Creating value as
a responsible investor
A letter from the Executive Chairman
As a firm with a global footprint, we are keenly aware of the many challenges facing the world and the role that responsible investment can play in overcoming these challenges and in creating value.
This year’s report sets out the steps we are taking to create long-term value, and highlights how we are putting sustainability at the core of our firm, as well as across our investment portfolio.
Mohammed Alardhi
Executive Chairman
Highlights
Climate action
Sustainability Leader
Ranked top 10 sustainability leaders by Forbes ME for the second year in a row
Net zero
Publicly reaffirmed our commitment to achieving net zero emissions by 2050 or sooner
-32%
Achieved a 32% reduction in Scope 1 and 2 GHG emissions in FY23, vs a FY19 baseline, and on track to reach interim net zero target
People and culture
DEI Top 10
Ranked among top 10 in DEI among private equity firms for a third year (2023) by Equality Group
>80%
Piloted DEI maturity framework with majority of European private equity portfolio companies
92%
Achieved a high score in our annual survey for general employee satisfaction
Supporting global climate action at COP28
Investcorp was one of the first companies to support COP28 as an Associate Pathway Partner, reflecting our commitment to help drive global efforts to tackle the causes and impacts of climate change.
This annual climate event was widely recognized as a success, culminating in an unprecedented agreement to shift away from all fossil fuels in energy systems, in a fair and balanced way. Our presence in the Climate Finance Hub placed us among sustainability leaders in the financial services space.
The evolving landscape of sustainable investing
Rishi Kapoor
Vice Chairman and Chief Investment Officer
Habib Abdur-Rahman
Global Head of Sustainability
Progress against our net zero commitment
As part of our net zero commitment, we have aligned our planned transition to near-term science-based targets, targeting a 47% reduction in Scope 1 and 2 emissions from our FY19 baseline by FY30.
Our energy reduction initiatives implemented to date have helped reduce our Scope 1 and 2 emissions by 32% between FY19 and FY23. In order to remain on a credible path to net zero, we must continue our efforts to achieve a further 15% reduction from our baseline. A large factor in our progress to date has been our increased use of renewable electricity and biogas in our operations and we will continue to leverage these energy sources across our offices where possible.
With regards to select Scope 3 categories, our emissions increased by 26% compared to FY22 with the majority of this increase relating to a rise in business travel. Business travel accounted for over half of our reported Scope 3 emissions in FY23 and a 42% rise in related emissions compared with the previous year. Despite this increase, total emissions arising from business travel were still significantly lower than pre-pandemic levels, driven by greater travel discipline and continued use of video conferencing technologies.
For further information on our Scope 1, 2 and 3 emissions, please refer to our Annual GHG Emissions Statement FY2023
Our approach
Focusing on what matters most
Our sustainability efforts are guided by input and feedback from all our stakeholders, including our clients, employees, shareholders, regulatory bodies, lenders and our Board of Directors.
We continually consult our core stakeholders on their views and expectations and strive to consider multiple views when establishing our sustainability policies, practices and reporting methodologies.
Climate action
We support the transition to a net zero economy through our investments, portfolio companies and across our own operations.
People and culture
We advocate for more representative and inclusive work environments and support the health, wellbeing and educational advancement of our communities.
Good governance
We build high performing businesses through good governance measures including robust data protection and cybersecurity protocols.
Our principles
Our principles guide everything we do in pursuit of our objective to provide clients with the best investment products and solutions for their needs.
Global outlook
We see opportunity in the major markets where we operate. We provide the local insight needed to understand and leverage every meaningful investment idea for our clients.
Lasting partnerships
Our business is built on the highest level of service. We nurture strong, enduring relationships with our clients and with the management teams we invest in.
Entrepreneurial spirit
We are aligned with our clients. As a principal investor in many ideas, we will often deploy our capital before we offer the opportunity to our clients.
Sound judgement
We are an institution with four decades of experience. We draw on our knowledge to make well-informed decisions in the pursuit of strong and sustained returns.
Sustainable investing
Embedding sustainability in the investment lifecycle
Over the past few years, we have been integrating and improving the way we consider sustainability factors across our investment strategies.
Our approach aims to protect our investments from value erosion due to sustainability factors and unlock additional value. The broad, complex and fast-changing nature of these factors requires flexibility; we use feedback loops throughout our investment lifecycle to stay responsive.
Framework evolution
Industry best practice
We leverage frameworks and pilot new approaches to sustainability from the industry groups we participate in.
Peer benchmarking
We monitor our peers and collaborate where appropriate to remain relevant with industry best practice.
Investor sentiment
We listen to our investors’ feedback and monitor wider market trends to build our understanding of their needs.
Market developments
We stay abreast of wider sustainability news and events to inform our approach and keep on top of emerging issues.
Process development
Screening and diligence
We learn from pre-investment screening and sustainability due diligence performed on target companies.
