Responsible investment

Responsible investment at Coller Capital

Coller Capital sees responsible investment as fundamental to its business – key to delivering long-term investment performance for our investors. We therefore integrate environmental, social and governance (ESG) factors into all stages of our investment process.

In 2011 we adopted an ESG policy, establishing robust processes for assessing and monitoring ESG risk

Our ESG approach

Coller Capital’s approach to responsible investment has developed over several years. Since 2011: we have put an ESG policy in place; established robust processes for assessing and monitoring ESG risk; committed to encouraging all our managers to adopt a similar ESG policy; and created an ESG Committee to steer our firm-wide approach to responsible investment.

In August 2014, we became signatories to the United Nations-supported Principles for Responsible Investment (PRI). These voluntary principles provide a practical framework for incorporating ESG issues into mainstream investment decision-making and ownership practices.

Responsible investment, in Coller’s definition, is a process that takes full account of the environmental, social and governance factors that might materially impact the value of our investments or that conflict with our corporate values. Our policy therefore covers a broad range of ESG issues – from climate change to labour rights to farm animal welfare – and is implemented across our whole investment process, not just the investment decision phase.

We strongly believe that private equity’s model, which emphasises investor engagement and a long-term horizon, is well positioned to create value through responsible investment. Although secondaries market investments are by their nature often at a step removed, Coller Capital nonetheless uses its influence with GPs to encourage best ESG practice wherever possible.

Support for global responsible investment

It is clear that responsible investment is an issue that investors take seriously – one in four of the Limited Partners in our sixth fund is already a PRI signatory. We therefore believe it is appropriate and important for us, too, to commit ourselves to the aspirational Principles laid out by the PRI.

The PRI's six principles of responsible investment

  1. We will incorporate ESG issues into investment analysis and decision-making processes
  2. We will be active owners, and incorporate ESG issues into our ownership policies and practices
  3. We will seek appropriate disclosure on ESG issues by the entities in which we invest
  4. We will promote acceptance and implementation of the Principles within the investment industry
  5. We will work together to enhance our effectiveness in implementing the Principles
  6. We will each report on our activities and progress towards implementing the Principles 

We expect our responsible investment policy to be in harmony with our corporate values – which are the touchstone for everything we do – and we therefore monitor its implementation to check that this alignment is maintained in practice.

The future of ESG at Coller

We have been encouraged by the impressive progress made by the private equity industry in recent years – the proportion of our underlying fund GPs with an ESG policy rose from 16% at the closing of our fourth fund in 2002 to 80% at the closing of our sixth fund in 2012. However, responsible investment is a complex area and we know we will need to continue developing and enhancing our approach.

Over the coming years we will work closely with our GPs to do this, especially those managing our direct secondary portfolios, with whom we have particular influence. We are also convinced that meaningful change through ESG will only be achieved if the Limited Partner community works together, and we therefore welcome dialogue with our investors on this issue.

FAIRR

As founding members and active contributors to the FAIRR (Farm Animal Investment Risk and Return) Initiative, Coller Capital promotes the consideration of ESG-related investment risks inherent in intensive livestock farming, including the threat of antibiotic resistance. 

We also encourage ESG engagement at the underlying portfolio company level by our GPs. We believe that well-managed ESG issues can translate into better risk management and corporate governance, and can also help to identify additional company value at exit.