backed businesses that country.
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tion by 3i
or (ii) by (i) by of develop rk which
ject inve tain areas funds rais funds raised, or ment of a
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transition to a low-carbon economy,
s. . the min stan tiall y rais ed, by fun
astructure
business imum cor y raised, prior to d manag
as they porate Novem eme
are either governance stan ber 2011 when th
not relevan dards) do
t or inap not apply
the achievement of a more sustainable
propriate t
to thos
consumption model through a circular 1
economy and improved health and
wellbeing, all of which can deliver
positive impacts over the long term.A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
12
Our Responsible Investment policy
Our Responsible Investment Our RI policy is integrated into our Objectives of our RI policy
investment and portfolio management
(‘RI’) policy is embedded into our 3i’s objectives as set out in the RI policy are to invest only in businesses which are
processes and procedures. 3i uses its committed to:
investment and portfolio monitoring influence as an investor to promote a
processes and sets out our commitment in its investee companies to:
stewardship approach. This policy • comply, as a minimum, with applicable The environment Fair and safe
sets out the types of businesses local and international laws and A cautious and responsible approach working conditions
regulations and, where appropriate, to the environmental management of Respecting the human rights of
in which 3i will not invest, as well relevant international standards (such as their business operations by making their workers; maintaining safe and
as minimum standards in relation the IFC Performance Standards and the efficient use of natural resources healthy working conditions for their
to ESG matters which we expect ILO Fundamental Conventions), where and mitigating environmental risks employees, contractors and suppliers;
new portfolio companies to either these are more stringent than and damage. treating their employees fairly;
applicable laws; upholding the right to freedom of
meet or commit to meeting over a
• mitigate adverse environmental and social association and collective bargaining;
reasonable time period. The policy impacts and enhance positive effects on and respecting the health, safety and
applies to all our investments, the environment, workers and relevant wellbeing of those affected by their
irrespective of their country or sector. stakeholders; and business activities.
• uphold high standards of business
integrity and good corporate governance.
Business integrity Good governance
Upholding high standards of business Clear accountability with defined
integrity, avoiding corruption in responsibilities, procedures and
all its forms, ensuring strong data controls with appropriate checks
management and cyber security and balances in company
and compliance with applicable management structures.
anti-bribery, anti-fraud, anti-money
laundering and data protection laws
and regulations.
SUMMARY OF OUR RESPONSIBLE INVESTMENT POLICY
www.3i.com/sustainability/sustainability-policiesA responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
13
Thematic approach to origination and portfolio construction
We adopt a thematic approach
to origination and portfolio Climate change and resource scarcity Demographic and social change
construction, backing businesses The response to the climate and environmental Increasing life expectancy and reduced fertility rates
emergencies will be among the defining themes in most of our core markets are resulting in an ageing
benefiting from structural trends of our time. The transition to a more sustainable and often declining population, which is increasingly
which can support long-term consumption model and the development of solutions urban. These structural, long-term trends are resulting
sustainable growth in our portfolio. to tackle global warming and climate change, either in profound changes in consumer behaviour and
For example, many of the businesses through regulatory ‘push’ or changes in consumer preferences, and the development of policy responses
preferences, are going to provide attractive to meet the challenges of greater longevity and the
we invest in stand to benefit from investment opportunities for many decades. increasing prevalence of age-related chronic illness.
the transition to a low-carbon
We have significant exposure to the renewable The healthcare investments in our Private Equity
economy, the achievement of a energy and waste management sectors through our portfolio, including Cirtec Medical, an outsourced
more sustainable consumption Infrastructure portfolio, with investments in companies medical device manufacturer, as well as Q Holding,
model through a circular economy such as Infinis and Valorem, which generate renewable SaniSure and ten23 health, which provide products and
energy, and Attero and HERAmbiente, which sort and services to the life sciences industry, have developed
and improving health and wellbeing recycle waste and generate power from waste that their businesses to benefit from this increasingly
in societies affected by profound cannot be recycled. Our Infrastructure business is important trend.
demographic changes. also invested in ESVAGT, the market leader in the
Havea, which is among the leaders in the natural
fast-growing segment of service operation vessels
consumer healthcare industry, is supported by a
for the offshore wind industry.
growing consumer focus on health and wellness.
