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

Ladies and gentlemen, welcome to the Corporate Sustainability Report 2022 Webinar Live Webcast. I am Alice, the Chorus Call operator. [Operator Instructions] and the event is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to André Frei, Chairman of Sustainability. Please go ahead.

Thank you, and welcome to Partners Group's Annual Corporate Sustainability Update. Thank you for joining us today. As was just announced, my name is André Frei. I'm hosting this call as Partners Group's Chairman of Sustainability, and we're truly excited to share some of the main points from our Corporate Sustainability Report with you today. The report was published this morning. It provides relevant insights into our environmental, social and governance performance and progress, and it covers both investment portfolio and corporate level. If you look at it, you see that we have upgraded the format of the CSR to further improve clarity for you as the readers of that report, and we hope you like both the format and the substance. If I turn to Slide 2, just a table of content, basically, I will start this call by providing a general sustainability overview. My colleague, Carmela Mondino, she's the Head of ESG and Sustainability, will present ESG insights from our portfolio in 2022. She we will be joined by Torborg Chetkovich, a Managing Director in our Private Infrastructure team, who will present an interesting ESG case study. And finally, Kirsta Anderson, our Chief People Officer, will talk about ESG at corporate level. And like we did last year, we will end today's call with a Q&A session. Let's move to and start with Slide 3. Partners Group really has been committed to sustainability for more than 15 years now. In 2006, we first established our ESG and sustainability directive. We signed the Principles for Responsible Investing back in 2008. In 2014, we established our PG Charter, which states that creating lasting positive impact is 1 of our 3 core purposes, and that is as true today as it was back then. If I look back about 20 years ago, [indiscernible] ESG may have started off as a common sense topic also in private markets. We have seen ESG evolve a lot since then. Today, ESG is much more clearly defined. It's more standardized, it's more formalized. And while that takes a lot of time and resources, it's actually a good thing. This slide shows some additional milestones that Partners Group has achieved on our journey to date, like the launch of our PG Life tool impact investment strategy in 2018 or our Climate Change Strategy in 2020. Let me say that Partners Group will, of course, continue to dedicate significant resources to sustainability and to be and remain a committed leader in responsible investing also going forward. With that, I'd like to turn to Slide 4. I would like to share some of our sustainability activities and achievements last year. First, we have invested over $2 billion in decarbonization-related portfolio assets on behalf of our clients, including Budderfly, a U.S. energy-as-a-service provider; Sunsure, an Indian renewable energy platform; as well as at North, an Icelandic data center operator. Investing in the low-carbon economy, as illustrated by these [indiscernible] 3 examples, is and remains an important and attractive investment theme for Partners Group. In private debt, we structured and invested in 20 sustainability-linked loans, which provide an incentive for borrowers to improve on their ESG profile by setting and achieving sustainability performance targets, and I think that's a very effective way to engage. We allocated significant resources to keep up with the tightening of ESG regulations globally. One of the special projects I would almost say was to ramp up our ESG data collection for our portfolio of controlled assets in private equity and infrastructure to meet regulatory requirements and increase transparency to investors. Data collection, of course, went way beyond just this core set of controlled assets and actually covered the entire portfolio. Now while ESG reporting is not a proxy for progress, data is a prerequisite, I think, to measure and manage ESG improvements. I'm glad that on average, our controlled portfolio companies completed more than 80% of the questions we asked in our annual ESG data collection exercise, and I think that's quite an achievement in terms of data maturity and a good basis for our engagement in 2023 and beyond. I'm excited that Partners Group entered into an agreement with Climeworks, a leading designer, developer and operator of Direct Air Capture plants to help contribute to the firm's goal of net zero by 2030. Partners Group now is not only an investor in Climeworks, but we're also a client, and that is great. You will hear more about Climeworks later from Torborg. In '22, finally, we also published our first TCFD report. We were included in the Dow Jones Sustainable Index for the second year running and in the S&P Global Sustainability Yearbook '23. We move on to Slide 5. 