Environmental, Social & Governance
AEA’s Long-Standing Commitment to ESG and Responsible Investing
“When we incorporate material, measurable, and actionable ESG opportunities into our deal process – from diligence all the way through to exit – we accelerate the positive impact we have on our investors, our business partners, our employees, our communities and the environment. I am both proud of what our team has achieved and energized by AEA’s steadfast commitment to continuous improvement.”Brian Hoesterey, Chief Executive Officer of AEA Investors
AEA’s Long-Standing Commitment to ESG and Responsible Investing
Early on in AEA’s history, we recognized the value of ESG management – both from a corporate reputation and value perspective, and because it is simply the right thing to do. We believe that a strong ESG program paves the way for more sustainable businesses that can unlock greater long-term value and positively impact our society. At the firm level and across our private equity portfolio companies, AEA seeks to integrate ESG considerations into each phase of our work – during the investment process, throughout overall portfolio operations and as AEA continues to advance and invest in capabilities to achieve firm-wide ESG goals.
Explore the AEA ESG Fact Sheet
For more detailed information regarding our approach, please explore our ESG Fact Sheet. The AEA ESG Fact Sheet is a quick reference tool for our investors and other stakeholders, and highlights AEA’s key areas of environmental, social and governance focus and progress.
How we integrate ESG throughout our operations – including private equity portfolio company operations and AEA internal operations – has been one of AEA’s most important ESG priorities.
Looking Inwards:
At the firm level, AEA is particularly focused on diversity, equity and inclusion (“DEI”). We have a variety of initiatives in place dedicated to supporting DEI across every level of our organization to promote an inclusive environment for all.
Looking Outwards:
With our private equity portfolio companies, AEA has established a strategy for integrating ESG matters into key investment and portfolio management processes and decision making, which includes oversight by our dedicated Risk and ESG Steering Committees. Our ESG efforts were formalized in 2015 for our MMPE team with the adoption of an ESG Policy, which captures the best practices our investment teams have been following for many years.
ESG in Action
Having made private equity investments across many companies and dozens of industries since our founding more than 50 years ago, AEA is well positioned to identify risks, share best practices and partner with businesses to develop customized action plans that address ESG challenges. We structure our actions in this area taking into account AEA’s level of control and the business maturity of the portfolio company.
Our 360° Approach to ESG Integration for MMPE and SBPE Portfolio Companies
Investing
AEA’s private equity investment process seeks to consider and integrate both the risks and opportunities associated with ESG. We leverage our ESG Framework, which was developed with reference to the UN Global Compact, the UN Sustainable Development Goals, the Principles for Responsible Investment and external subject matter experts, and detailed ESG Review Checklist to identify these issues and opportunities prior to investment. We then work with portfolio company investment teams to help incorporate these potential risks and areas for improvement as well as possible opportunities for value creation into their plans. As part of our ESG evolution, AEA has placed greater emphasis on understanding how ESG trends can be harnessed to drive industry growth, create new markets and provide a competitive advantage.
Portfolio Operations
Once we have made a controlling investment in a private equity portfolio company, we help our management teams develop an ESG action plan. These plans, which are informed by the relevant Sustainability Accounting Standards Board (“SASB”) guidelines, outline the following process:
- Determine the most material issues for their stakeholders
- Prioritize those issues based on impact, likelihood and current process effectiveness
- Develop plans with responsible owners, metrics and monitoring
- Engage with the Board of Directors in annual reviews
- Communicate about their ESG efforts as appropriate
Starting in 2020, AEA began hosting an annual ESG Summit, which gathers AEA portfolio companies and outside experts to review key trends, introduce process enhancements, share portfolio company progress and best practices.
AEA Firm Goals
AEA is committed to ongoing ESG learning and improvement as we work towards furthering our ESG goals. Actions we take to stay at the forefront of a continuously evolving ESG landscape include:
- Focusing on promoting diversity, equity and inclusion across all levels of our organization and investing in human capital through recruiting and retaining top talent
- Leveraging third-party experts, market-leading frameworks and our deep subsector knowledge to effectively identify and assess ESG risks and value opportunities
- Utilizing our dedicated ESG leadership team to develop and share best practices across the firm and our diverse portfolio
- Conducting external expert presentations on promoting diversity and inclusion in the workplace and sharing ESG best practices and program development updates with a focus on recent ESG trends and implementation skills
- Encouraging our investment teams to stay current on material ESG issues related to their respective portfolio companies
- Supporting the DEI and talent-focused initiatives we have in place to enhance AEA’s culture and support a diverse workforce, including AEA’s Women’s Leadership Network, Sponsor of Students for Educational Opportunity, HBCU Summer Internship Program and our partnership with Out 4 Undergrad. Read more about the programs that push our culture further on our Culture and Talent & Careers pages
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