ESG is a core pillar of Long Ridge Equity Partners’ stewardship with a buy-in and leadership from the most senior levels of the firm. Long Ridge’s investment strategy has long focused on technology that advances ESG in enterprises within the firm’s core financial and business technology verticals. Its policy draws upon two industry frameworks: the UN Principles for Responsible Investment and ILPA’s Diversity in Action Initiative, of which Long Ridge is a signatory.
ESG is integrated across the firm’s investment lifecycle, beginning with pre-investment due diligence and risk mitigation. During the hold period, companies are encouraged to keep ESG top-of-mind, particularly around employee base, executive team and board composition.
DEI is core to Long Ridge’s talent management philosophy. The firm’s code of conduct is focused on anti-harassment and anti-discrimination. Diverse, equitable, and inclusive hiring and retention is a priority. Long Ridge tracks metrics that are consistent with ILPA’s Diversity metrics template and encourages portfolio companies to measure their progress around hiring diverse leaders, engaging employees in DEI conversations and assessing culture.
Long Ridge, which was also named a PE Innovator in ESG last year, believes it can have a disproportionate impact in achieving its goals by working closely with executives to raise the profiles of these issues and share best practices. As active investors, the firm plays a role in shaping ESG priorities across portfolio talent management and executive and board-level recruitment. Long Ridge has a long-standing relationship with third-party advisors to ensure diversity of portfolio leadership and boards.
In addition, Long Ridge encourages portfolio companies to incorporate ESG as a topic in board agendas and in annual goal-setting or reporting. The investment team has also engaged portfolio leaders to help facilitate conversations around equitable hiring practices, unconscious bias training and community involvement.
“We continue to believe that private equity firms can make an outsized impact on ESG advancement due to their active role in shaping not only the strategic priorities, but also the talent bases of their portfolio companies,” says Andrew Cedar, principal. “The portfolio can and should be leveraged as an engine or force multiplier for ESG initiatives, given the scale of the companies’ economic impact, employee base and geographic reach.”
Long Ridge has also taken steps to track portfolio ESG metrics. In February 2022, it implemented a portfolio monitoring software program called Cobalt that is aimed to facilitate standardized KPIs. The firm is also designing a standardized dashboard for portfolio companies to report diversity of their boards and leadership teams.
For our full 2022 Private Equity Innovators in ESG coverage, click here.