The Trustee has appointed Cambridge Associates (CA) as the advisory investment consultant for the UKRF’s private equity programme. CA’s mission is helping clients meet or exceed their investment objectives by providing proactive, independent and objective advice that is grounded in intensive research. To achieve that mission, CA strive to be good stewards of clients’ capital and also seek to be good stewards of the natural and socio-economic systems that ultimately drive long-term value creation.
When issues were raised in relation to a social care provider, despite it having received supportive ratings across its sites from its regulator, CA engaged with the investment manager which is the majority owner. Over several meetings and exchanges of emails, CA sought to understand:
- The allegations
- The manager’s due diligence process at the time of investment
- The extent of its risk processes
- The actions taken to address and rectify shortcomings at the relevant care facilities, and
- How their ESG and risk processes could evolve, especially social risks.
CA was reassured by the investment manager’s actions, which included replacing management, firing relevant personnel, improving governance, introducing new procedures, and conducting multiple independent legal reviews.
The role played by CA was to use its influence to ensure the investment manager took greater accountability in relation to its ownership responsibilities. Following the remedial actions from the investment manager, the social care provider received a reaffirmed and supportive review from its regulator.
Overall, CA’s positive engagement with the investment manager gave comfort for the partnership to continue, albeit with increased monitoring of its other assets and awareness of the potential for heightened social risks.
This case illustrates the importance of ‘social’ in ESG and how influence on investments can be used as a positive force by the Trustee.