# Creating sustainable value through responsible investment
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-02-15
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Why Responsible Investing is Essential for Creating Value
Meta Description: Learn from senior investment manager James MacLeay why responsible investing enhances value creation, returns, and supports long-term growth prospects at
URL: https://financedigest.com/creating-sustainable-value-through-responsible-investmenthtml

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**_![James MacLeay](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/07-1736816235551-compressed.jpg)_**

**_WestBridge understands and embraces the importance of responsible investing, firmly believing it helps create and protect value. Here senior investment manager James MacLeay explains why._**

Responsible investment is a hot topic across all asset classes, not just private equity. It relates to the investment strategy that incorporates environmental, social and governance (ESG) factors into the investment process.  Although there may be some overlaps, it isn’t the same as impact, social or [ethical investing](https://www.financedigest.com/ethical-property-investment-can-your-money-do-more.html "Ethical property investment: Can your money do more? ")

A common misconception is that responsible [investment leads](https://www.financedigest.com/invest-in-infrastructure-to-escape-the-starvation-cycle-warns-leading-nonprofit-sector-strategist.html "Invest In Infrastructure To Escape The ‘Starvation Cycle’, Warns Leading Nonprofit Sector Strategist") to lower returns.  In our view, the opposite is true. It can actually help enhance returns by [identifying value accretive initiatives and acting as a risk](https://www.financedigest.com/legal-entity-identifiers-leis-how-can-banks-minimise-risks.html "Legal Entity Identifiers (LEIs): how can banks minimise risks?") mitigation tool.

Taking each component of ESG in turn it is clear to see that responsible [investment and increased](https://www.financedigest.com/investments-in-the-caribbean-increasing-due-to-cbi-demand.html "Investments in the Caribbean Increasing Due To CBI Demand") financial returns go hand in hand:

- The [environmental criteria of ESG](https://www.financedigest.com/the-impact-of-environmental-social-and-governance-esg-investing.html "The Impact of Environmental, Social, and Governance (ESG) Investing") is subject to increasing scrutiny from society and wider stakeholders. Businesses are increasingly expected to manage their resources in a [sustainable way](https://www.financedigest.com/5-ways-to-sustain-productivity-when-the-clocks-go-back.html "5 ways to sustain productivity when the clocks go back") and minimise their carbon footprint. Sustainable resource management and a reduced [carbon footprint](https://www.financedigest.com/ecb-can-cut-carbon-footprint-by-shedding-bonds-of-biggest-polluters.html "ECB can cut carbon footprint by shedding bonds of biggest polluters") can result in meaningful operational efficiencies and cost reductions, can significantly increase brand reputation and support long term growth prospects.
- The [social aspect of responsible](https://www.financedigest.com/corporate-social-responsibility-within-the-festival-industry.html "Corporate Social Responsibility Within The Festival Industry") investment covers the relationships between the company and its stakeholders, whether employees, suppliers, customers or those further afield. By [investing in staff through employee](https://www.financedigest.com/why-investing-in-employee-health-can-be-good-for-business.html "Why investing in employee health can be good for business") engagement, welfare and talent attraction schemes, companies can boost employee motivation, productivity and retention.
- **Governance** is an area on which private equity has historically been focussed, perhaps by putting a non-executive chair in place, upgrading controls, policies and processes that improve decision making and [investing in risk management](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management") to protect value.

At WestBridge, we understand the direct link between responsible [investing and creating value](https://www.financedigest.com/procurementin-european-private-equity-investment-adding-value-to-the-boardroom.html "Procurement in European private equity investment – adding value to the boardroom."), therefore, our approach to ESG is aligned to our investment objectives. Pressure from LP’s and the media has meant that many larger private [equity investors have been incorporating ESG into their investing](https://www.financedigest.com/norway-wealth-fund-to-consider-investing-in-unlisted-equities.html "Norway wealth fund to consider investing in unlisted equities") for the last 5+ years, often with dedicated teams.

In the lower mid-market, however, with smaller [teams and less public](https://www.financedigest.com/orvium-the-decentralized-platform-for-scholarly-publication-counts-cern-nasa-amazon-and-oracle-experts-in-senior-team.html "Orvium, The Decentralized Platform For Scholarly Publication, Counts CERN, NASA, Amazon and Oracle Experts in Senior Team") scrutiny, there hasn’t been as much of a focus on ESG outside the impact funds.

We are in the business of creating long term value for investors and firmly believe that responsible [investing and a clear strategy](https://www.financedigest.com/2018-it-security-predictions-methods-for-attacks-investment-areas-cybersecurity-strategies.html "2018 IT Security Predictions-Methods For Attacks, Investment Areas & Cybersecurity Strategies") on ESG will help to generate sustainable growth in our portfolio and drive returns for investors. This is why we take [ESG seriously and incorporate it into all aspects of our investment](https://www.financedigest.com/explainer-what-is-the-s-in-esg-investing.html "Explainer-What is the ‘S’ in ESG investing?") process.

This is evidenced across the WestBridge portfolio. We are helping to support, [fund and encourage numerous ESG related initiatives](https://www.financedigest.com/tokenized-vc-fund-spice-and-polymath-launch-industry-initiative-to-advance-tokenized-securities-market.html "Tokenized VC Fund SPiCE and Polymath Launch Industry Initiative To Advance Tokenized Securities Market"). The COVID-19 pandemic and the consequent interruption of [business and introduction of different business models has enabled some of our portfolio companies to change their working practices](https://www.financedigest.com/exact-launches-practice-management-solution-to-help-transform-accountants-into-trusted-business-advisors.html "Exact launches Practice Management solution to help transform accountants into trusted business advisors").  They have become more efficient, more environmentally friendly and shown [increased care for their staff](https://www.financedigest.com/positive-group-sees-huge-increase-in-focus-from-employers-on-staff-psychological-health.html "Positive Group Sees Huge Increase In Focus From Employers On Staff Psychological Health") and wider stakeholders.

In the past year, many of our portfolio companies have had a significant proportion of staff [working from home](https://www.financedigest.com/savile-row-designer-on-working-from-home-winter-attire.html "Savile Row Designer on Working From Home Winter Attire") and COVID-19 related restrictions and measures have been in place for those who remained in the workplace.

By way of example, APEM and Aptus have increased the number of [mental health](https://www.financedigest.com/breaking-the-stigma-men-and-mental-health-in-the-world-of-investments.html "Breaking the Stigma: Men and Mental Health in the World of Investments") first aiders in their teams as they seek to support employees’ physical, mental and financial wellbeing.

Elsewhere in the portfolio, a number of companies have either increased or implemented staff surveys to ensure the [leadership teams understands](https://www.financedigest.com/corporate-leadership-understanding-your-own-bias.html "Corporate Leadership: Understanding Your Own Bias") any lockdown-related problem areas or opportunities that have been identified by staff.

With a combined employee base of 2,000, ensuring that we invest in, support and retain our staff is an important factor in creating long term, [sustainable growth](https://www.financedigest.com/medical-device-cleaning-market-expected-to-witness-a-sustainable-growth-over-2019-2027.html "Medical Device Cleaning Market expected to Witness a Sustainable Growth over 2019 – 2027").

**_Typically, WestBridge invests between £10m and £25m in established, profitable and fast-growing UK small cap businesses with enterprise values of up to £50m.  We are always keen to hear from ambitious management teams that require development capital, acquisition funding or support for a management buyout.  To hear more about our investment criteria or discuss the suitability of a company, do get in_** [**_touch_**](about:blank) **_._**


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