November 13, 2020
Improving environmental, social and governance (ESG) performance of our clients is critical to Norfund’s sustainability ambitions. Not only do high ESG standards help to mitigate risk, but they also help to identify and maximise opportunities to add value to business.
One of the ways Norfund helps firms to achieve best practice standards is through our ESG workshop programme, which provides hands-on support and practical advice.
CDC started organising these workshops in 2010, and Norfund has been a partner and provided financial support since 2017 .
Helping managers integrate ESG performance
The first years, the workshops focused on helping fund managers to integrate ESG into their investment process. However, we realised there was a lack of expertise about the role that private equity funds could play to drive good ESG performance within their portfolio companies, and that they could use their position as a leading investor to share experiences and good practice. Since then, the workshop programme has become the largest of its kind in emerging markets, reaching a significant proportion of the private equity industry in the areas where CDC and Norfund invest, particularly in Africa.
As the programme has grown, it has been adapted to meet the needs of participants and expanding the topics covered.
Learning by sharing
For example, the revised and expanded version of the programme that CDC and Norfund launched caters not only to fund managers, but also to companies where we invest directly, and those we invest in through private equity funds. The inclusion of portfolio companies has brought diverse experiences and points of view to the table, which has led to dynamic and productive discussions. The workshops use a strong ‘learning by sharing’ approach building on shared experiences and using examples from participants. Businesses often have a small ESG team of one or two people, so these sessions are an opportunity to bring a much larger group together to talk about common challenges and ways they can create value in their business. It is extremely useful for participants to see how similar challenges are addressed by other companies.
“Strengthening the ESG capabilities also makes our dialogue with companies on sustainability matters so much easier, ” Tim Lund explains.
New technical sessions focus on climate change, human resource management, emerging ESG issues such as data privacy or the circular economy, and a session on integrating impact measurement. These complement our existing training on topics such as how to integrate ESG in the investment cycle, establishing an effective Environmental and Social Management System (ESMS), board oversight of ESG and women’s economic empowerment. These sessions continue to evolve to reflect emerging practice and knowledge.
Supporting small and first-time fund managers in emerging markets
The revised workshop programme also reflects a focus on supporting smaller and first-time fund managers in emerging markets, who often face tougher ESG challenges because of contextual risks and circumstances such as weak legislative frameworks or poor enforcement of ESG legislation. These workshops aim to drive ESG value beyond compliance, by encouraging participants to think about ESG not just through the lens of risk mitigation but also through the lens of opportunity and value addition.
One example of a fund manager we’ve supported through our workshops is Ascent Capital Africa, which invests in promising businesses across East Africa through its Ascent Rift Valley Fund. The Ascent team – along with representatives from the fund’s investee companies – attended our training sessions in Kenya. One of these sessions formed the basis for how Ascent now incorporates ESG considerations into their investment process.
We really used that training to set up a template for how we look at environmental and social considerations at screening, during due diligence, and also when we’re monitoring investmentsMarieke Geurts, Investment Director at Ascent.
From theory to implementation
Ascent aren’t the only Fund Manager applying lessons from our workshops; in a follow-up survey to CDCs most recent workshop, two-thirds of participants said that they planned to apply lessons from the workshops in their work within the month, and over one-third confirmed that they had already implemented changes in their company’s ESG practice as a result of the training.
Online training due to Covid-19
As a consequence of COVID-19, CDC and Norfund are now moving these workshops online, to a virtual training that keeps as much of the interactivity and implementation focused learning experience as possible.
We recently ran sessions exploring how COVID-19 affects the ESG and business integrity investment processes of fund managers. For portfolio companies, the training focused on using the ESG management system as an essential tool to navigate changing social and environmental dynamics during the pandemic.
For more informationabout our workshop programme, please contact: