Constellation presents a unique opportunity to implement strong, long-term stewardship practices, not only to a new generation of private equity managers, but also to their underlying investments. The ESG policy sets forth a robust process that seeks to integrate and provide ongoing guidance to portfolio companies for the duration of the investment.
Wafra developed this ESG strategy in close consultation with our Constellation investment partners. As a result of the collaborative process, the ESG methodology reflects the Constellation partners’ shared values and vision. To ensure an efficient process, Wafra focuses on key ESG risk factors that allow investor entrepreneurs to concentrate on an actionable set of best practices. We used Sustainable Accounting Standards Board (SASB)’s sector-specific framework to develop a set of ESG diligence parameters that emphasized financially material risks and opportunities within our portfolio companies. The portfolio manager then uses these considerations and industry-agnostic ESG factors to diligence and engage the managers throughout the life of the investment.
Pre-investment ESG Diligence
Constellation executes ESG diligence for all prospective portfolio companies on a set of risk factors. We use SASB’s sector-specific framework as well as other global norms to develop ESG diligence parameters that emphasize financial material risks and opportunities within our portfolio companies.
Post-investment: Value creation and Engagement
We aim for our investments to positively impact society. We look to engage on matters such as operational efficiencies and ESG best practices in order to create long-term value. For example, Ara, one of Constellation’s portfolio companies, invests in Puraglobe, a leading innovator in zero emission biofuels that is impacting the renewable energy market.
The ESG opportunities captured by Capital Constellation are documented in an end of year report given to the limited partners.