Partners Group Holding AG (PGHN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the 2019 Corporate Sustainability Update Conference Call and Live Webcast. I am Alessandro, the Chorus call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Partners Group. Please go ahead.

Welcome to the first-ever live presentation of Partners Group's Corporate Sustainability Report. For the past 4 years, we have shown our willingness to be accountable on sustainability by publishing a stand-alone corporate sustainability report. This year, we just decided to make ourselves even more accountable by presenting our key metrics and initiatives live to an audience. So thank you all for joining us. Our call today -- well, unfortunately, is happening in the midst of a global crisis triggered by the coronavirus outbreak. And while our objective during this call is really to report on Partners Group's track record as a responsible investor in 2019, many of you will want to know what impact the coronavirus pandemic is having on our ESG activities now. One thing that I can say for sure is that we will not waver in our commitment to responsible investment and sustainability. And if anything, it will, in fact, be heightened as it has never been more important than it is now. We have a long-standing commitment to sustainability. We have been a committed leader in responsible investing and were one of the first private market investment firms to sign the United Nations Principles for Responsible Investment. So in the next 30 minutes, we plan to cover the following. I'll just share a quick overview of our sustainability governance structure. And then my colleague, Fredrik Henzler, who is the Head of our Industry Value Creation business unit, will provide a brief snapshot of our current ESG priorities during this crisis before taking you through the 2019 highlights from our investment portfolio. And then next, Carmela Mondino, a senior member of our ESG and Sustainability team, will share with you an impact investment case study. And then after that, we will move away from the portfolio to look at Partners Group's corporate sustainability. And our co-CEO, Andre Frei, will take you through 3 focus topics. And then finally, our co-CEO, Dave Layton, will provide an update on stakeholder impact that is particularly relevant in the current crisis. So let's begin by turning to Slide 4. Partners Group has always understood the importance that sustainability can have to long-term investing and more specifically to risk assessment. ESG topics, both corporate and investment-related, are important items on our Board and executive committee meeting agenda. These topics are officially overseen at the Board by myself and at the ExCo level by Andre Frei. These are also discussed in our Investment Oversight Committee, where I sit together with 3 other Board members. And just for your information, we have included our firm's ESG and sustainability targets in our overall executive compensation assessment. This is to ensure that all executives treat ESG as a vital component in successful investment. So with that, I hand you over to Fredrik for the ESG section.

So as Grace flagged in her introduction, it's clear that today, we find ourselves in exceptional circumstances. So before I take you through the 2019 ESG highlights from our portfolio, it feels pertinent to start with a brief snapshot of what our current ESG priorities are during this crisis, as shown on Slide 6. The key focus of Partners Group's ESG strategy right now is to maintain the business continuity in our investments. Coronavirus is the biggest challenge that many of our portfolio companies have faced so far, and we are working intensely with each of the companies to provide support and direction in navigating the evolving pandemic. Each company requires bespoke advice and solutions to manage the risks and negative impact of this crisis. Alongside individual solutions, Partners Group is providing advice across our portfolio to ensure that the management teams are providing the leadership and protecting their employees while maintaining the liquidity and working alongside the local authorities, their clients and the supply chain as necessary to keep the businesses running. As you might expect, the absolute priority topic across our portfolio in the recent weeks has been the health and safety of our employees. In parallel to the rollout of our own business continuity plan at Partners Group, we have worked closely with our assets to make sure that their own plans are adequate and that they protect the employees to the biggest extent possible from the spread of the virus. Second priority has been the risk management. The hardest hit of our portfolio companies are those that have been forced into a temporary reduction of their service due to strict social distancing, either introduced by the government or by our own, to control the outbreak. These include assets in consumer-facing sectors such as education, retail and the food and beverage industry. For these companies in particular, but also across the portfolio more generally, liquidity management has come to the fore as a priority in terms of risk management. We will see revenue shortfalls in many of our portfolio assets, and we need to manage this liquidity closely. For a handful of our portfolio companies, we envisage remaining fully engaged on the business continuity for the duration of this crisis, meaning that some of the other ESG initiatives that we have planned for 2020 will need to be postponed for now. For other portfolio companies that have been less impacted by the crisis, it will be business as usual in terms of our ESG assessment. In the meantime, the crisis has also triggered many ad hoc ESG initiatives, either across the portfolio or specific to individual companies. To name just 2 examples, my -- the IVCT, the Industry Value Creation team, has developed a playbook for guiding our management teams in the assets on what measures can be taken at the company level to help them face this crisis. They are related to health and safety, but also to the liquidity management, communications and business continuity. We have worked to secure 10,000s of face mask to individual assets. Most recently to our French asset, Cerba, a medical diagnosis company, which faced difficulties in procuring this protection -- this protective equipment on its own. Cerba was the first private laboratory in France to be certified to conduct the COVID-19 testing, and as such, is an elementary part of the pandemic fight in France. And they are also involved in testing in Italy and in Spain. Additionally, our portfolio companies are proud to support in their own contributions to contain and to fight this virus. To name just 3 examples. Civica, a software provider to the public sector in the U.K., has been supporting their NHS in its campaign to recruit retired doctors to fight the pandemic. Hofmann, the catering company headquartered in Germany, has partnered with DHL to assure that we can deliver frozen food to vulnerable people and families that are in self-isolation. And Foncia, a property management service provider in France, is using its platform to provide free access to furnished apartments for medical workers. More than 50 of these apartments have been provided for medical staff that is not able to return to their own homes in this crisis. So while managing our portfolio companies through this crisis is clearly a priority at the moment, we do want to take the opportunity to highlight our 2019 ESG activities and the improvements across our portfolio. Turning to Slide 7. I would like to first highlight that over the years, Partners Group has developed a systemic platform-wide approach to ESG integration across all asset classes, from sourcing all the way to exit. We have constantly evolved and enhanced our approach and receive recognition within the industry. We have earned the A+ rating for responsible investment strategy and governance for the fifth year running in the United Nations PRI Annual Benchmark Assessment. One of the key points underpinning our approach is engaging with our portfolio companies throughout the investment life cycle. As active owners, we commit to establishing ESG engagements with each and every one of our lead investments, setting clear expectations for what type of improvements our acquired assets should have once they are on-boarded to our platform. Turning to the next slide. Our engagements with the portfolio companies have allowed us to achieve a number of ESG impacts also in 2019. Of the figures on the slide, the one that we are particularly proud of are the 28,600 net new jobs created in the portfolio and the 9.2% average growth rate in the last decade between 2009 and 2018. Private equity is often portrayed as a net destroyer of jobs. However, this is not our experience. In fact, we have significantly outperformed the public market in terms of job creation to date. Our 9.2% average job growth year-over-year compares to an average yield growth of 2.7% across the S&P 500 over the same time period. Moving on to Slide 9. As ESG becomes more and more important to our investors, having a tool to demonstrate how robust and impactful our approach is, is a key differentiating factor. It helps us to show our clients and it helps our clients to separate leaders in the space from those that have a less developed approach. Starting in 2018, we decided to establish a ESG dashboard because we wanted to go beyond positive anecdotes that are normally found in many ESG reports. While these are good as examples, they're not systematic and they don't tell -- they are not a transparent tool to demonstrate progress across the portfolio. In order to systematically integrate ESG across our portfolio with the scale of our approach, we must have tools to understand where the performance should be improved and where we are having success. Our ESG dashboards help us track and report key environmental, social and governance KPIs across all of our direct investment portfolio, covering topics that are material to most businesses, such as energy management, health and safety, cybersecurity and gender equality. The increased transparency we achieved through the dashboard is not only useful for company -- for communicating with our clients and other stakeholders, but it also helps us steer the ESG projects within our companies as we can clearly see and communicate our expectations and measure the progress. It helped us create further accountability for our portfolio companies' ESG performance and generated competition amongst the management teams in our portfolio. To illustrate how this works, let us take a look at the 2019 ESG dashboard for our private equity portfolio as found on Slide 10. Based on the Sustainability Accounting Standards Board, the SASB, and industry standards and our own experience of implementing ESG projects and one-to-one conversations with our portfolio assets, these dashboards show the 12 most common material ESG KPIs across our portfolio. It has also shown how -- it also shows how material the individual ESG topics are for a given company through color coding, where we are engaged with each company in 2019 to attempt to improve its performance and whether or not we have been successful, as illustrated by the arrows you see in the dashboard. For metrics that are qualitative rather than quantitative, such as environmental management or cybersecurity, we conduct maturity assessments, scoring each company from a 1 to 4 based on 4 dimensions, with 1 indicating a low level of maturity and 4 indicating a best practice approach. For example, one of the KPIs we report in our dashboard is cybersecurity readiness. It indicates the strength of the company's cybersecurity policies and processes on the scale of 1 to 4. Cybersecurity is a particularly high-materiality topic for one of our portfolio company that hold sensitive data for over 30,000 employees and its nearly 190,000 customers. Throughout the year, we reviewed this company's cybersecurity readiness and realized that the policies and processes in place were insufficient. This was reflected in the subpar score of 2.8. The Board, therefore, defined this as a significant priority action area and have since worked to strengthen the cybersecurity infrastructure and tools. For instance, the company now ensures that they have an IT expert on call around the clock to manage its critical IT services. It has also implemented a tool to automatically log all incidents and attacks and launched a solution to detect outages and notify IT experts immediately. The company's readiness score has now increased to a 3.1, and the Board will continue to work on this together with Partners Group in 2020 in order to further increase the rating to the target of a 3.6. Two notable additions to the dashboard in 2019 are our climate change and Board maturity. The Board maturity KPI is a direct result of the work from our operating directors and entrepreneurial governance team. This team is charged with implementing governance excellence across all of our portfolio and has developed the board health assessment that we apply across our portfolio as a key indicator of our effective governance. The climate change KPI is a result of a carbon footprint exercise we conducted throughout our portfolio to help us identify where our greatest climate-related risks and opportunities lie. Through this exercise, we have identified and prioritized key actions to take over the coming years: One, increase data quality and tracking capabilities for companies that are unable to accurately report their carbon footprint today; two, develop and implement company-specific actions, such as energy efficiency, fuel reduction and physical climate risk assessment and mitigation strategies; and finally, building out a climate change sweep for our portfolio companies to ensure a systemic -- systematic approach to improve our portfolio companies' performance on this topic during our ownership. Our mission is to ensure that every company performs at or above the industry benchmarks on each KPI within 2 years of our investment. By the time we exit, we want each asset to be at or on a clear path to top quartile ESG performance. Turning to Slide 11. We recognize that there are several ESG areas that are material to most of our businesses. And in 2019, we initiated a project to sweep our portfolio on some of these topics. This means leveraging learnings from our most successful ESG engagements with one asset and take these across all of our portfolio on a systematic fashion. We conducted 2 ESG portfolio sweeps in 2019: health and safety; and fraud, bribery and corruption. For both sweeps, we started with a robust risk-triaging exercise to identify the high-, medium- and low-risk assets. We then worked with our portfolio companies' boards and with industry-leading external experts to identify any gaps between the company's approach and best practice and then defined action plans to fill these gaps. We also incorporated the findings of our sweeps into our ESG due diligence assessment. For fraud, for instance, we worked with our transaction services team at Partners Group to streamline and improve the fraud risk assessment, including criteria such as industry revenue makeup and the ranking of a portfolio company's headquarters home jurisdiction on the corruption perception index, CPI. In 2020 and beyond, we will plan to roll out portfolio sweeps on additional topics and have a developed climate change sweep, which we plan to conduct this year. I will now hand over to my colleague, Carmela Mondino from our ESG and Sustainability team, who will walk you through our 2019 engagement with the portfolio company, Techem. Techem also happens to be one of the investments included in our impact-at-scale investment strategy, PG LIFE, which Carmela will also briefly touch on.

