Apollo Global Management has a long-standing practice of using ESG factors in investment evaluations. As part of the due diligence process, it identifies and assesses potential material ESG risks. Once an investment is made, it uses this information to address ESG risks and opportunities.
Via its ESG reporting program, portfolio companies submit an ESG data report and ESG narrative report. The reports, which are submitted in the first quarter of each calendar year, are used to produce Apollo’s ESG annual report and further refine engagement strategies with each portfolio company.
Through its ESG reporting program, which has been in place for 13 years, Apollo measures the effectiveness and impact of each portfolio company ESG performance by collecting quantitative and qualitative ESG data annually. It asks portfolio companies to report on more 160 ESG metrics.
The firm evaluates the information to track how portfolio companies are integrating ESG considerations into their business and measures year-over-year progress on ESG indicators. The data is also used to identify best practices that can be shared among portfolio companies, as well as identify opportunities for improvement. Apollo provides ongoing resources to help portfolio companies submit the reports.
In addition, Apollo regularly interacts with and supports portfolio companies on ESG issues. Examples include quarterly webinars, a quarterly ESG digest, conferences, on-site visits, and help connecting to external counsel and consultants.
Apollo continues to build its formidable ESG muscle. In the fall of last year, it added two key ESG leadership positions. Dave Stangis joined as chief sustainability officer and Carletta Ooton came on board as head of ESG for private equity.
Earlier this year Apollo, established The Sustainability and Corporate Responsibility Committee of the Apollo Board of Directors. Stangis, together with the committee and relevant dedicated responsible investment professionals, are responsible for internal oversight and reporting of ESG and implementing responsible investing policy.
In addition, Apollo launched new initiatives this year to drive meaningful change across the private equity funds’ portfolio companies. For example, it committed to reducing median carbon intensity by 15 percent over the projected hold period for new control investments in the firm’s flagship PE strategy. Apollo, which was named as a 2021 PE Innovator in ESG, also plans to achieve more than $1 billion in direct and indirect spending with diverse suppliers across its portfolio.
“Apollo has a long-standing commitment to ESG and we welcome the opportunity to share our knowledge with other GPs,” says Stangis.
For our full 2022 Private Equity Innovators in ESG coverage, click here.