Private equity: assessing risk; improving practices

Overview

Our client wanted to better understand human rights risks across their portfolio and improve due diligence practices, pre- and post-investment, for all their funds.

Part of the challenge came from the diversity of sectors within the portfolio (including technology/software, automotive, logistics and FMCG).

Our approach

In the first of two project phases, twentyfifty conducted a risk assessment on 70+ companies within the client’s portfolio.

• We assessed the overall severity and likelihood of human rights risks for each company.
• We gathered information from internal documents, conducted external desk research and gained insights from ESG managers.
• We created individual risk profiles for each portfolio company, and an overall heat map per fund.

For the second phase, we created tools including a pre-investment due diligence ‘decision tree’ and a human rights due diligence questionnaire to provide guidance for future investments.

We also provided a list of human rights mitigation measures tailored to the sectors that the client invests in.

Results

The project helped the client have a better understanding of the human rights risks within their portfolio.

It also helped them understand which companies they should choose to prioritise for further engagement.

In particular, the project helped raise their awareness regarding human rights challenges in technology and AI.

We also equipped the client with new tools and templates to make more informed decisions on potential investments.