Thank you, Fredrik. On the next slide, let me start by giving you a really short introduction to our impact-at-scale strategy. Over the last years, we have strived to develop our approach to ESG integration. And in 2018, we decided to take our approach one step further by launching PG LIFE, a dedicated impact-at-scale strategy focused on investments that contribute towards achieving the UN sustainable development goals, or SDG. Since then, we have worked hard to develop a methodology that endure -- ensures the assets we are investing in are actually delivering on the impact that we're promising. A central pillar of our PG LIFE framework is that active ownership is the primary lever to grow both an asset's financial performance and its impact. And one great example of this is Techem. Techem is a European energy infrastructure and services company and is a market leader in submetering services. During the diligence, we conducted our impact assessment for Techem and established that by installing and maintaining submetering devices, the company enables better monitoring of energy use, helping tenants to create -- to generate energy efficiency improvements and ultimately supporting a sustainable development Target 7.3, which is double the global rate of improvement in energy efficiency. Today, Techem Services enabled to avoid more than 7 million CO2 tons per year. This impact assessment that we conducted also outlined ways Partners Group could use its expertise to enhance the company's impact through both strategic and operational improvements. On the operational side, we are leveraging our internal team of industry and ESG experts as well as business building toolkits and expert networks and so on to grow Techem's business, both on the submetering services side, but also enabling solutions that support customers in increasing their energy efficiency. For instance, a clear example of this, its digital communication tools that Techem are currently development that will enable tenants to easily check the development of their heat or hot water consumption and also benchmark against peers. This innovation aims at using consumer behavior to further reduce consumption, while at the same time, attracting new generations that are more interested in tech-enabled solutions. Driving impact at our portfolio also requires a buy-in from the management teams. And in our active ownership portfolio, this is something that we highly value. For instance, in Techem's management, in the case of Techem, management supports quantifying the impact on energy consumption because they can use it to engage with governments, with consumers, even with employees. And overall, this is something that is supporting the business strategy as they are seeking to reposition themselves from a metering company to an energy efficiency firm. We are also ensuring accountability by establishing KPIs for all the impact investments that we make. In the case of Techem, this is related to their CO2 emissions, and we have worked closely with them to improve the way that they are measuring and reporting this -- on this metric. Now I'm going to hand it over to Andre, who will discuss some of our corporate highlights.