A number of our Private Equity portfolio companies
We also have exposure to this trend in our Infrastructure
provide services or solutions in support of the transition
portfolio, through Ionisos, which provides cold
to a circular economy. For example, WP makes
sterilisation services to the medical and pharmaceutical
innovative packaging systems for the FMCG industry
industries, among others.
which are increasingly recyclable and reusable. Mepal
develops innovative products for storing, serving and
take-away food and drink, which can help to reduce
food waste and the usage of single-use packaging.
A core pillar of Evernex’s customer proposition is to
repair, reuse and recycle IT equipment, reducing waste
and emissions.
OUR PORTFOLIO
www.3i.com/portfolioA responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
14
Assessment and management of ESG factors
The management of ESG risks and
opportunities is key to driving value Pre-investment During investment Exit
from our investments. It is also key
to safeguarding our reputation as a Assessment and action planning Use of influence and engagement Data collection and monitoring Preparation and communication
responsible investor. We therefore • Screen each opportunity against • Implement robust governance and • Collect ESG data from portfolio • Consider the data and
embed a rigorous assessment of the requirements of the RI policy. procedures at the portfolio companies on an annual basis to governance structures which
• Conduct an early-stage review company to ensure that ESG risks understand the baseline and may be required in advance
the long-term sustainability of each and opportunities are assessed measure progress. of a sale process.
of the ESG profile of each new
investment in our processes. business opportunity to assess and managed rigorously. • Prepare detailed quantitative • Work with advisers to
all material ESG topics which may • Use active participation and and qualitative ESG assessment communicate relevant
Once invested, we support impact the business, including influence on portfolio company as part of the March semi-annual sustainability information
long-term sustainability trends boards to ensure they are portfolio company review to potential buyers.
companies as they develop and climate change risks and addressing the ESG factors process.
strategies and respond to opportunities, based on each impacting their businesses. • Discuss ESG assessment
stakeholder expectations, and we company’s subsector and • Leverage the 3i portfolio and during semi-annual portfolio
end markets. network to provide introductions company review meetings,
gather data to measure progress
• Following the early-stage review, to other companies, useful involving investment teams as
against ESG objectives. This enables commission specialist due contacts and advisers and share well as Investment Committee
us to prepare companies ahead of diligence on ESG matters where best practice, sometimes through members and selected 3i
required. dedicated forums such as the Board members.
any exit opportunity. carbon and CIO roundtables (see
• Include ESG considerations • Set and monitor progress
(both risks and commercial pages 16 and 20). with portfolio-wide objectives
considerations linked to • Provide a sounding board (eg for all companies to
the investment case) in and support to portfolio produce a carbon emissions
the Investment companies as they devise their baseline and implement a
Committee materials. sustainability strategies and sustainability strategy).
• Integrate relevant action points implement and deliver
into the 180-day post-invest plan. sustainability projects.
Objective
The Investment Committee may We use our influence Data is used to develop our Good ESG performance can
decline investment opportunities to mitigate risk and understanding and management protect and potentially
where red flags are raised in the ensure value creation of ESG matters, to enhance our enhance the value achieved in
pre-investment ESG risk opportunities are captured. decision making, more recently to an exit.
assessment that it does not facilitate better financing
believe can be remedied post opportunities and to identify key
investment or commission themes, trends and opportunities
READ MORE further specialist due diligence across the portfolio.
