Spotlight on Portfolio Operations: Colin Etnire

As part of BC Partners’ latest series focused on operational excellence, we’re sitting down with members of our Portfolio Operations team to find out more about their expertise, emerging themes in their practice areas and how they work across BC Partners’ portfolio to deliver hands-on support and value creation.

In this Q&A, we speak with Colin Etnire, Head of Sustainability, to discuss his role, how we approach sustainability at BC Partners, and how the team works with companies to better businesses, responsibly.

Thank you for sitting down with us, Colin. Could you tell us about your role at BC Partners and your background before joining the firm?

Colin Etnire: My pleasure, thanks for allowing me to share my experiences. I became Head of Sustainability at BC Partners in 2020, leading the firm’s sustainability efforts in diligence, reporting, and value creation. I transitioned into this field in 2016 with The Carlyle Group, reporting to their Chief Sustainability Officer, back when incorporating these considerations in private equity investments was still a fairly new concept. Now, it is an established practice area.

One of the things that attracted me to BC was a history of being on the front foot with developments in the space: they were one of the first PE firms to commit to UN PRI back in 2009. When I joined, it was clear that BC wanted to remain in the leading pack amongst our European buyout peers.

My work at BC Partners falls into three main areas. The first of these is due diligence: we evaluate potential investments for environmental, social, and governance (ESG) risks, integrating this analysis into our Investment Committee (IC) memos and informing our decision-making on potential investments.

Second, during ownership, we work together with our businesses to improve practices, investment or personnel, ensuring they effectively manage risks and capitalize on sustainability-aligned value creation opportunities. We also support companies to effectively position themselves for exit from a sustainability perspective.

The final element is the monitoring and reporting that we do on behalf of our LPs to provide them transparency and meet the needs of their stakeholders.

In your experience, how does sustainability contribute to delivering value creation within BC Partners’ portfolio?

Colin Etnire: For our portfolio companies, we tie sustainability initiatives to specific value creation drivers: customers, employees, operations, or investors. We ask questions such as: Will it help you win new business or expand a relationship with an existing customer? Will this help to retain and recruit talent to your firm? Does it help to reduce costs or minimize operational risks?

If we can’t link a sustainability initiative to a genuine driver of business value, we simply don’t pursue it.

Like the other members of the portfolio ops team, I don’t see this work as being exclusive to the ownership stage, it exists throughout the investment lifecycle. In diligence, I meet with our deal teams at an early stage and map out where we think the most material potential areas are, and a plan for how to assess them.

This evaluation of the impact of sustainability on business value helps shape our investment decisions and also highlights any value-creation efforts needed during ownership.

That last point is important: rather than enforce a single cookie-cutter approach across the whole portfolio, we tailor our interventions to the specific needs of individual companies. This also means that we focus only on the companies where we can add real value in this area, rather than spending time on those for whom it is less material. With sustainability in particular, the potential issues are far too diverse to have a one-size-fits-all approach.

Could you provide some additional insights into how you and the team are addressing and implementing sustainability initiatives across the portfolio?

Colin Etnire: Building better businesses through sustainability initiatives spans broad reporting and engagement, as well as delivering targeted initiatives at company and division level.

As owner-operators, working with management to build better businesses, one of the first points of engagement is making sure that our companies have the right resourcing required for the implementation of sustainability initiatives. Many of our portfolio companies already have dedicated leads, while some have entire teams, and a few handle such issues through other functional areas. Any of these structures can be appropriate depending on the business. However, we do advise on potential improvements, assist in identifying and hiring executive-level talent when necessary, and connect in-house teams with trusted third-party providers to address specific issues.

That resourcing is important because each company faces unique challenges, and in-house resources are better positioned to manage them on a day-to-day basis. My role is to understand these challenges and offer strategic advice. For example, in the case of our portfolio company, PetSmart, which sources live animals, I couldn’t offer veterinary advice. However, I was able to provide perspective on how investors perceive risks in the area and how to best ensure confidence, through effective policies and procedures.

Similarly, some of our companies wanted to do their first GHG footprint, or even to set decarbonization targets. My eight years of experience in footprinting allowed me to help them understand what each task would entail, determining which activities would fall under each scope, and even to calculate the emissions themselves (or at the very least audit their calculations).

In terms of broader pan-portfolio engagement, we host regular sustainability webinars with our portfolio companies to discuss the current landscape, facilitating cross-portfolio discussions and connecting with experts from across BC Partners’ network to provide expertise and insight on a range of topics.

For example, we’re currently working with our portfolio companies to improve awareness and understanding of significant upcoming regulations such as the EU Corporate Sustainability Reporting Directive (CSRD) disclosures and greenhouse gas tracking requirements. This is to ensure that they’re prepared for regulatory changes and have the systems, resources and expertise in place to meet new requirements.

Thanks Colin, this has been very insightful so far. Could you please also share how sustainability initiatives are measured?

Colin Etnire: Of course, happy to. Every year we send out a survey to our portfolio companies with over 100 KPIs related to ESG criteria. These KPIs include those from regulatory frameworks like SFDR, industry frameworks like EDCI, and some bespoke questions that are important for monitoring sustainability programs. This data is not just essential for us at BC to understand what’s going on with our programs; it also enables us to deliver the required reporting to our LPs, helping them meet their reporting obligations.

That monitoring doesn’t merely sit with my function or our LPs, however – we require each company to share their survey responses with their boards at least once a year to ensure board-level visibility of sustainability outcomes.

These standardized metrics are essential, but as noted above – sustainability is a highly diverse field and not every material issue would be effectively captured by a standard template. As such, the other important part of our monitoring program is the direct engagement we have with the sustainability focused contact at each company so that we can get qualitative and bespoke information about how they’re navigating specific challenges.

Finally, what are the biggest sustainability trends or challenges facing companies across BC Partners’ portfolio?

Colin Etnire: I would argue that one key emerging topic for companies is an increase in regulation and reporting standards - both at GP and PortCo level. This growth in regulation reflects growing public interest in sustainability, as well as the maturity of the sector and sophistication of sustainability within the investment landscape. It also coincides with much greater scrutiny of sustainability claims, both from those that support and oppose sustainability initiatives, which encourages greater rigor.

On the EU CSRD, an example of our work with portfolio companies is in addressing the increase in greenhouse gas monitoring requirements. We help them stay ahead of upcoming regulations while also developing monitoring processes to provide an effective baseline for reducing emissions. By ensuring our companies are aware of upcoming changes, and providing them with the right resources, support, and expertise, we enable them to stay ahead of the curve. We see sustainability as a form of future-proofing and there is no area where that is more relevant than in the realm of regulation.