Monomoy Capital Partners engages everyone from the ground up in ESG at both the firm and portfolio companies. For example, all new hires are required to understand the firm’s ESG policies as part of the onboarding process.
“We firmly believe in getting everyone involved,” says Ethan Klemperer, head of the operating team. “In our portfolio companies we involve everyone in ESG, from employees on the plant floor to the board members,” he adds.
Monomoy has an internal ESG committee and in the last year started establishing ESG committees at its portfolio companies. The firm expects to have active committees in place at 75 percent of them by the end of this year.
ESG evaluations and strategies are built into the investment processes, from underwriting, operating and through exit. ESG diagnostics are used during due diligence. Early in the underwriting process, the deal team works closely with a company’s management to form an ESG action plan. Establishing and aligning goals early in the relationship allows for speedy implementation of policy improvements, often even before the deal is closed.
Monomoy has internal benchmarking processes to evaluate, compare and qualify sustainability indicators in portfolio companies. ESG indicators are reported quarterly. In June 2021, the firm implemented Goby’s ESG data management and reporting software to further enhance, centralize and automate reporting. Real-time measurement allows for evaluating and executing strategy changes.
Portfolio management teams have also been trained to use the Goby platform so that they have the tools and insights needed to manage their ESG strategy. Each portfolio company has specific KPIs that they track through their ESG committee on a monthly and quarterly basis. This is then reported to the board.
“We have seen the best results by first putting the process in place and then allowing things to evolve-building the diagnostic, establishing the committees, and then setting the targets,” says Klemperer. “We are seeing that by starting somewhere and letting it evolve, the companies that have been doing it the longest are starting to have it ingrained in their culture and are becoming more sophisticated.”
Monomoy, which was also named a PE Innovator in ESG last year, is committed to hiring and promoting a diverse pool of talent internally and across its portfolio. As of this year, for example, there are women in leadership positions at all of its portfolio companies.
For our full 2022 Private Equity Innovators in ESG coverage, click here.