2022 has been a crucial year with the launch of our Sustainability Strategy. We actually presented it to this group almost precisely 1 year ago. And we then spend significant time to also communicate it to our portfolio companies with an initial focus on the controlled assets in our portfolio in private equity infrastructure. The strategy is now being adapted to real estate. I believe that the ambitions that you see on this slide, combined with the more detailed targets we defined, represent a systematic and thoughtful approach to building sustainability and scale across our platform. In the dialogue with our portfolio companies, we always strive to find the right balance between guiding them top down on ESG matters. So these focus areas and targets set out in our sustainability strategy, but then also and at the same time, letting boards and executives decide what is going to be most impactful or simply required due to current or upcoming regulation. Our aim in 2022 at portfolio level has been to align expectations to build on existing initiatives and to ensure that our portfolio companies develop meaningful multiyear ESG journeys that address the needs of the various stakeholders, be that clients, be it [indiscernible] and investors, customers of these assets and of course, regulation. I'd like to move to Slide 6, please. At Partners Group, we drive ESG impact through a clear and dedicated governance structure. Actually, we always say that ESG starts with the G because strategy and tone from the top matter. For that reason, oversight for sustainability topics lies with the most senior levels of our organization. Our Board of Directors, together with the executive team, is responsible for our sustainability strategy. Lindsay Luth, Carmela Mondino and I, we mostly work with Wolf Scheider with Co-Head Investments; and Hans Ploos, our CFO, to implement our sustainability strategy both at portfolio and corporate level. The 3 quotes on this slide actually summarize our approach quite well. So let me just read them. As active owners, we have the opportunity and responsibility to build better and more sustainable businesses. We do not treat sustainability as a separate and isolated topic, but as an integral part of our transformational investing approach. And we organize ourselves to realize sustainability scale. On Slide 7, finally, I've tried to link our approach to sustainability, which is shown at the bottom of the slide, to how we explain our transformational investing approach in the context of direct private equity investing, which is shown at the top of the slide. As you know, sustainability can happen both through thematic sourcing of investment and opportunities as we acquire assets and companies in specific sectors. Sustainability does a vital topic pre-investment in terms of sourcing and due diligence. I've already mentioned, for example, the $2 billion invested in decarbonization-related investments. Sustainability, second, can also happen through active ESG engagement with existing investments in our portfolio during the ownership period. You recall how I said that ESG starts with a G on the previous slide, well, actually, the same holds true for our assets. We want to have clear governance and ownership for ESG at the Board, executive and operational level for our controlled investments. We're of the opinion that our portfolio companies, the Boards and executives are best suited to design and oversee an ESG journey that is most fitting and impactful for their business and stakeholders. The ESG team is, of course, here to advise, support and challenge. Now depending on the business and value proposition, an ESG journey can be highly strategic and transformational or it can be geared towards operational excellence. An ESG journey, however, always means to intentionally strive for higher ESG standards to benefit the business, the stakeholders of the company and, ultimately, investment success. The future-proof companies in terms of sustainability and to win, we believe ESG journeys must be aligned with regulatory standards, expectations from customers, investors and society. And now I would like to hand over to Carmela who will talk about these topics in the next section. Carmela, over to you.