Thank you, Carmela. With this, we have covered the ESG highlights and activities from across our portfolio in 2019. Now what I would like to do is shift and look at corporate sustainability at Partners Group. But like Fredrik, I will begin by providing a quick snapshot of the impact of the current coronavirus pandemic and the resulting crisis on our firm. And I would also like to talk about the steps that we have taken to contain this. As a matter of fact, Partners Group's crisis response team was mobilized back in January, and we did immediately put into action our business continuity plan for a pandemic scenario. And given the severity of the situation, our COVID-19 crisis response team now includes both Partners Group's Chief Operating Officer, our Chief Risk Officer and key representatives from key business functions at Partners Group, such as the health care industry vertical. The firm has also engaged an expert in infectious diseases and adviser to the Swiss government to provide additional insights into COVID-19 and to review our approach in the context of this specific virus. I believe we have been among the first firms to really put in place work-from-home protocols across many regions. Today, to ensure the health and safety of our employees and to comply with government guidelines on social distancing, actually 16 of our 20 offices worldwide are temporarily closed and almost 95% of our more than 1,400 employees are currently working from home, including many of us here on the line. This is, of course, the largest business continuity challenge our firm has ever faced. And I would say I'm proud to see what we have achieved within this time period and with minimum disruption, without interruptions to critical and noncritical business functions. Given the proportion of employees that are working from home, many of them actually trying to juggle child care with work, for example, our leadership and crisis response team has also prioritized employee well-being through a series of special communications and the provision of resources on working from home, best practices and personal well-being. So that's just a quick summary of where we stand today. I would now like to share a few highlights from the last year, starting on Slide 14. The first I would like to highlight is a series of significant measures we have initiated back in '19 to improve our organizational effectiveness and to achieve what we call ownership excellence. Following the results of our employee survey, we found that potential development area for Partners Group includes increasing employee empowerment and decision-making authority as well as offering additional learning and career development opportunities. As a first step towards addressing these areas, what we did is we implemented a revised organizational leadership structure that we refer to as cell leadership. The objective of such a structure is to give ownership of day-to-day business decisions and processes back to individual teams or cells, as we call it, which typically count about 5 to 10 people, and cells are headed by a cell leader. We believe this approach empowers our leaders to truly own the outcome of their work and ultimately, to achieve better outcomes for the firm and its stakeholders. This is also embodied or underlined by this -- the sustainability goal, which is summarized as own the business and care for people. Another key initiative tied to ownership excellence in 2019 was the initiation of an operational excellence program to further strengthen our internal processes, systems and risk control structures. One of the key measures underpinning the program is the establishment of 17 operational excellence principles, which define best practices for our day-to-day operations and services and reflect organizational learnings over the past 2 decades. Finally, in 2019, we decided to further institutionalize our approach to employee training and development and establish what we call the PG Academy, our state-of-the-art learning and development platform. We now offer module-based skills training in areas such as project management, communication, presentation, interview skills, unconscious bias as well as languages. With this, I'd like to turn to the next slide. Fostering diversity and inclusion within our firm and across the private markets industry also continues to be a key area of focus for Partners Group. One of the key issues we have been working on tackling at the firm is the underrepresentation of women within our industry. Looking at our own gender diversity statistics, we acknowledge that there is currently an imbalance in the ratio of males to females at senior management level. We want to tackle this imbalance proactively as we firmly believe our industry will benefit from increasing female representation, and thus placed increasing -- increased emphasis on this topic over the last few years. As shown on Slide 16, in 2018, we actually set ourselves 2 targets aimed at increasing the number of female professionals within our firm. By 2020, we wish to have female ambassadors at 20 top universities globally in order to attract the next generation of very talented young women. And by 2025, we wish to substantially increase the number of female partners and managing directors to at least 25. Now as of the end of 2019, we have achieved the full 100% of our 20 by '20 target, but only 44% of our 25 by '25 target. To reach our second goal, we will combine development of leaders already working at Partners Group, and there will likely be lateral hiring as well in the years to come to achieve the target. To further support our efforts in 2019, we launched a dedicated diversity and inclusion working group to work as a consultant to the executive committee on diversity and inclusion topics and to act as a bridge between Partners Group employees and senior management. In 2019, the diversity and inclusion working group focused primarily on gender diversity and actually developed several specific initiatives in this regard, like a Partners Group coaching program that's a structured coaching program for high-potential, mid-level professionals. Second, the parent buddy program, which is a program that supports any member of staff during pregnancy, parental or adoption child care leave as well as return to work. Third, emergency child care provision that is soon to be launched pilot emergency child care services program initially for our employees in the United States, and we plan to roll that out to a larger -- to our larger offices globally in the future. Fourth, a flexible working policy, that's a new policy setting guidelines around flexible working aimed at supporting employees with young families as well as an improved child care leave policy with improved standards that have been introduced globally. With this, I'd like to change or turn to Slide 17, which is about strengthening our strategy on climate change. This was a really highly relevant corporate sustainability milestone for Partners Group in 2019. And what we're doing is we're developing a platform-wide climate change strategy, which defines our approach to managing climate risks and impact across our company, Partners Group, and our portfolio. The approach we're developing aligns with the 4 core elements of the task force on climate-related financial disclosures: Governance; strategy; risk management; and finally, metrics and targets. We have embedded this approach into key stages of our investment and ownership process. So first, sourcing. We have now a clear exclusion list for the sourcing and screening stage of our investment process. Second, due diligence. We have updated our ESG due diligence assessment to include questions on climate change for all potential investments. Third, ownership. We have made a significant effort to more accurately measure the carbon footprint of our portfolio, as Fredrik just mentioned before. And fourth, exit. We aim to materially improve our assets' performance on climate change by the time we exit. Last but not least, I'm really happy that Partners Group is equally committed to managing the climate-related risks and impacts of our own operations as a firm. And that is why in 2019, we did commit to fully offset our CO2 emissions from corporate air travel. With this, I'd like to hand over to Dave Layton for stakeholder impact.