15 Our ESG assessment framework to assess whether a situation
can be remedied.A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
15
Our ESG assessment framework
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 to Assessment Action plan and strategy development
develop company-specific remediation and completion
long-term value creation plans. After making
the initial investment, this tool is used by
our investment teams in conjunction with Deal team
portfolio company management teams to
ensure that we achieve engagement and Portfolio company Proprietary Aggregation and Output
accountability on these matters throughout management assessment tool analysis engine
our period of ownership. Regularly refined and Developed and calibrated
benchmarked against external against historic portfolio
The assessment tool is refined on an tools and research performance
ongoing basis to reflect emerging themes Asset review dashboard
and impact areas, the requirements of our
Environmental questions
stakeholders, including regulators, investors Comparison to 3i
Action log
and lenders, and to ensure that we remain minimum standards
abreast of best practice. Over the past few Social and policy questions
years, we have improved the granularity of Trend analysis Portfolio dashboard
our assessment across a number of areas,
including environmental impact, cyber Governance questions
Risk scoring and
3i-wide output
security and diversity, equity and inclusion. Assessment categorisation
databank
As a result of our granular reviews we have Investment decision
been able to identify a number of themes support Feedback loop
across the portfolio which allow us to Investment case
manage proactively and synergistically the Opportunity tracking
and monitoring
various sub-categories of ESG risks and
opportunities on a portfolio-wide basis. Risk log
Historic assessment
responses
Risk weighting/analysisA responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
16
Proactive engagement with our portfolio
Once invested, we use our influence
with portfolio companies to ensure Environment
that they consider the ESG and
Greenhouse gas emissions • Action a pan-European discount retailer Data and disclosures
sustainability factors that have the and our largest portfolio company, set a
In March 2021 we held a Carbon We have made significant strides in the
potential to impact their business roundtable with representatives from 23 target to reduce its emissions from its own assessment of the environmental impact of
and provide support in the evaluation of our portfolio companies with the aim of operations by 50% by 2030, compared to a our portfolio and collect data on a number
demonstrating the broader commercial baseline year of 2020. It also has an of environmental indicators. Over the last
and delivery of specific projects, objective to reduce significantly the CO2
benefits of measuring a carbon footprint two years, we have focused specifically on
ensuring that these are resourced and taking steps to reduce it, including emissions of its outbound transport; improving our collection of GHG emissions
adequately. We leverage our better employee engagement or customer • Scandlines, which operates ferry services data, to satisfy both regulatory and
knowledge and expertise across sentiment, as well as cost savings. The between Germany and Denmark, has set commercial demands. We currently
event, facilitated by specialist consultancy an ambitious target to ensure emission- collect GHG emissions data from over 70%
our portfolio and facilitate the free operations on its Puttgarden-Rødby
Anthesis, also delivered practical advice of our Private Equity portfolio companies
sharing of best practice. on how to measure a carbon footprint and route by 2030 and for Scandlines by 2040, and over 80% of our economic Infrastructure
improve the quality of carbon reporting. supported by significant investments in its investments. Most of the companies that do
In the pages that follow we set fleet. Since we first invested in 2007 the not already supply us with this data are new
out our activity across a number Many of our portfolio companies have put company has made more than investments, which will be expected to
in place realistic and achievable, and in €300 million in green investments for its
of ESG themes. some cases ambitious, emission reduction
measure and report their emissions to us
fleet. All six of its passenger ferries are within the first year of investment. Once
targets, some targeting specific aspects of now powered by hybrid propulsion Scope 1 and 2 data is in place, we will
their business, other more comprehensive. technology. It plans to increase this also begin collecting Scope 3 data
For example: investment level to approximately systematically. This portfolio baseline
• ESVAGT, which provides service operation €400 million by 2024 and in 2021 it will allow us to:
vessels to the offshore wind industry and commissioned an emission-free freight • improve our engagement with each of
emergency rescue and response vessels ferry with the world’s largest battery our portfolio companies to devise specific
to the offshore energy industry, has set a installation for delivery in 2024; and emission reduction strategies;
target of zero CO2 emissions by 2050 and • Ten23 health, which 3i set up in
carbon neutrality by 2035 and announced • assess relevant targets; and
partnership with Hanns-Christian Mahler,
the first green service operation vessel an expert in life sciences, is strongly • make TCFD aligned disclosures by the
for Ørsted; purpose-driven. It puts Patients, People FY2024 deadline imposed by the FCA
• Audley Travel, a leading provider of and Planet at the centre of its decisions for asset managers such as 3i.
tailor-made experiential travel, has a target and actions. It monitors its emissions, We are also improving the data we collect
to reduce its Scope 1 and 2 emissions by both related to greenhouse gases and on waste produced and materials consumed
68% by 2030, from a baseline year of plastics, takes actions to reduce these by portfolio companies, which will allow
2019, in line with the Paris Agreement and mandates itself to offset any us to enhance our engagement with the
1.5°C target. The company plans to unavoidable emissions, in partnership portfolio on resource efficiency over time.
submit its measurements and targets with certified organisations.