Thanks. Thanks, André. Now I would like to give a brief overview of how we embed ESG in our investment framework in this transformational investment strategy that are under [indiscernible]. Today, 100% of our AM is covered by our ESG and Sustainability Directive. In practice, this means that we integrate material ESG factors just as we would integrate commercial, financial, legal considerations across all asset classes and investment strategies throughout the investment life cycle. Since we have different governments, right, our approach and ambition levels vary between controlled and noncontrolled investments. For noncontrolled investments, and this is what you see on the left of the slide, our investment philosophy is that it is very similar to what would we consider a traditional ESG approach through stewardship, similar to the approach adopted in public markets. For controlled assets, now going towards the right, our approach goes beyond that. We follow a strategic ESG approach based on our active ownership and our transformational investment approach. As elective owners, we have the unique opportunity to go beyond just excluding or engaging and driving change within our investments. And this is the part that I, personally, but also my entire team likes the most about our jobs. And I think I say it in every webinar every year because it's true. Again, it all starts with governance, right? So we adopt this strategic approach, and we can really enhance and, in some cases, transform our companies into ESG leaders. And effective owners, we do not only just mitigate risk, we really leverage value-creation opportunities and build more sustainable businesses. Now I'm going to go through how we made progress over the past year on the 3 dimensions, ES&G. So if we go to the next slide, please, I'll start with environmental part. And I'm happy to say that 2022 was a very active year for partnership and for our control portfolio on the environmental side. After introducing our security strategy, we received consistent feedback from our portfolio that carbon accounting is not really straightforward. So for that reason, we formalized our approach around how we expected the companies to apply the greenhouse gas protocol. For that reason, we partnered with EY to support our portfolio companies in its efforts and achieve its scalability across our platform. A significant share of our assets use the service, and this enables them to have a better quality of their calculations and also for us to be able to better report to our clients and our different stakeholders. And this is really important because as we have made current commitments as part of our sustainability strategy, we need a good baseline. So on the figure side of things, 92% of our portfolio companies disclosures Scope 1 and 2 footprint at 80% obtained assurance on the figures, and this assurance was there is -- based on the need for the improved quality for the base lining. Now we will discuss how we work in data in a couple of slides, but this is really important for us at the moment because, as you know, we want to align our portfolio with the Paris Agreement. We have asked all our portfolio companies to develop a greenhouse gas reduction strategy within 3 years of holding -- being part of our portfolio. And everyone needs to have a plan to work reducing the footprint by 20% during our ownership period and by 50% by 2035. Now if we move to the next slide on the social side of things, our goal is to build companies and employees who want to work for and increase returns by having an effective workforce with better culture, cooperation and retention. We encourage our employees -- or our companies actually to engage with their employees and to first-year employee-centered efforts. It all starts with governance, right? So at more levels, we have worked a lot to improve the diversity at the Board level. And over the past year, we have observed that 30% of Board appointments were from minority candidates. And more than 60% of new companies had at least one diverse Board member. This is in line with our target from our sustainability strategy to hire 40% of all new Board members from underrepresented groups. Also on the social side, looking into the next slide, we are also working on our Stakeholder Benefits Program. We invite portfolio companies and their Board of Directors and management team to design a tailored approach specific to the business, including nonmonetary works or financial participation, both looking into going above and beyond traditional