Environmental, Social and Governance (ESG); Sustainable Investments, Sustainable Returns

Pioneering investment firms are showing that purpose and profit go hand in hand. In this article, Harry Fehily, Managing Partner in Holmes, and colleagues, discuss the shift in the Irish private equity market and wider economy.  

“Environmental, Social and Governance (ESG) has become the driving force of decision making in the private equity market. Sustainability indexes have been outperforming their peer benchmarks for quite some time. The recent global unrest and social and economic turbulence have created the perfect storm of a scarcity of resources and an increase in the cost of doing business. For the Irish market, this means that businesses are now taking action on the issues which we all have been talking about for a very long time.”

For Stephen Walker – a corporate lawyer with almost thirty years of experience on corporate and commercial transactions – working with clients of impressive sustainable credentials, such as John Mullins of Amarenco Solar and Denis Brosnan of BHSL, it is very simple really: 

Incorporating ESG into your corporate strategy leads to sustainable value creation for your business and our clients are demonstrating that every day of the week. 80% of the transactions which I have dealt with this year have had ESG considerations at their core. It is a critical part of due diligence and an important consideration for investors.

Stephen Walker

Pat McInerney, a Partner specialising in public administrative and regulatory law, adds

Globally, regulatory bodies are adopting ESG mandates for company and investor actions. This has been an agenda item for Europe for a very long time but for the first time, we are witnessing the U.S. stepping up and addressing these issues. This has a knock-on impact on Irish companies that fall in the supply chain to larger U.S. corporations.

Pat McInerney

Harry Fehily, Managing Partner, counts WYLDE – the esports company co-owned by Usain Bolt – amongst the firm’s diverse range of corporate clients:

Smart, progressive companies are seizing the opportunity, determined not to be left behind. Talent attraction and retention, buyers’ enthusiasm for an ESG mindset, and investment gains are just a few of the reasons that our corporate clients are shifting their focus

Harry Fehily

Shane Costelloe, Partner specialising in employment law explained the challenge that companies are facing:

The phenomena of the “Great Resignation” and “Quiet Quitting” are already causing businesses a host of problems in attracting, motivating and retaining employees.

Shane Costelloe

Nearly three-quarters of millennial employees say they would take a pay cut to work for a sustainable company that shares their ESG values. From a people perspective, failing to address ESG is not an option for successful businesses. Accordingly, employers are looking towards alternative ways to attract and retain staff through engagement with interactive CSR projects, offering long-term incentive plans including share options and tying such incentives to staff projects which deliver organisational improvements, for example evolving the employer’s ESG footprint and those which impact on the corporate reputation of a business.

Working with clients like Future Energy Ireland, a new joint venture owned by Coillte and ESB which combines the nation's strongest assets and expertise in renewable energy, is at the forefront of Holmes’ agenda. Partnering with Dr. Hugh O’Donnell of Ingenium Training and Consulting, Holmes helps businesses develop their ESG strategy and make sustainability part of their core offering so clients can take advantage of market opportunities. Dr. O’Donnell, also the chairman of Novus Technical Services, a leading provider of energy services, is experienced with people and senior leadership development in a global environment. This unique partnership offers a company’s board of directors a 360 solution in approaching their sustainable business objectives.

Changing trends require boards from a good governance perspective to adapt their business model to make it ESG compliant. Holmes in partnership with Ingenium are happy to assist in that process.

Harry summing up the market shift

For more information, please contact any of our team below.