According to Private Equity International’s LP Perspectives 2021 Study, 80 percent of respondents consider diversity and inclusion at the GP level during due diligence; how does AP6 engage with managers on D&I?
D&I is a standard item in due diligence and a separate module in AP6’s annual ESG assessment, where both the GP team and the portfolio company perspective are addressed. We want to understand how GPs are securing the best talent and avoiding group think in their organisations as well as in portfolio companies. D&I is also a topic which is raised by the investment team in the ongoing dialogue with GPs, for example, through interactions in the LP advisory board, the annual investor meeting or more informally. AP6 has also organised several diversity and inclusion roundtable events where GPs have been invited to share and learn from each other in an intimate roundtable format.
What steps are being taken to improve diversity at AP6?
Over the years we have worked hard to deliver on the long-term ambition to increase diversity and inclusion at AP6. We have looked carefully at our teams and how we assess talent and experience, how we formulate job postings and what we require from recruitment firms. On an annual basis, the board of directors adopts sustainability-related targets, where increased gender diversity and diversity in a broader sense have been key for several years. Considering that diversity and inclusion is an industry issue, we also collaborate selectively with universities to showcase female careers in private equity, for example.
How does AP6 address D&I at the portfolio company level?
AP6 invests indirectly through private equity funds and directly in minority, mainly through co-investments. Therefore, D&I is best addressed in dialogue with the GPs, as outlined above. In cases where AP6 has a more significant minority investment, with a board seat, there are means to address diversity and inclusion more directly on the portfolio company level.
How does D&I tie in with AP6’s approach to ESG?
ESG is an important part of creating long-term high returns for the pension system as the integration of ESG provides an additional lens when diligencing and monitoring investments. This helps us uncover risks and opportunities that may not have been identified without ESG integration. One of the social issues in ESG that spans across AP6 as an organisation and AP6’s investment portfolio is diversity and inclusion. Increasing diversity and inclusion has the potential to improve team culture and decision-making in AP6, as well as in fund teams and portfolio companies.