benefits and really increasing employee engagement. A lot of our companies are still working on it, but we also have a big group of them that have already started initiatives that illustrate its intention and the goals that are [indiscernible] Stakeholder Benefits. And for instance, one of them was our company, Pharmathen. Pharmathen is a leading developer of advanced drug delivery technology. They have over 1,300 employees, and they have started implementing an [indiscernible] equity program for large section of leaders and for all of its -- of their 800 factory workers. This is really important because not only we are creating a better business by doing so, but for us, it's important to increase talent retention as there's a very high competition for R&D talent in the science side of things. And this program is what we think will make the difference for the people to stay within the company. Now if we go to the next slide, on the governance side, it all starts with governance again. It's very clear for us that in order for our portfolio to be able to deliver on their ESG targets, and for this to stay beyond our ownership, we need to have clear ownership within each level of decision-making. We expect all our portfolio companies to establish ESG responsible at Board, executive and leadership level within the first 100 days of ownership. And this is what we do as well at Partners Group. Then through our ESG Responsibles, our portfolio companies are expected to develop strategic and operational ESG initiatives to enhance the ESG performance and if applicable, also transform them in what we call the ESG Journey. The ESG Journey is important to attract material, ESG topics and aligns the sustainability performance of the company with the expectations from customers, society, [indiscernible] investor. And these days, a very important stakeholder, and that is a regulator. And we have a big project running at Partners Group to make sure that we are delivering to regulatory needs, and we expect our company to do so as well. From a governance perspective, it is crucial that companies are managing these risks on their own as well. So we are asking every company to have a risk and audit committee and also for them to work on the most material risks toward their business. And we believe cybersecurity is one of them for the entire portfolio. And for that reason, last year, with support from Aon, we introduced the cyber baseline project where we had a general assessment of where each company is in terms of cybersecurity, and 85% of our control assets in private equity went through this assessment last year. Now, I've mentioned a lot of figures over the past minutes. And in the next slide, I'm happy to introduce you to our new ESG dashboards, and you've seen that before, right? Collecting data is a very important part of our transformational investing in [indiscernible] ownership approach. And this is how we believe we can really track performance and drive progress against our ESG ambitions and missions. As part of our strategy, we defined certain focus areas and targets that we expect all our companies to work on. And as I mentioned before, the regulation and their expectations are also part of the things that we take into consideration as what we're driving our engagement. So this year, there was a big lift on our sustainable finance disclosure regulation work. Now we have been collecting ESG data for many years now since 2014. And we have continuously worked on this topic and improved our ESG data governance to improve coverage and quality. In 2022, our focus was to refine how we gather data and build a scalable reporting solution to fulfill all this reporting requirements that we see from the first stakeholders. Also in 2022, we -- as I mentioned before, the carbon side, we ask companies to start getting assurance on certain data points, and 80% of our control portfolio companies had a number of ESG indicators assured. And this is only to start of the journey, and we will continue refining our approach to group quality, but also make a practical process to our portfolio company. Now our ESG dashboards focused on the ESG data from our controlled assets, and these are the assets that we can really actively influence. But this is -- what you see on the dashboard is just a result of a lot of work from a lot of people at PG that work with these companies making better businesses. And my colleague, Torborg, is one of them, and she will walk you through an example of how we do this. So Torborg, back to you.