to the Science Based Target initiative
in the second half of 2022;A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
17
Proactive engagement with our portfolio continued
Environmental continued
Waste and circular economy a practice that recovers waste in order to • Action has stated its ambition of
We encourage our portfolio companies to turn it into new resources. For instance, completing circularity assessments for all
treat their waste sensitively, minimise Havea has developed a process to treat 14 of its product categories by the end
packaging, maximise recycling and optimise grape seeds discarded by the food of 2022. In 2021, Action completed such
their processes to reduce waste. The topic industry to produce a cosmetic assessments for half of its product
of circularity and resource efficiency also ingredient with anti-ageing properties; categories using the Circular Transition
provides significant commercial • Mepal’s food and drink storage containers Indicators framework; and
opportunities for our portfolio companies. are a sustainable solution to reduce food • Attero, which offers waste management
We are very pleased with the progress waste and the use of single-use services and produces energy from waste,
made in this area. For example: packaging. Most Mepal products are is working on a number of projects to
• WP has an ambition to make all the made from 100% recyclable plastic, are of increase the capacity for post-separation
packaging it produces to be recyclable, a high quality and have a long useable life. of residual waste from household and
reusable or refillable by 2025. It is using its Mepal also offers a replacement parts commercial waste and increase the
innovation capabilities to develop more service to consumers to prolong the useful capacity for recycling. The business
sustainable packaging solutions that life of its products; produces 3.6 million tonnes of waste every
support the circular economy. Last year, it • Evernex works with its clients to maintain, year and uses it to produce 25 million
introduced a 100% recyclable valve for repair and reuse their IT assets and recycle cubic metres of green gas, 318,000 tonnes
dispensing closures; used IT equipment. In total, 15% of the of compost, more than 700,000 tonnes of
components installed in the discarded other recycled materials and 900GWh of
• Havea has placed eco-design at the electricity, generating sustainable power
centre of each of its brands and considers IT equipment that Evernex receives as
‘IT waste’ can be reused. This is more than for 363,000 households.
the environmental impact of its products
throughout their lifecycle. The company 50,000 spare parts every year.
has already reduced its reliance on virgin The remaining 85% contains valuable
plastics by introducing plant-based and minerals, rare earths and gold, as well as
recycled plastic bottles across several other metals and raw materials that are
of its brands including Biolane and separated and made into secondary raw
NaturéMoi. In addition, it aims for 25% materials which re-enter the
of the cosmetic ingredients used in its production cycle;
skincare range to be ‘upcycled’ by 2022,A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
18
Proactive engagement with our portfolio continued
Social
Supply chain transparency • Audley Travel has launched ‘Athari’,
and ethical sourcing a travel product which supports its
clients to easily identify sustainable
We are intensifying our focus on supply experiences that have a particularly
chain management and transparency in our strong, positive impact on the local
portfolio as we believe that there are high economy and environment. This type
rewards from building trust with consumers of experience puts a purposeful focus
and other stakeholders on these issues. on supporting local businesses, educating
We ensure that, where relevant, our staff, challenging local norms or positively
portfolio companies have policies and impacting conservation and biodiversity
procedures in place to monitor their efforts. Highlighting these experiences
supply chains, and make adequate encourages Audley’s clients to consider
disclosures on this topic to satisfy their sustainable choices when planning their
stakeholders. For example: trip with their specialist, and gives an
• Action has set a target of achieving 100% incentive to Audley’s other partners to
transparency on labour conditions in its offer similar options; and
supply chain by 2025 and to purchase • Royal Sanders has an ambition to increase
100% of the cotton and timber used in its its use of certified sustainable palm oil
products from sustainable sources by across the group from c.90% to 95%.
2024. In addition, it requires all its suppliers The Roundtable on Sustainable Palm Oil
to sign up to its Ethical Sourcing Policy and (‘RSPO’) has developed a set of
it audits its supply chain periodically; environmental and social criteria which
• All BoConcept suppliers must follow its companies must comply with in order to
code of conduct in order to ensure that produce certified sustainable palm oil.
all its products are manufactured in a When properly applied, these criteria can
manner that respects the rights of their help to minimise the negative impact of
employees. The company applies palm oil cultivation on the environment
its Danish background in setting out and communities in palm oil-producing
expectations from its suppliers when regions. Demand for RSPO palm oil has
it comes to quality, environment and increased significantly over the last few
work processes; years, resulting in limited supply and
high prices for this sensitive resource.A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
19
Proactive engagement with our portfolio continued
Social continued
Diversity, equity and inclusion • Inclusion of parents with young children This topic can also provide commercial
After establishing a working group aimed opportunities for our portfolio companies.