Engagement and monitoring
We apply learnings from working with our portfolio to feed into investment process considerations and conditions.
Value realization
We seek to assess how sustainability factors support value realization and understand what buyers of our assets value.
Investor reporting
We analyze the due diligence questionnaires and data requests we receive to give us insights into what our investors value.
Investment lifecycle
Iterative investment team feedback enhances our processes; we encourage cross departmental knowledge sharing.
Spotlight on our portfolio
Climate action
Accelerating decarbonization in our portfolio
We work closely with our portfolio companies to help them better understand and manage their environmental impacts, prioritizing attention on companies with carbon-intensive operations, where relevant. Our aim is to increase the proportion of assets under management that are aligned with net zero pathways compatible with 1.5°C.
It is evident that companies of the size and stage we invest in require assistance to understand and reduce their environmental impact. The first stage of our global carbon management program is focused on building capabilities within our portfolio companies to formulate GHG inventories, establish emissions baselines and identify high-impact, low-cost carbon reduction initiatives. We’ve been pleased to see an increase in the percentage of portfolio companies calculating their emissions in 2023.
Case studies
People and Culture
Advancing representation in our portfolio
In FY24, we continued to engage with the management teams of our portfolio companies to support the development and implementation of policies and practices that prioritize people and culture.
At Investcorp, we have seen firsthand how bringing together diverse perspectives creates stronger, more effective organizations. However, we recognize that diversity alone is not enough – it must be accompanied by a culture of inclusion, respect and belonging to drive meaningful impact. Our portfolio data shows that policies and practices that promote diverse recruitment and retention can significantly impact workforce diversity and, in turn, strengthen long-term competitiveness.
Case studies
Good Governance
Strengthening portfolio governance practices
Strong governance has been a focus of Investcorp from our inception and is the bedrock of our approach to responsible investing. We believe that strengthening corporate governance practices is a prerequisite to building sustainable businesses.
For each potential investment we make, we evaluate governance structures and identify areas for enhancement. We support our companies to establish and implement strong governance codes, policies and practices such as anti-bribery and anti-corruption measures, and cybersecurity risk management. In some cases, we will support our portfolio companies to establish governance structures such as putting in place a board of directors.
As a member of the EDCI, we are able to assess our portfolio against comparative private companies, including on governance-related metrics. Providing analysis and benchmarking where available to our investment teams helps them and our portfolio companies focus on the initiatives which will best mitigate governance-related risks and improve operational effectiveness.
Corporate sustainability
Spotlight on our operations
Climate action
Decarbonizing our operations
In line with our commitment to achieve net zero emissions by 2050 or sooner, which we announced in 2023, we continue to pursue a range of initiatives to reduce our operational emissions including improving energy efficiency in our global offices, optimizing energy consumption and deploying renewables where green tariffs are readily available.
To achieve a 47% reduction in Scope 1 and 2 emissions by 2030, we have mapped decarbonization levers across our operations, focusing on those that have high emissions materiality. This includes a goal to source 100% renewable electricity from the grid, where this is available, by 2030 and a long-term strategy to transition to green buildings. We are also seeking to leverage our procurement spend to advance climate action among some of our biggest vendor relationships.
People and Culture
Promoting representation and advancement
As an organization that has bridged regions, cultures and people from inception, we recognize the immense value that diversity brings to driving sustainable practices and long-term business success.
Today, our global firm is proud to be home to 44 nationalities spanning four generations, each contributing a wide range of viewpoints and experiences. This diversity strengthens our ability to adapt, innovate and create value for all our stakeholders. We are committed to building a culture where everyone feels empowered to bring their unique backgrounds to the table, ensuring that their voices are heard, respected and reflected in the way we do business.
Educational partners
Good Governance
Building a sustainability mindset
Investcorp was founded on the principle that good corporate governance is a prerequisite for long-term success. These practices are reflected in our approach to sustainability matters at Investcorp. We continually strive to improve the effectiveness of internal controls related to Investcorp’s sustainability activities and reporting, in an effort to build a long-term sustainability mindset.
Today, our global firm is proud to be home to 44 nationalities spanning four generations, each contributing a wide range of viewpoints and experiences. This diversity strengthens our ability to adapt, innovate and create value for all our stakeholders. We are committed to building a culture where everyone feels empowered to bring their unique backgrounds to the table, ensuring that their voices are heard, respected and reflected in the way we do business.
- We voluntarily completed our first PRI assessment, achieving a score of 69% for the Policy, Governance and Strategy module (the median for which was 58%). We used the results to help improve processes and practices across the firm.
- We published our GHG emissions within a standalone report and have to date disclosed five years of emissions data.
- We conducted regulatory horizon scans to ensure that we and our portfolio companies are preparing for and compliant with applicable sustainability-related regulation.
- With the ISSB’s IFRS S1 and S2 standards coming into effect, we are reviewing our disclosures to ensure that they continue to align with best practice and meet the needs of our stakeholders.