Thank you, Carmela. Yes, as mentioned, as a key part of our ESG work is engaging with portfolio companies to drive improvement projects on topics that are highly material to them and societies we're present. One example is the work we have carried out with CWP Renewables across its environmental, social and governance pillars. CWP is a large-scale Australian renewables energy platform, combining wind, solar and storage. We invested in Sapphire Wind Farm, the first of the CWP Renewables assets to be constructed in 2016. We have developed -- go to the next slide. Yes, thank you. We have developed CWP Renewables from the ground up, in line with our long-term thematic approach to investing in next-generation as infrastructure assets that benefit from decarbonization trends. Having successfully managed projects towards commercial operation dates installed best-in-class teams to handle daily operations, arranged long-term purchase agreements and implemented a portfolio to replace individual asset-specific project finance facilities. CWP transformed into one of the largest renewable energy platforms in Australia. We exited the investment in 2022. On the environmental front, CWP's mission is to lead Australia's transition to renewable energy. The platform is a key contributor to helping corporates and governments to achieve their net zero emissions target through the supply of renewable energy by way of long-term power purchase agreements. CWP has explicitly disclosed its commitment to reduce its emissions intensity by 50% by 2030 and to reach net zero emissions intensity by 2040. A key focus area, as part of this, is continued focus on building internal capacity to properly track Scope 3 emissions with a view to define construction emissions intensity and to track performance against its committed targets. It has furthermore committed AUD 250,000 to ecological research and AUD 500,000 to scientific research for the conservation of vulnerable species in partnership with the Australian government. Wind power has already got one of the lowest carbon footprints compared to other energy sources and produces 0 emission energy, but even this industry can do more. For example, it can shift from a linear to a circular economy. Rather than decommissioning turbines, it can seek to extend the product's life cycle and repower old part on the asset offering environmental benefits by delaying or preventing disposal. On the social front, it has defined target for 0 lost time injury frequency rate. Last year, CWP were awarded an ISO 45001 accreditation for its health and management system. Community impact is also super central to CWP's ESG strategy. And CWP has demonstrated its commitment to diversified and inclusion of indigenous groups with reconciliation plan. Key actions include working towards improving supply diversity by prioritizing procurement from businesses owned by indigenous people, execute anti-discrimination strategies and offer scholarships for the professional development of endogenous people. On the governance side, CWP has published its first ESG report in 2022, highlighting its ESG commitments and progress across material topics. I truly would like to highlight that our ESG engagement work with CWP is just one example of the deep ESG work we are conducting across all our portfolio companies. The sustainability revolution presents a big investment opportunity, with an array of compelling investments. I'm truly excited to see how our thematic investing approach in decarbonization and sustainability guides our investment professionals in their investment sourcing efforts and how we then during our ownership period, integrate sustainability as a seamless part of our value creation efforts, together with our Boards and management teams in our portfolio companies. So we will now dwell into sustainability at corporate level in 2022. Another -- and to do that, I would like to share another great example of how Partners Group is using one of its investments through our use of Climeworks services. An investment we did in March of '22, we invested in Climeworks as a leading Swiss designer, developer and operator of Direct Air Capture plants. Climeworks generates revenues through selling carbon dioxide removal services to both businesses and individuals. Today, it has 15 plants, including the world's largest Direct Air Capture and storage plant, which started operations in September 2021 in Iceland. We are working closely with Climeworks management team, Board and other investors to help scale Climeworks and to support its commercialization strategy and international expansion. Our true belief in this investment is so strong that we have additionally signed a separate partnership with Climeworks to remove CO2 from the atmosphere on our behalf and permanently store it underground. This multiyear agreement will help to accelerate the scale-up of carbon dioxide removal technologies, such as Climeworks, and the market as a whole. Carbon dioxide removal technologies need to be scaled to gigaton capacity by 2050 at the least to help the world achieve net zero by neutralizing residual emissions. And we are truly proud of being part of this journey. I now would like to hand over to Kirsta.

