ARCH raises and invests private capital in emerging markets to aid their rapid transition to low carbon, climate resilient and sustainable economies. We do this in support of the Paris Agreement, in contribution to the UN Sustainable Development Goals (SDGs) and with respect to human rights in line with the UN Guiding Principles on Business and Human Rights (UNGPs).
This approach brings long-term sustainable value and helps these markets leapfrog carbon intensive industries and environmentally and socially unethical practices.
We believe there is an intrinsic interconnection between financial and ESG aspects that builds more resilient and valuable companies.
Three aspects to ARCH’s responsible investment approach
Considering and managing material ESG impact/risks associated with asset development or portfolio company activities in line with local and international ESG standards.
Developing strategic positive ESG impact initiatives for local communities or ecosystems in which assets or portfolio companies operate.
Contributing to SDGs
or Paris Agreement
Investing in infrastructure or companies that directly or indirectly contribute to the Paris Agreement and/or UN SDGs.
Delivering on this commitment
Endorsed by the CEO, this sets out ARCH’s commitment to ESG being at the core of investment decision-making
Fund-level ESG Policies & Management Systems
A customised set of policies, procedures and tools to integrate ESG into the investment lifecycle of each Fund
Diverse Investment Teams engaged on ESG
Investment teams with diverse perspectives and insights all trained and engaged on ESG and responsible investment
Works with each fund investment team and portfolio company to support the integration of ESG aspects into decision making and value creation
ESG in Committees & Board-level discussions
As well as a dedicated ESG Committee, ESG is a standing item on the agendas of the Audit and Risk Committee, Product Committee, Board meetings, and every fund IAC and LPAC meeting
ARCH’s embedded approach to ESG integration in the whole investment lifecycle
Each ARCH Fund implements a fit-for-purpose Environmental and Social Management System (ESMS) to integrate a rigorous ESG lens at each stage of our investment process; from initial screening to exit. It is comprised of policies, procedures and tools to identify, assess, manage and report on ESG risks and positive ESG impact associated with the activities of portfolio companies.
Deal Sourcing and Screening
Conducted by our investment teams, with analysis and input from our dedicated ESG function on every opportunity prior to investment scaled to the ESG risk level.
External ESG specialists are brought in as needed to dive deeper on specific issues, such as climate risk, biodiversity, resettlement, or where a full ESIA is needed.
An analysis of relevant ESG issues is included in IACs for consideration when seeking investment approval.
ESG aspects are incorporated into investment agreements and construction contractor agreements to achieve alignment with high ESG standards and maximise positive impact opportunities.
We partner with and support our portfolio companies to ensure they align with our ESG standards and create sustainable value by sharing knowledge, building internal capacity to manage issues and opportunities, and leveraging board/shareholder influence.
ESG data is a core tool we use during the investment period to drive value. We routinely monitor and report on material ESG metrics across all our investments.
Leveraging the work done through the investment period to integrate and measure ESG risk management and positive impact, we communicate portfolio companies’ tangible ESG value creation to maximise valuation premiums for business models and competencies that reflect ESG best practices.
We also factor in ESG credentials into the evaluation of potential buyers with the aim of our portfolio companies and assets continuing to be managed in a sustainable way.
Deal Sourcing and Screening
Deal Sourcing and Screening
The investment teams constantly evaluate investment opportunities for alignment with the fund strategies.
Those opportunities are screened against an ESG Exclusion List and reviewed to identify key ESG risks and opportunities.
Hover over the segments of the image below to see further details of ARCH's approach to ESG in the investment lifecycle.
ARCH has become a signatory of the UK iCI so we can contribute to the private equity industry’s commitment to tackling climate change. We recognise that climate change will have adverse effects on the global economy, which presents both risks and opportunities for investments. We are therefore committed to developing our approach to integrating climate change in our investment processes and actively engaging with portfolio companies.
Disclosures in accordance with Regulation (EU) 2019/2088 Sustainable Finance Disclosures Regulation (the “SFDR”)
ARCH is an investment adviser to certain regulated managers. The managers of ARCH advised funds are domiciled outside of the European Union and therefore firm level disclosures (for such Managers) under SFDR are not applicable.
Where required, fund/vehicle specific disclosures in accordance with the SFDR will be made available in the data room and the investor portal.
The managers advised by ARCH do not consider the adverse impacts of investment decisions on sustainability factors within the meaning of the SFDR. Whilst ESG considerations are integrated into all investment processes as outlined in the Sustainability Policy, the detailed rules underlying the SFDR will require ARCH to ascertain the availability of the data expected to be reported under the new requirements of the SFDR. As such, the position will continue to be monitored and reviewed by ARCH as the underlying rules are finalised.