Thank you, Andre. I'd now like to spend a little bit of time discussing the stakeholder side of the equation. As you've heard earlier in this presentation from Fredrik, we've always been a firm that's taken pride in growing jobs and in providing good fulfilling jobs. That's a part of our identity. And at this time, I think the topic of stakeholders is more important and relevant than ever. The economic consequences from COVID-19 quarantines and social distancing measures have been dramatic and they've been unprecedented. During this crisis, many public and private company boards have had to make difficult decisions to ensure that companies remain solvent in the face of these economic realities. Millions and millions of individuals around the world will have their income levels negatively impacted by the current environment through no fault of their own. Many of these employees are in the low- to middle-income brackets and include retail associates, food service workers, business service professionals, dental assistants, teachers and the like. Accordingly, we approach this topic with an appropriate amount of humility. After seeing these events unfold, our leadership team has an even higher level of conviction for our recently announced stakeholder benefits initiatives and for the hardship fund component of that in particular. Those who dialed into our annual results call, a few weeks back, will remember that we've already spent a significant amount of time speaking about this topic, and I'll just quickly recap some of those thoughts again on this call. On Slide 19, you'll see some of the stakeholder impact initiatives already in place across our portfolio, all aimed at portfolio company employees and spanning a range of impacts from financial to health and wellness. The private markets industry has maybe not been as vocal about this topic as it could have been in the past. But the reality is that we've always been focused on a broader range of stakeholders than has traditionally been understood or maybe portrayed. At any given point in time, Partners Group typically has dozens of ESG initiatives that we pursue on the employee engagement side across our portfolio. As an industry, we're judged based on relative performance. Most people think about relative performance in our industry as only really being relevant to returns. How much higher is the return on investment in private markets been versus public market equivalent returns? But lately, we've started to ask ourselves and to engage with our clients in the discussion about if this aspiration for outperformance shouldn't also be applied to other societal measures. And while we can -- we've been active about many of these topics, and I think we genuinely care. I don't know that we can credibly claim that, in the private markets industry, we've outperformed against best-in-class from industry on many of these societal topics. For example, I don't know that we can claim to have been better at engaging with stakeholders. In terms of job creation, yes, but not necessarily in what I'll call stakeholder experience. I don't believe it's due to a lack of willingness or intention. At the end of the day, it comes down to cost. These initiatives come with capital requirements. Turning to the next slide. This realization triggered a lot of internal discussions last year, and we went into 2020 with the intention to make this topic an even higher strategic priority for our firm, and we're going to spend more time on the work environment and the financial benefits of our portfolio company employees. Our intention is to systematically deploy some of the value that has been created within our portfolio companies for the benefit of the employees who are at the heart of creating it. Our first step will be to more systematically apply across our portfolio some of Partners Group's own corporate initiatives focused on corporate and team culture, employee engagement, learning and development as well as compensation and benefits. Andre talked about a couple of these things just a minute ago. And the second step, together with our clients, we started to develop a new stakeholder benefits program, the concept of which you can see laid out on this slide. The new program will aim to systematically reinvest a portion of achieved profit growth for the benefit of our portfolio company employees and other stakeholders. That could translate into a range of benefits and will likely include increased sharing of exit value creation with a broad set of employees within the firm. Additionally, as part of the overall concept of the stakeholder benefit program, we came to the conclusion that we should consider putting in place a hardship fund that would be funded via a kind of insurance premium paid from the profits of our portfolio assets and with a meaningful financial participation from Partners Group. This hardship fund is intended to be used to take good care of portfolio employees in the unfortunate scenario that there would be an impact to their employment. Now this framework that we've established, we think, is absolutely the right way forward. Since our annual results call, when we first started talking about this initiative publicly, we've seen governments and industry temporarily shut down consumer-facing sectors altogether. That includes education, retail, food and beverage, like we talked about. Again, millions and millions of individuals around the world have had their income levels negatively impacted by the current environment. Our portfolio company boards have had their fair share of difficult decisions to make over the past weeks and months as well in order to maintain sustainably solvent situations during this challenge and during the sudden stop in economic activity that we've observed. Additionally, in order to preserve liquidity during this crisis, many of our asset-level portfolio executives have made large cuts to their own income levels. And so we feel compelled to show solidarity with our negatively impacted stakeholders and our portfolio executives. And so we'll see how long this crisis last, but for at least the next 6 months, our co-CEOs, the executive members of our Board of Directors, which includes our founders and our chairman, will be foregoing our salaries and making those funds available to hardship initiatives at our various portfolio companies via a portfolio employee support fund. We also have a number of other senior leaders from the firm, many of our investment leaders and other employees, who will be voluntarily foregoing a portion of their salary or contributing directly to this initiative. The firm will also contribute. We're doing what we can. We view our contribution as a necessary stop gap in this moment of crisis. And we were also highly energized and motivated to develop the final format of our stakeholder benefits program over the coming months, as shown on Slide 21, which will prepare us to take care of our people during any such future events. Difficult situations arise, and compromises and trust are required in the relationship between employer and employee and between owner and stakeholder. We care deeply for our investors as well as for our stakeholders, and we're committed to aligning ourselves with both of those groups, not just on the upside, but also on the downside. And with that, I'll bring an end to the formal part of the presentation, and I'll hand it over to the moderator to take any questions that people may have.