Thank you very much, Torborg. We are really excited about the opportunity to partner with one of our own investments and through doing so to help accelerate the scale-up of carbon dioxide removal technologies. If I zoom out for a moment, as a firm, we committed to working towards net zero carbon emissions by 2030 for our corporate-related Scope 1, 2 and 3 emissions. In 2022, we managed to reduce the sum of Scope 1 and 2. However, Scope 3 did increase largely due to increased travel volumes. So there is more action that will be needed in 2023, and we are working on it. One example is we've established an internal carbon price of $50 per ton of CO2 in 2022, and that's to provide an incentive to reduce emissions and to fund carbon removals. So the adoption of Climeworks will complement our portfolio of nature-based solutions that I just went through as our first technology-based solution. So we're very excited about all of those initiatives. If I then move in the next slide to the social side. Our conviction is that our business's growth and our people's growth go hand in hand. And that's why in recent years, we've invested heavily in figuring out how to scale our people's growth. When we were smaller, we could do it through day-to-day coaching and bringing people to our headquarters to absorb our culture through osmosis, and now we have to find more scalable ways as we grow, and that's what I'm going to talk about here. If I think about celebrating success, first of all, we started the year celebrating some of the great successes in our engagement survey. Engagement increased to 71%, and this has put us on track to achieve our goal of 75% by 2025. Going beyond and kind of underneath the surface of engagement, we were really pleased to see that some of the foundations of our culture and our people's growth were maintained through the COVID years in particular. So people continue to report that they feel they are treated with respect and inclusion. They continue to feel incredibly proud of the quality of what we offer and of our client focus, and they continue to feel clear and confident about the direction of the firm. And we take all of that feedback to mean that our people feel a strong sense of purpose and belonging at Partners Group. Now building on those results, we also took away from the survey 3 key areas to focus on to ensure that PG continues to be a place where people grow. One was resourcing, so making sure that we actually have enough people in the right places to maintain that level of quality and also give people the opportunity to grow. The second is decision authority. So getting decisions to the lowest level appropriate so that our people can be quick to take the right decisions and we can manage the growing complexity of our business. And then the last one is collaboration, which again, as we become more global, collaboration becomes all the more important for making sure that we're coming to the right conclusions. So a little bit about what we did on each of those fronts. On the resourcing side, in 2022, we hired over 650 people and expanded our global platform to 1,856 employees with a turnover rate of 14.6%. We then turned to how do we onboard these new people that we've hired and brought into the platform. And so to get decision authority and collaboration, working for so many new joiners, our focus was on giving them the context to make the right decisions for Partners Group and also the opportunity to build relationships across the firm to ground collaboration across those departments. To that end, one of the most fun and inspiring initiatives in 2022 was we relaunched our onboarding event, which we call Wildspitz and you can actually just barely see a picture of a group on a Wildspitz event in the background of the slide up there. This is a 2-day onboarding event that we run in each region, which includes people who've joined Partners Group in the last 6 months or so and is named after the mountain that our founders and senior leaders used to climb for strategic planning sessions. And in Switzerland, it actually still takes place there on Wildspitz. Over those 2 days, we help people understand PG's history, our values, our culture, why we do things the way we do, but we also get their feedback on what to change and improve. And we give those people at all levels of the opportunity to engage with senior leaders. I have the honor of hosting our relaunch sessions in Singapore and in Zug. And in fact, in Zug, André was kind enough to co-host with me. And I have to say, it was truly inspiring to see people developing a real sense of belonging in Partners Group through these programs. In addition to this cultural onboarding focus, we also expanded our learning opportunities. The key vehicle for learning and growth for our people, in our view, is actually on the job. And this is why in our performance management process, everyone in the firm is evaluated on leadership and collaboration alongside productivity and quality. That is to ensure that everyone has invested in the development of their colleagues day in, day out, and that has been the case for a number of years. And then to complement on the job learning, we also continue to expand our PG Academy platform to match the scale of the firm. We, this year, increased the variety and volume of our offerings and have launched a series of pilot programs aimed at supporting -- providing support and practical advice to develop self-awareness and emotional intelligence, and that all sits under a new training category of wellbeing. We also introduced a new ESG training module to educate our employees on ESG concepts and our general approach to sustainability. As a measure of the success of the platform, we are really pleased to see that the average training hours per employee increased by 20% from 20 hours to 25 hours per person. So we have a big and continued focus on growing our people and creating that sense of belonging I talked about earlier. And that brings us to diversity and inclusion as a topic because we know that diversity and inclusion are critical foundations for our people's growth. So as we go to the next slide, thank you. Our conviction is that the importance of diversity and inclusion to our business has not changed because it really is embedded in our DNA. Since our founding, we have seen time and again that we make the best decisions on behalf of our clients when we collaborate, jointly explore, vigorously debate a range of viewpoints in order to achieve priority of direction and come to the best decision. We're glad to see that we are generally heading in the right direction here. The focus on this slide is gender diversity, and I want to be clear that is because that's what we can currently measure. We are currently in the process of gathering additional data on other underrepresented groups where we can, and we will soon start reporting on other elements of diversity. What we're most proud of this year is the growth of our employee networks, actually, and the leadership role that they have taken in driving diversity and inclusion in Partners Group. We have 5 employee networks, all of which started grassroots by our employees on their own initiatives. Those are the Women's network, the Black network, the Pride network, the Parents network and the Boots and Rucks network, which represents veterans at Partners Group. Membership of these networks grew by 50% in 2022, and they were a huge part of bringing people back from COVID and reengaging a sense of belonging in Partners Group. They hosted social events and education sessions for employees at all levels. They started book clubs, they hosted training sessions on well-being and engaged in a whole range of activities. I'd actually like to take this opportunity to thank our networks for the great impact they've had on our culture this year. They've been truly inspiring in the passion they've shown and the impact that they've had. That summarizes our key activities on the diversity and inclusion front. And with that, I'd like to hand back to André to wrap this up.

