Episode 19
Elsa Palanza
Inject Sustainability

Elsa Palanza is responsible for firmwide ESG strategy and responsible investing at ICG, a private equity investment firm. Having worked across FTSE and Fortune companies plus the not-for-profit sectors for the past 20 years, Elsa has extensive experience in launching and driving ambitious ESG initiatives. In this episode, Elsa discusses the strategic imperative to inject sustainability principles into core investment practices and portfolio company business plans.

Inject sustainability into core decision making

Portfolio companies have a lot on their hands – acquiring other businesses, workforce management, new regulations, industry trends and much more. With so many decisions at hand, it’s important to inject sustainability principles into the centre of these decisions rather than just applying it on the outside (as a separate strategy or set of decisions).

Build coalitions to make progress

It’s possible to demand particular actions from portfolio companies as an owner, but does that help build a company that embraces sustainability principles for the future (e.g., retaining knowledge, capability and commitment)? No. Building coalitions, finding win-wins and supporting people on their individual journeys is the way to make a lasting change.

Regulation is a floor not a ceiling

Regulatory regimes are growing and changing quickly. Regulation is the floor to protect consumers and ensure stability of the financial system. There’s no way a regulatory regime can layout a bespoke way of an individual business to structure its approach to ESG.

Establish a baseline and a plan for improvement

Investigative work before acquiring company – get to know credentials of ESG for the business. When we acquire a company we go through an on-boarding process assessing targets, baseline metrics, etc. The goal is to assess initial ESG maturity then develop a plan for improvement. Our approach uses a consistent fund-level framework but individual company plans are bespoke.

Expansive pathway of opportunity moves markets

If you really want to harness markets, focus on the opportunity. We can build new businesses in the transition of our global economy. If we look at the next company’s owner, they’ll be thinking of their buyer. That’s a 15 year time horizon - what will customers want in 15 years? How is the global economy going to look? There’s a huge pie to go after with this long term view.