We consider sustainability at three levels: the Board, HarbourVest and investee companies. We are dedicated to promoting the highest standards which we believe foster higher-quality investments and improved returns.
Sustainable Investing, Meaningful Results
From energy and climate to diversity, health, and human rights, the world continues to face challenges that are only intensifying. Current events continue to deepen HarbourVest’s understanding of these and other sustainability and business conduct issues, bringing more clarity to the important role private markets can play in helping to secure and shape our collective futures. HarbourVest is committed to being a true steward of capital: using its influence to raise standards on sustainable investing, diversity, equity and inclusion, and climate action in private equity through collaboration, engagement, and investment. The Investment Manager’s goals are supported by the systematic integration of sustainability and business conduct factors across all the investment strategies, from the ways in which it partners with GPs and LPs to support their sustainability objectives, through to research and feedback.
Programme Governance
HarbourVest’s Sustainable Investing Council oversees the implementation of the Sustainable Investing Policy. In 2023, HarbourVest updated its policy to reflect its continuously evolving responsible investing practices and governance structures. The policy (available at www.harbourvest.com) includes detailed information on HarbourVest’s processes for integrating sustainability and business conduct factors into investment decision-making.
Signatory to the Principles of Responsible Investment
HarbourVest has been a proud signatory to the Principles for Responsible Investment (“PRI”) since 2013. HarbourVest strives to adhere to both the letter and spirit of the PRI: it considers the potential impacts that its investment and operational decisions could have, encourages the GPs it invests with to adopt the PRI, and has experience in helping clients achieve their sustainability objectives through customised investment solutions.
Incorporating Sustainability into our Research
HarbourVest has instituted robust sustainable investing due diligence procedures across each of the investment strategies. It believes these procedures support timely and sound investment decision-making, which is at the centre of how it seeks to create compelling risk-adjusted returns for investors.
The Investment Manager utilizes a proprietary Manager Scorecard to evaluate a GP’s approach to sustainable investing. HarbourVest’s evaluation criteria is aligned with industry standards, including the PRI, Taskforce for Climate-related Financial Disclosure (“TCFD”), and Institutional Limited Partners Association’s (“ILPA”) Diversity in Action initiative. The Manager Scorecard results are generated by proprietary weightings and provide an overall rating for the GP, plus individual ratings on climate change and diversity and inclusion. HarbourVest’s approach is grounded in the conviction that the sustainable investing policies and processes of the GPs that it invests with can be an indicator for fund excellence.
HarbourVest’s sustainability and business conduct due diligence and monitoring practices are supported by RepRisk, an online database that helps the Investment Manager track negative reports globally for thousands of portfolio companies and GPs daily. RepRisk has been a particularly useful tool when screening assets for the direct strategies and as a proactive incident monitoring tool for the portfolio, which is uploaded and tracked through RepRisk.
HarbourVest’s monitoring team meets on a bi-weekly basis to review the RepRisk data and determine courses of action. Between June 30, 2023 and June 30, 2024, it screened 286 reports and selectively engaged with GPs on 34 reports which it considered to be potentially material (i.e., concerning potential litigation or human rights concerns). HarbourVest has found that these engagements have allowed it to better understand its GPs’ risk management and incident response capabilities.
The Board recognises the critical importance of sustainable investment considerations to many investors. It acknowledges that sustainability and business conduct issues can present both opportunities and threats to long-term investment performance. The Board also believes that HVPE will benefit from the continued evolution of HarbourVest’s sustainable investing practices and standards.
The Board is aware that, as an investment company, its approach to sustainable investing matters is materially informed by the strategy of the Investment Manager and accordingly the Board is committed to ensuring that it has appointed an Investment Manager that is incorporating high standards of sustainable investing practice, and has the skill and vision to respond to ongoing developments. It is confident that in HarbourVest it has such an Investment Manager.
The Board is reliant on the Investment Manager’s screening processes, controls, and priorities to address sustainability and business conduct matters within the investment portfolio in both the selection and oversight of investments. The Board believes that engagement with management of General Partners and investee companies is an effective way of driving meaningful change and takes comfort from the extent of the Investment Manager’s activity in this area, which is described on pages 41 through to 47 of the 2025 Annual Report and Accounts.
The Board receives regular updates from the Investment Manager on the development and implementation of its sustainable investing policies and processes, and the Board has established a framework for monitoring its continuing progress. Updates include information on the levels of engagement with investee companies and sustainability and business conduct issues in respect of their monitoring and selection of holdings in the Company’s portfolio. This provides a valuable opportunity for the Board to challenge the Investment Manager to demonstrate that it is applying high standards of sustainable investing practice within its investments and operations.
As an investment company with no direct employees, the core of the Company’s sustainability initiatives is derived from its oversight of its service providers, most importantly the Investment Manager. However, the Board also considers the application of sustainability standards to its own activities as an Investment Company, including the following:
- Carbon Footprint: The Board initiated a project to calculate its own carbon footprint in 2021 and since that time, has continued to offset its operational carbon emissions, the majority of which result from travel. The offsetting programme compensates for emissions by delivering finance to emission reduction projects, which are independently reviewed to assure emissions reductions are occurring.
- Relations with Stakeholders: The Board has extended its interaction with its shareholders and other stakeholders to include a consideration of sustainability matters.
- Position on Modern Slavery: The Board recognises the importance of the issues which the UK Modern Slavery Act 2015 is designed to address. It has expanded its oversight of outsourced providers, including the Investment Manager, to include questions relating to their policies to combat Modern Slavery. As Chair, Ed Warner assumes direct oversight of the Company’s statements and its response to the issue of modern slavery. A description of the Board’s approach to this subject is set out on the Company’s website.