Well, I would just like to say thank you, Kirsta, Torborg, Carmela and the entire team who worked on to seize our report. And I hope you enjoy the format and substance, as I said before, and I'm happy to open up for questions.

The first question from the webcast goes to André Frei. Could you elaborate on how Partners Group are considering their Scope 3 category 15 emissions footprint? Are there ambitions to set quantifiable Scope 3 category 15 reduction targets following Science-Based Targets initiatives, private equity sector guidance in the future given ongoing efforts to help assets decarbonize?

Well, thanks for the question. And actually, we partially addressed it in the CSR report. If you look at Partners Group, Scope 1 and 2 are much smaller than Scope 3, which is largely due to air travel as Kirsta said. Now if we included category 15, which is also like Scope 3, if you wish, then of course, it will again be much higher than the Scope 3 without category 15. Now the reason we do not include category 15 right now is simply that I believe we lack the data as a foundation to publish figures with confidence, right? So we have, in '22, we have spent a lot of time gathering data. We have built sound processes and tools and systems. But I believe it will take more time before we have comprehensive data, also data of high quality, so we could report Scope 3 category 15, which is really meaningful as opposed to just a figure that is not really trustworthy. Scope 3 and Category 15, by the way, is, of course, also a figure that clients frequently inquire about. So the focus will initially be to report such figures to clients. And if we can report to clients, we can also report to shareholders in the CSR. In terms of SBTi, as we do look at SBTi, it's -- at this point, only a small number of our companies, half, are about to commit to SBTi. If you read about it, it's really interesting, a lot of relevant methodologies that could make sense for Partners Group's overall portfolio or for individual asset classes. So the approach we have chosen is not to publish a target right now, but to learn, build them up to learn from SBTi, and we'll take it from here.

Thank you, André. The second question from the webcast goes to André Frei as well. We have just published a sustainability strategy in 2022. Did you not have one before?

The answer is yes and no. When -- so Partners Group has been committed to ESG for like 15, 20 years, as I said. And over these years or decades, of course, like the conviction, our approach to ESG has found its way into processes and policies, into tools, into experience, into frameworks. But the sustainability strategy is an attempt to consolidate, to pause and reflect, hey, what have we done in the past and what do we have to do going forward. So I believe it's just a natural next milestone. It's not a revolution, but it's a logical consequence of, let's say, 2 decades of ESG experience and provide the frame that would be relevant for the years to come. The sustainability strategy at one point will not be obsolete, but will have to be refreshed. So it's not a strategy once and forever. And as I said in my presentation, it's really by to always reflect the Partners Group need to impose sustainability top down or how do we enter into dialogue with our portfolio companies and have them really commit and drive towards ESG. So that is the balance that we strive for at this point and in the future.

Thank you. The third question from the webcast goes to Kirsta. Your corporate D&I targets of aiming your teams to reflect the societies in which you operate is quite vague. How will you track it?

Yes, it's a great question. We actually will have more concrete goals coming out soon. So we are looking at in each of the regions in which we operate, what is, for example, the female representation in the workforce at different seniority levels, and we're looking at the same for ethnic minorities, in particular in the U.S. and the U.K., where that is a concern. And so we will be releasing those, and that will enable us to, a, track our progress; and then, b, know when we're at where we want to be in terms of what it means to actually reflect the societies we operate in. But we're also doing simultaneously so that we actually know where we stand is where we can collecting the data, I think I alluded to this before, on representation of gender of LGBT plus status and of ethnic minorities again so that we know how we're doing.

The next question from the webcast goes to Torborg. Introducing ESG measures in companies might be a long-term process. In terms of influencing a company's targets, how much time in years, for instance, would you believe it takes until a firm actually starts introducing the ESG measures you suggested from the first time of discussions?