[Operator Instructions] There are no questions from the phone at this time.

We have a few questions on the webcast currently. The first question for Andre is from Carmela Mendoza from PEI. She asked about PG's impact-at-scale strategy, PG LIFE, how we're prioritizing the strategy in a market like this. And does it take a back seat or -- at a moment like this coronavirus crisis?

Thanks for that question, Carmela. Actually, PG LIFE is an investment strategy that we have formalized back in 2018. It's a continued priority for the company, so it's not going to go away. We have spent considerable time educating clients about our methodology. We have really installed procedures to select the deals or investment opportunities that fit this investment strategy. Carmela and the IVC team, ESG team are really engaged in the seed portfolio, those assets that have been allocated to this life strategy. So that is something very strategic to the company that we are proud to further develop in the years to come. So it's not going to go away. It's here to stay. It's an important part of our business. Actually, if you look at the investments, 10% to 20% of our deal flow are in line with this life strategy, or like 10% or 20% of our deal flow does have a direct or indirect link to this sustainable development goal. So we look forward to sticking to that PG LIFE strategy and investing assets on behalf of our clients.

We also have 4 questions from Thomas Streiff from BHP - Brugger & Partner. The first one, for Fredrik, is who and how are you coordinating initiating the measures you mentioned regarding the coronavirus crisis? The second question, for Andre, is about PG Academy. Is this just for our own employees or also for our investees, boards and management teams? He also asked, for Andre, about salary transparency. Is this currently a reality at Partners Group? Is it planned or is it not an issue for Partners Group? And finally, for Andre, he also asked 26,000 miles per employee is a huge number when it comes to the travel figures. To what extent do we plan to go beyond compensation and substitute VC, web conferencing, for travel?

Thomas, this is Fredrik. Thank you for your question on how do we assure the implementation, who has the responsibility and how do we report on the initiatives to prepare for and combat the effects of the pandemic. The ultimate responsibility of deciding what gets implemented in each portfolio company lies with the Board and the management team of the individual companies, so the PG team members and our external operating directors on the board and the management team. But we go beyond that, and the IVC team at Partners Group is there to coordinate, assist and monitor the progress of these actions and efforts. We generate -- yes, collate that data on a weekly basis, and we report the progress and the status in each of our assets up to our investment committees and the global investment committee on a weekly basis. Andre?

