CSR: Ardian takes the lead
In 2017, the UN-supported Principles for Responsible Investment (UNPRI) organisation gave Ardian top marks for its Corporate Social Responsibility (CSR) strategy. The A+ rating recognized the sustainable approach taken by the French private investment manager in four key areas: Environmental, Social and Governance (ESG) Strategy, Direct Investments, Infrastructure and Funds of Funds.
Ardian among the frontrunners
Last year, UNPRI ranked Ardian as a top ESG performer, giving the firm an A+ for its CSR and direct investment commitments, and an A for initiatives covering its Infrastructure and Funds of Funds portfolios. These results put Ardian above the sector median.
These strong performances form part of a broader CSR approach. Back in 2015, Ardian was one of five private equity firms that founded Initiative Carbone 20, a project that seeks to reduce the carbon footprint of portfolio investments. This environmental commitment was further strengthened two years later by the signature of the Decarbonized Europe Initiative Manifesto, which calls on European states to slash greenhouse gas emissions by 2050.
“Ardian’s progress on this front reflects our aggressive CSR approach. We have no choice but to keep getting better, if only to maintain our scores at a time where the demands placed on management companies are intensifying all the time”, says Candice Brenet, Ardian’s Head of Corporate & Investment Responsibility. She leads a three-person team that is working hard to disseminate the CSR culture within the organisation and steer CSR-related reporting to investors.
CSR monitoring goes up a gear
Ardian is confident about ESG’s role in generating value, citing the example of Novacap, a health company that saved €500,000 over five years by reducing accidents in its factories by 75%.
For this reason, Ardian sees ESG criteria as an integral part of investing. “They are the subject of increasingly extensive reporting, throughout the life of investments”, says Candice. In 2016, 148 managers answered 40 questions sent out by the Funds of Funds teams to assess their maturity in terms of social and environmental responsibility. “These surveys do double duty for our investment teams by spotlighting major ESG issues and identifying best practices introduced by managers and senior executives, which are then used to benefit the portfolio as a whole.” Measured indicators include stakeholder and public engagement, business transparency, environmental impact and sponsorship.
On the investor side, Ardian has established a reporting system that Candice calls “fairly unique“. “We communicate not only on how ESG criteria are recognised in the investment process within our Expansion, Mid Cap and Infrastructure activities, but also on the main ESG issues identified at each portfolio company and the steps taken by the firms to address these issues. It is still fairly uncommon to encounter this level of detail in the private equity industry.”
Sharing profits with employees: Ardian’s stance
“We feel very deeply that success ought to be shared.” In 2008, Ardian became one of the first investment firms to draw up a charter on sharing profits with the employees of exited companies. It has gone on to share €21 million with 9,000 employees at 18 companies. This stance is consistent with Ardian’s make-up as an independent company that is 55%-owned by employees.