Through the global climate conference (COP28) in the UAE, we were reminded of the extreme and devasting weather patterns that took place during 2023 and that global climate action has never been more necessary. At an organisational level, Environmental, Social and Governance (ESG) strategies are increasingly being placed at the top of board agendas and, as confirmed by a recent survey conducted by deVere Group financial services, more than half of investors plan to increase their ESG orientated investments in 2024.

During our conversations with CPOs and Heads of Talent last year, it was increasingly felt that organisational ESG performance would play a critical role in attracting and retaining top talent in a highly competitive market. HR teams can play a critical role in driving the ‘Social’ narrative of ESG initiatives through a diverse range of DE&I, Employee Relations and community-based activities.

To learn more about the strategic importance of ESG and how it increasingly overlaps with organisational HR, Miller Byrne spoke to Katie Ahmed, ESG Manager with Basalt Infrastructure Partners, a dedicated mid-market infrastructure equity firm focusing on investments in power & renewables, utilities, transport and communications & digital infrastructure in North America and Western Europe.

Can you tell us more about your HR career before transitioning into ESG with Basalt Infrastructure Partners?  

My first HR role was with an Asset Manager, AllianceBernstein, and I was there for over five years. I started in a team of 13 and by the time I left we were a team of 3, whilst the whole company was going through significant headcount reductions across the business, which was very challenging but a great experience professionally. I then moved to Actis where I also spent more than five years but with more responsibility working as both a business partner and leading HR operations. It was a much more global role although a smaller organisation (less than 250 people at the time) who had a real focus on responsible investment. I started to see what a difference ESG could make and heard about tangible examples as well as getting involved in reporting on D&I for investors.  Following my first maternity leave I took a contract role with the UK’s development finance institution.

What motivated you to pivot into an ESG role and what advice would you provide to anyone considering such a move?

I was looking for a senior role within financial services (given my background) that I could do on a part-time basis – ideally 3 days a week, following my second period of maternity leave. I had always had an interest in the environment, having done a degree in geography and chosen modules such as environmental issues and environmental risk management, and the social and governance aspects of ESG are very closely intertwined with the HR role. I assumed you would need direct experience in a responsible investment role, but I was lucky to find somewhere that was looking for someone with good communication skills and relevant experience. The more I looked into it the more I realised how many transferable skills there were between the two disciplines and I would recommend anyone considering a similar move to spend time thinking about the aspects of their existing roles where there is overlap e.g. building and managing relationships, dealing with global locations, writing policies, reports and clear communications, implementing D&I initiatives or community volunteering projects, recognising and identifying good/bad governance practices within a company, involvement in health and safety, compliance with local regulations, good employment practices, recruitment and retention initiatives, and understanding risks within a company (legal, social, reputational etc).

What are the key pillars of Basalt’s ESG strategy?

Basalt has always considered ESG in the investment decision-making process and integrated it throughout each stage of the investment process. Our work over the last few years has tried to ensure a more systematic process with good policies in place and consistency across the companies we invest in, which includes focusing on four key pillars:

How do you align the firm’s ESG strategy across portfolio investments?

In 2023 we were focusing on getting the fundamentals in place at each portfolio company, no matter their size, sector or maturity, which includes having ESG as a standing item on the board agenda, having an ESG policy in place, measuring GHG emissions and considering climate risks. Following a new investment, we hold an ESG review with that company, and communicate Basalt’s expectations around ESG and reporting in particular, whilst evaluating their strategy and implementing bespoke KPIs alongside the company’s mandatory data collection points. Good engagement is key, particularly as often the ESG lead at a portfolio company is not in an ESG role, as it could be HR, operations, health and safety, or the CEO!

Where do you see the key overlap between ESG and HR strategy?

Communication is key in both disciplines, working with a multitude of stakeholders and needing to be able to deliver key messages, simply. I have drafted policies in both roles, analysed data and written reports. But fundamentally, for me at least, it’s about doing the right thing and having a positive impact – whether that is with workplace practices and policies, leadership and governance, or environmental impact. I have always had a strong moral compass and conscience, and want to ensure fairness across an organisation, which comes under both roles through influencing positive change, improving processes and being an adviser and technical expert. Plus there’s always the common need to ask the Exec Board for budget!

What ESG trends do you anticipate will gather more momentum in 2024?

Increasingly there is more regulation being introduced, particularly in Europe, and this requires certain disclosures and reporting to be in place. Having a background in HR, complying with employment law and interpreting new regulation, is proving helpful. Navigating the sometimes conflicting views on ESG and different priorities between Europe and the US continues to be tricky. Working closely with legal and compliance has always been important for HR professionals and now ESG is going the same way.

What have been your key ESG achievements across the firm and the portfolio?

Producing an annual ESG report each year in a team of one is really challenging but also interesting as it has been nice to see how the content has improved and the data available for us to include has increased due to processes we have implemented. I really enjoy working with the portfolio companies and we get the ESG leads together on an annual basis, which is a lovely event and great to see the progress we have made and how closely we work with that community. As well as hearing positive feedback from investors and our rating with the PRI (Principles for Responsible Investment) improving, it’s just great to work with so many different stakeholders. I think managing to maintain my three days a week working pattern has been a miracle given how much growth and progress there has been both within the ESG sector but in particular at Basalt. I do have to be selective regarding what we focus on as there is always more that can be done in ESG – definitely another thing in common with HR!