Okay. So the question was whether PG Academy is only here for partners or employees or whether we would also open up for Board members and management members of our portfolio companies. Well, actually, a very interesting question. At this point, PG Academy focuses on Partners Group leaders and employees. This is a multiyear effort, even Partners Group employees will not just all go through PG Academy in 1 year and will be done. But this is really a number of trainings that employees will complete over many years. And I believe the PG Academy, at this point, is focused on Partners Group employees. Personally, I believe that -- like, a few years down the road, I believe that management members, leaders of portfolio companies, might be invited on a case-by-case basis to the PG Academy. But let's start with Partners Group employees. The second question, Georgina, was salary transparency, where it's a reality, planned or not an issue. It's not an issue. As a company, we are transparent about salaries of our Board and executive committee members, which is a stock exchange obligation. We don't have an intention to make all salaries transparent. I don't believe that's needed. What we have focused on, as a company, is really well explain our salary framework, what are the principles. And we also made sure that every employee truly understands the link between individual contribution, performance and then actual remuneration at Partners Group. And by the way, a very positive feedback. We made a survey. We asked employees, is it well understood? What about, like, this -- the framework of Partners Group, do you understand the philosophy and the principles? And there was positive feedback, like, at the beginning of 2020 about how Partners Group goes about compensation in terms of processes and framework. The last question is about this 26,000 miles per employee, to what extent do we go beyond compensation and substitute by VC or web conferencing? Well, personally, I'm a big fan of conferencing. This is a very climate-friendly way of interaction. I believe conferencing can replace a lot of air traveling. I don't believe it will completely substitute the in-person contact, but I think it will remain an important part of our communication. We encourage employees actually to use conferencing where that is possible. But air travel is, unfortunately, from a climate perspective, is going to be an important part of how we want to interact with the various stakeholders of Partners Group. Fredrik talked about, like, the Industry Value Creation team, Carmela talked about PG LIFE. It's still a fact that there are many of these counterparts wish to see one of the leaders of our platform to better feel the culture of the company, but also really get to know the people we have. Personally, I believe that the coronavirus is going to really boost acceptance of conferencing. So I think that's a good contribution and eye-opener for many frequent travelers, and there will be a little bit less traveling going forward for many of us.

I -- just to add on to that. I agree completely. I think years ago, there was a subway strike in London and people had to find new ways to go to work. Some people bought cars, some people had to take the bus, some people walked. And even after the subway strike was resolved and the subway came back online, you had a certain amount of people, I think it was 5% of the people that stuck to walking to work. They found new patterns and new rhythms and those were permanent changes. And I think we could see the same thing coming out of coronavirus. You have so much video conferencing going on right now. It's quite efficient, quite effective. And I do think you'll see the number of miles traveled reduced as a result of that because I do think some of these temporary adjustments that are being made will be permanently ingrained in people coming out of this crisis.

Next, we have 2 questions for Fredrik. The first is from Sacha El Khoury from BMO GAM, who asks, do you believe there is a positive correlation between the various ESG initiatives and performance despite the added cost. Is there a way to evidence it? The second is from Scott MacLennan from Schroders who asked, you mentioned that one of your main ESG strengths is that you can measure job creation. But what would be one of your ESG weaknesses that you measure? And how are you looking to address that?

Okay. I'll start with Sacha, it's a bit easier on -- Sacha, I myself, but also Partners Group, we are 100% convinced that the only way that you can create long-term value is to create and build better businesses and more sustainable assets. Long-term value creation and sustainability are immediately linked. And if you build a better business, you make more with less, you make more faster and you make more safer. And can we prove the effect and the positive effect? Yes, we can with the individual initiatives. One very simple one is health and safety of our employees. We see that by focusing on health and safety in our portfolio companies, we have often been able to have and sometimes even go to 60%, 80% reduction in the accidents that are caused in our factories, in our stores, in our service centers. And there is an immediate improvement due to this reduction of accidents of lost time injury rate for our employees, lower cost of penalties, lower cost of health care. And in each and every one of the portfolio companies where we have targeted health and safety, the investment that we have done has been -- has generated a positive impact, not only on the safety, but also on the bottom line of our investments. Second question was if the ability to measure the KPIs and to measure the impact of our job creation is the strength, where do we see a weakness? I think a general weakness on the ESG side is -- and we're trying to combat it with the dashboards is -- it is such a broad and encompassing topic that it is tough to get to the final metric. The IVC team comprises the ESG team, which focuses on sustainability. It also comprises our operating team, which focuses mainly on operational improvements. On the operational improvements, we measure ourselves on the generated profits or the generated value in our portfolio companies. It's a very one-dimensional KPI that we can measure ourselves against, are we able to generate 15% EBITDA increase year-on-year in our individual assets in the portfolio? On the ESG side, and you can see in the dashboard, it's much more multifaceted. And that is a challenge because it becomes very tough to -- in simple sentence or in a simple statement, show that we have made progress across the board. And that's why -- so I think that's a weakness, perhaps not to Partners Group itself, but it is a challenge that we have on the responsible side that it is such an encompassing topic that a one-dimensional answer very often is too simple. So hopefully, that can answer your question.

Thanks, everyone, for your questions. We currently have no more questions remaining on the webcast.

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