January 15, 2021

Partners Group is a leading global private markets investment manager with over USD 109 billion in assets under management and more than 1500 professionals across 20 offices worldwide.

Establishing the manager's contribution to the achievement of impact

In this International Finance Corporation (IFC) case study, Partners Group showcases one of the IFC's Operating Principles for Impact Management – "establishing the manager's contribution to the achievement of impact" – in a case study on its lead investment in portfolio company Techem, a German energy services provider. The case study shows how Partners Group enhanced the company’s impact through strategic and operational initiatives, whilst also improving operational and financial metrics. Partners Group was a first adopter of the IFC's Operating Principles for Impact Management, which launched in 2019, and played an active role in their development.

Partners Group's impact-at-scale strategy

Partners Group launched an impact-at-scale investment strategy in 2018 focused on companies and infrastructure assets with business models that can advance the UN's Sustainable Development Goals (SDGs). A central tenet of this investment thesis is that active ownership is the primary lever to improve an asset’s financial performance while also increasing its impact. By acquiring a controlling interest in companies on behalf of its clients, Partners Group implements significant value creation and environmental, social and governance (ESG) initiatives that drive financial and social returns and minimize negative impacts. The firm has created a simple yet robust framework for measuring the impact of these initiatives.

Investment in Techem

In 2018, Partners Group invested on behalf of its clients in Techem, a German energy infrastructure and energy services company and market leader in “submetering” services. Sub-metering is a cost-efficient way to reduce individual heat and water consumption by providing residential energy consumers with technology and services that offer consumption data on a regular basis and incentivize more efficient resource use through lower costs.

Today, Techem’s services lead to a total CO2 avoidance of more than seven million tons per year. The impact assessment for Techem established that installing and maintaining sub-metering devices in apartment buildings enables better monitoring of energy use and temperature regulation, helping to improve energy efficiency and advance SDG target 7.3 to: “by 2030, double the global rate of improvement in energy efficiency.” The assessment also outlined that, as Techem’s lead investor, Partners Group would hold majority governance rights and could use its expertise to enhance the company’s impact through strategic and operational improvements.

You can read the full case study on our website:

https://www.partnersgroup.com/en/news-views/in-the-media/detail/article/ifc-establishing-the-managers-contribution-to-the-achievement-of-impact/

CHAPTER fi.

Case Studies—Experiences of Signatories to the Operating Principles for Impact Management

Signatory

Principle 3

Establish the Manager’s

contribution to the

achievement of impact.

Partners Group is implementing Principle 3 through

active private equity ownership.

In 2018, Partners Group, a global private markets

investment manager, launched an impact-at-scale

investment strategy focused on companies and

infrastructure assets with business models that can

advance the Sustainable Development Goals. A central

tenet of this investment thesis is that active ownership

is the primary lever to improve an asset’s financial

performance while also increasing its impact. By

acquiring a controlling interest in companies on behalf

of its clients, Partners Group implements significant

value creation and environmental, social, and corporate

governance (ESG) initiatives that drive financial and

social returns and minimize negative impacts. The firm

has created a simple yet robust framework for measuring

the impact of these initiatives.

Identifying Partners Group’s contribution to impact

begins in the due diligence process for all investments

within the strategy, with the first step being the

proprietary impact assessment. During this assessment,

Partners Group engages an independent provider to build

an evidence-based model linking a potential investment’s

core business activities to measurable outputs, outcomes,

and impacts that contribute to a specific SDG target.

In line with Principle 3, the assessment also estimates

the degree to which Partners Group, as manager, would

materially contribute to the asset’s SDG impact, and

outlines specific metrics to measure the firm’s impact

contribution during ownership. The final output of the

assessment is a clear framework for Partners Group’s

impact narrative, which is documented over the life of

the investment.

Te c h e m :

In 2018, Partners Group invested on behalf

of its clients in Techem, a German energy infrastructure

and energy services company and market leader in “sub-

metering” services. Sub-metering is a cost-efficient way

to reduce individual heat and water consumption by

providing residential energy consumers with technology

and services that offer consumption data on a regular

basis and incentivize more efficient resource use through

lower costs. Today, Techem’s services lead to a total CO2

avoidance of more than seven million tons per year.

The impact assessment for Techem established that

installing and maintaining sub-metering devices in

apartment buildings enables better monitoring of

energy use and temperature regulation, helping to

improve energy efficiency and advance SDG target 7.3

to: “by 2030, double the global rate of improvement in

energy efficiency.” The assessment also outlined that,

as Techem’s lead investor, Partners Group would hold

majority governance rights and could use its expertise

to enhance the company’s impact through strategic and

operational improvements.

Partners Group’s impact contribution includes:

Business building:

Partners Group identifies assets

whose core business generates positive impact,

and then scales that business by leveraging the

firm’s internal team of industry and ESG experts

and business-building toolkits. Partners Group

is scaling Techem’s business by proliferating sub-

metering services and accelerating energy efficiency

improvements across the company’s customers.

Impact value creation:

Partners Group also

identifies discrete ways in which it can increase an

investment’s positive impact while also improving

operational and/or financial metrics. At Techem,

one strategy is to improve digital communication

tools so that inhabitants can more easily monitor

their heat and hot water consumption and also

compare it to their peers. This uses consumer

behavior to further reduce consumption while also

attracting new customers interested in more tech-

enabled solutions. In addition, Techem is exploring

technology innovations to optimize heating

systems and save fuel. Providing such systems to

customer properties could further reduce resource

consumption and increase energy savings.

CASE STUDY 12: PARTNERS GROUP

GROWING IMPACT

New Insights into the Practice of Impact Investing

Working with management teams:

Driving

impact at portfolio assets requires buy-in from the

management teams, and Partners Group’s active

ownership model is highly beneficial to implementing

these initiatives. Many management teams are also

often eager to drive the conversation forward. For

example, Techem’s management team supports

quantifying the company’s impact on energy

consumption, as it has positive effects on government

relationships, consumer marketing, employee

satisfaction, and the overall business strategy, as the

company seeks to reposition itself from a “metering”

firm to an “energy efficiency” firm with a vision to

“make buildings green and smart.”

Ensuring accountability:

Partners Group

establishes impact Key Performance Indicators

(KPIs) for all of its impact investments, which

are then tracked and reported annually. Techem

improved the way it measures the reduction in

energy consumption achieved by its clients. To

monitor its impact contribution, Partners Group

has also built impact governance into the firm’s

broader asset management process. This means that

investment teams report on impact performance

alongside financial performance to the Operational

Value Creation committee, which oversees all assets

across Partners Group’s portfolio.

Author

| Carmela Mondino

“Driving impact at portfolio

assets requires buy-in from the

management teams, and Partners

Group’s active ownership

model is highly beneficial to

implementing these initiatives.”

—CARMELA MONDINO, SENIOR

OPER ATING A SSOCIATE, ESG &

SUSTAINABILITY, PARTNERS GROUP

In 2018, Partners Group invested on behalf of its clients in Techem, a German energy infrastructure and energy services company and

market leader in “sub-metering” services.