Yes, thank you. I would like to start with -- it's really -- it's about tone from the top that we were discussing before. And the same goes for how we are approaching when we take over a portfolio company. And we actually start with identifying in the Board who is the person in the Board, who is responsible for the ESG questions. And then looking at the portfolio company together with them, we then decide who is in on the executive level and also on the operational level within the portfolio company responsible for together with us driving what we call our ESG Journey. And of course, I mean, every company is different, and every company also needs to find their own ESG journey. But of course, we have, from our end, I mean, also coming from regulation, but also from our true belief in PG, there are some things that we really would like to see where our portfolio companies are or how they are developing basically. And as a rule of thumb, I would say that we wouldn't like this ESG Journey to take longer time than 2 years to develop. But what we have seen over the years is also that by having this very tight cooperation, also having support from our ESG team here in Partners Group, we can also inspire and support and help our portfolio on their journey.

The next question from the webcast goes to Carmela. Does Partners Group have a specific set of targets or objectives to affect biodiversity risk?

Thanks. Not yet. So at the moment, we have adhoc initiatives, if the topic is material for [indiscernible] company [indiscernible] for greenfield infrastructure assets, we address the impact of the construction on local biodiversity, right? And it is something that is part of the environment impact assessment that we do. But we didn't have anything at the moment throughout the portfolio. So what I would say is that this year, we gather a number of data [indiscernible] biodiversity through our survey. And now we're in the process of analyzing the data, [indiscernible] in priorities, and then we will see what makes the most sense, what type of engagement we can have.

The next question from the webcast goes to Kirsta. As an employer, are you engaging on how to, for example, anonymizing CV, cover letters to remove gender, ethnicity, et cetera, and avoid whatever biases which might affect people employing, although they might not be aware of it?

We did. Great question. We did actually explore that, and we ran an experiment a couple of years ago when our CEO, Dave Layton, asked our recruitment team when recruiting for one of our graduate programs to run a blind recruitment process. What we did is insisted because we felt that this wouldn't lead to a better outcome, but I thought it was worth running the experiment on actually running 2 recruitment processes at once. So we ran one blind and one non-blind. And what we found is that the blind process actually led to a less diverse candidate pool, we believe it's because there is still not equal opportunity in university education and internship opportunities and so on. So if you take everything else away and can only see that, you end up replicating that lack of equal opportunity at the levels below. And so we stopped that practice. What we do instead is we focus on diverse interview panels and crystal clarity and training on what competencies interviewers are looking for to enhance objectivity, and then finally, unconscious bias training for interviewers so that they can be aware of any of their own biases and control for them.

The last question from the webcast goes to André. André, keen to hear how you spend your time internally versus with portfolio companies? Has it changed over the last years?

When -- it's a clear goal that we spend more time externally than internally. There's also a clear goal that we want to spend more time at portfolio level than at corporate level. Because if you look at Partners Group, we have like 2,000-minus employees at corporate level, but we have 200,000-plus at portfolio level. So naturally, the time allocation and the focus of the ESG team should be on the portfolio side more than the corporate side. Now what was -- I'm not so surprising is the right term, but in 2022, probably the focus has not been as much in the portfolio as we wanted it to be because regulation is -- the regulatory landscape is developing quickly. Everyone wants the ESG to be quantitative. So we have spent a significant time in '22 to provide guidance to our portfolio companies to really gather the data, to make sense of regulation. And I really look forward to '23, '24 when we can turn this around and, again, increase dialogue with portfolio companies and spend time externally. I hope the investments see the same way, and I'm sure they do. There seems to be no more questions at this point. So let me say thank you again to everyone involved and especially thank you dear listeners to attending this call. I wish everyone an amazing day. Thank you.

Ladies and gentlemen, the webcast is now over. Thank you for choosing Chorus Call. Thank you for participating in the webcast. You may now disconnect. Bye.