Case Study: How Exponent’s ESG Strategy is Rooted in Data

Exponent is a leading private equity firm that invests in mid-market companies headquartered across Europe (UK, Ireland, Benelux and Nordics). Exponent has a distinctive approach, central to which is identifying the potential in corporate, family or founder owned businesses. Committed to integrating ESG principles across the firm, both with its portfolio companies and internally with its investment team, Exponent has had a robust ESG policy in place since 2010.

Lizzie Stazicker, the Head of ESG and Responsible Investment at Exponent, has been integral in driving ESG initiatives at the firm for over 16 years. While continuing to build out its ESG focus, the firm leveraged technology to streamline data collection processes.

The Challenge

As Exponent’s ESG efforts continued year after year, managing and aggregating ESG data from various portfolio companies became increasingly complex. Initially, the firm relied on Excel spreadsheets for its annual ESG monitoring survey. However, this approach presented significant challenges:

• Difficulty in aggregating data by fund or sector
• Time-consuming data management processes
• Variability in data quality and consistency
• Gaps and discrepancies in data reporting

In search of a more efficient and reliable ESG data collection process, Exponent partnered with Novata. This collaboration aimed to streamline the firm’s ESG reporting and improve data accuracy and transparency.

Streamlining Data Collection

Exponent integrated Novata’s ESG data platform, which resulted in several key benefits:

1. Ease of Use and Improved Data Quality: The transition to Novata’s platform significantly improved the quality of data collected. Lizzie highlighted, “The quality of the answers wasn’t as high as it is now in Novata because the additional guidance included is quite helpful, especially for companies that are starting out.” The platform’s user-friendly interface and built-in guidance ensured more accurate and consistent data entries.
2. Time Efficiency and Aggregation: The time spent on data aggregation was drastically reduced. The transition to Novata significantly reduced the time spent on data aggregation. Lizzie remarked, “Being able to export all of that data through Novata has been really helpful and made that process a lot easier as well.”
3. Enhanced Support and Onboarding: Novata’s team played a crucial role in onboarding Exponent’s portfolio companies. Lizzie praised the support, saying, “The Novata team did an amazing job of onboarding all the portfolio companies, explaining how the platform works, and answering any specific questions they had.” This support ensured a smooth transition and helped portfolio companies quickly adapt to the new system.
4. Positive Reception from Portfolio Companies: The streamlined reporting process was well-received by Exponent’s portfolio companies. Lizzie noted, “I did have a couple of portfolio companies tell me this year they actually enjoyed the reporting process, which I was quite surprised by. They found the platform really easy to navigate.”

Once collected, Exponent puts the ESG data to good use. The firm uses the collected ESG data to:

• Produce Annual ESG Reports: The data is used to create comprehensive ESG reports that are publicly hosted on Exponent’s website, demonstrating its commitment to transparency.
• Share Insights with Deal Teams: Exponent developed tailored dashboards to track key metrics and align with investor interests. “This does put us in a better position to share the data internally with deal teams,” Lizzie explained.
• Facilitate Benchmarking: The platform enables benchmarking across portfolio companies, helping to identify areas for improvement and track progress over time.
• Drive Strategic Decisions: By making ESG data readily available to deal teams, Exponent ensures that ESG considerations are integrated into investment decisions.

Looking Forward

After completing one reporting cycle with Novata, Exponent is looking to further enhance its ESG data collection processes. Lizzie credits the firm’s ESG committee of senior partners and deal team members with helping to drive ideas forward and support the team’s initiatives. This senior-level buy-in is pivotal for leaders in roles similar to hers, she notes.

Exponent’s partnership with Novata has transformed its ESG data collection and reporting process. The collaboration has led to higher data quality, increased efficiency, and greater engagement from portfolio companies. As Lizzie stated, “Novata has been amazing to help with the process, and all the different reporting frameworks have been really pivotal in helping us.”