Academic research shows that diverse and at supporting young parents among its For example, WilsonHCG, which works with
inclusive companies are likely to outperform employees, in 2022 Havea opened an companies to help them plan and execute
less diverse peers. Where appropriate, inter-company crèche at its headquarters. talent acquisition programmes globally, has
we have been making this case with our This facility provides a flexible childcare also developed a Diversity, Equity, Inclusion
portfolio companies through our board- solution for Havea’s 400 employees in and Belonging service for its clients. With
level engagement. Boufféré where both production and HQ this service, the business helps companies
We monitor diversity and inclusion in our staff are based. In particular for production to diversify their talent pools by accessing
portfolio closely through our semi-annual staff, the facility provides childcare candidates from diverse communities,
portfolio company review process and have support based on their atypical shift leveraging its relationships with hundreds
improved the quality of our data collection working patterns which can involve early of diversity-focused organisations.
and engagement on this topic over the last morning or late evening working. Through this service the business also
few years. A number of our portfolio To deliver this, Havea approached a local creates guidelines and standard operating
companies are sponsoring initiatives to eco-network made up of industrial procedures for diversity hiring that can be
improve diversity and inclusion across their companies undertaking joint initiatives to tracked and measured to ensure clients
organisations. For example: provide solutions to the societal and comply with internal guidelines and
environmental challenges they face. government regulation. In addition, its
• Gender diversity
In total, five companies collaborated with talent consultants host training sessions
Shipping is a notoriously male-dominated
a childcare provider to provide a solution with hiring managers to reduce bias.
industry. Both ESVAGT and Scandlines
aimed at attracting and retaining
signed the charter on women in shipping
young parents.
launched by Danish Shipping in early 2020
and have increased their efforts to • Inclusion of people who have
improve the hiring of women. ESVAGT has long been unemployed
initiated collaborations with educational Action partners with initiatives across a
and training institutions offering number of its markets to reintegrate
employment to women. Technology has people distanced from the labour market
also traditionally been a male-dominated or who do not have the skills and training
industry. Tampnet is developing a to participate in the workforce.
‘Women in Technology’ programme • Inclusion of people with disabilities
and has set up targets to improve the Mepal’s products are manufactured
representation of women in its workforce primarily in sheltered workshops in the
overall and in its management team. Netherlands, which provide access
Many of our portfolio companies have set to employment for individuals
targets for improved gender diversity. with disabilities.A responsible A responsible A good 3i Group plc Sustainability report 2022
Introduction investor employer corporate citizen GRI and SASB
20
Proactive engagement with our portfolio continued
Governance
Robust governance of ESG Cyber security ESG-linked funding To date, 3iN, ESVAGT and Royal Sanders
risks and sustainability Cyber security remains an important area Most of our portfolio companies have have put in place specific ESG-linked
of attention. As significant shareholders in bank funding in place. As these facilities bank facilities. As more of our portfolio
We engage with our portfolio company companies’ bank debt is refinanced, we are
management teams so that they assess our portfolio companies we have supported are gradually refinanced, we have been
material investment in IT and security considering linking them to ESG targets. considering implementing ESG linkages at
and mitigate the relevant ESG risks for other companies.
their business and embed long-term infrastructure to ensure this risk is mitigated This has both financial and commercial
sustainability considerations in their appropriately. We raise cyber risk awareness benefits. ESG-linked banking facilities tend
strategy. A significant proportion of our with our investment teams and our portfolio to have lower costs and attract a broader
portfolio companies have put in place and through regular training and forums and range of lenders. The commercial benefits
published comprehensive sustainability periodically conduct cyber audits of our are less immediate, but as public demand
strategies and in many cases set targets to portfolio through an external network for progressing sustainability agendas
measure their performance across a number security consultancy. becomes clearer, being able to show a
of relevant indicators. We are working with commitment to deliver on a number of
In November 2021, we facilitated a CIO
the remainder of our portfolio to ensure that quantifiable EGS KPIs can have benefits
Virtual Forum, hosted by a specialist
they have a suitable strategy in place. in terms of perception with customers,
consultancy, which brought together 30 of
governmental actors or regulators,
our portfolio companies. The purpose of
among others.
the event was to highlight the current cyber
security threats and best practice to address
them, discuss portfolio companies’ cyber
security maturity and share the experiences
of cyber security strategy implementation.You can also read
