Natasha Morris on ESG strategies that deliver
The Green Files is a unique CEFC series where we talk to the people making a difference in the race to net zero emissions.
21 June 2022
After a diverse career across the private and social sectors, private equity investor Natasha Morris finds herself in a unique position – leading a responsible investment strategy designed to put emissions reduction at the core of private equity investment.
Natasha’s path to her current role as Managing Director, Responsibility and Impact at Adamantem Capital has been anything but linear. Starting out as a finance lawyer, Natasha went on to work in investment for an infrastructure fund manager before working in venture philanthropy in London. On returning to Australia, Natasha continued on this trajectory, working in impact investing for Social Ventures Australia. Now, she is responsible for creating and implementing an integrated responsible investing strategy for private equity investor Adamantem – demonstrating that profitability and ESG can go hand in hand in the hyper competitive private equity sector.
“I often reflect on how this role really brings together the range of skills I’ve developed across my career previously,” says Natasha. “That’s why I enjoy it so much – it enables me to use my experience to develop approaches to address a range of issues I’m deeply interested in, in a really unique way.”
The role for private equity
Private equity may not be known as a leader in emissions reduction but this is changing rapidly, thanks to investors such as Adamantem. In fact, Natasha believes emissions reduction planning is vital to ensure businesses can be competitively positioned in the transition economy. “As an investor, if you’re not considering the emissions profile of the businesses you invest in, you’re missing a large part of the risk management and value creation piece,” she explains. “It’s becoming increasingly clear to everyone that environmental goals around reducing emissions can absolutely coexist with generating outstanding financial returns.
What we are trying to do is put the issue of emissions on the board and management agendas within our investee companies – and integrate it into their risk management and value creation processes in the same way that we do with more traditional business risks and growth opportunities.Natasha MorrisManaging Director, Responsibility and Impact, Adamantem Capital
Natasha is also quick to point out that emissions are only part of the ESG story. “Emissions are an important part of what we do, but we look at them within the context of climate risk more broadly,” she says. “Pre-investment, we carry out extensive due diligence to understand both physical and transition climate change risks and opportunities for all the businesses we’re looking to invest in. And once we own a business, we look at managing those risks and opportunities and carbon footprinting in a far deeper and more collaborative way.”
Collaboration on new frontiers
In late 2020, the work of Adamantem was bolstered by a CEFC investment of $80 million in the Adamantem Capital Fund II – the first private equity investment by the CEFC. Natasha believes this has made a difference in many ways. “Having the CEFC on board has strengthened our collaborative approach to portfolio stewardship – as in, how we engage with companies once we own them,” she says. “We know the CEFC wants the private equity sector to lift its ambitions with respect to reducing emissions. In this fund, we made our first ever formal commitments around both Scope 1 and Scope 2 emissions reduction. For the first time, to support this, we have also established an Emissions Reduction Committee, which helps with that planning process. The committee is comprised of Limited Partners, including the CEFC, and the expertise and guidance that it provides is very important.
Collaboration and information-sharing – between General Partners and Limited Partners, and across sectors and industries more broadly – is fundamental to achieving emissions reduction, particularly when things are changing and evolving so quickly. We are really pleased to have been able to set up a governance structure within this latest fund that reflects that.Natasha MorrisManaging Director, Responsibility and Impact, Adamantem Capital
All hands on deck
In Natasha’s view, hands-on involvement is also critical. “I think private equity has an important role to play in giving companies the practical support, or ‘scaffolding’, to take action and come up with climate mitigation and adaptation plans,” she says. “By getting our hands dirty and actively supporting this process, we continually build on our knowledge of how to manage transition risks and opportunities in a business, and ensure it’s positioned competitively. The benefit of being a private equity investor is that, as we do this across a range of businesses in a variety of industries, we can share and amplify this depth of expertise.”
In addition to working with businesses in its own portfolio, Adamantem is also proactive in engaging with the broader private equity sector. “This is actually a fundamental part of what we do – whether it’s by publishing thought pieces or speaking at industry events,” says Natasha. “We need to recognise that we’re working in a highly ambiguous environment that’s in a huge state of flux, and we are all still learning.”
Leaping into the unknown
In this uncertain and ever-moving context, Natasha believes that progress comes down to being adaptable and inventive. “There are no established norms on how to address many of the ESG issues we come across, and things are changing so rapidly – so it takes an entrepreneurial mindset and a willingness to experiment a bit, but using the facts and knowledge that you have at hand. The preparedness to take a bit of a leap into the unknown in working out how to best address some of these issues is important, as is the flexibility to adapt and adjust your approach over time.
Working in this area requires patience, and the most important thing I have learnt is the value of deep and ongoing stakeholder engagement to bring people along on the journey.Natasha MorrisManaging Director, Responsibility and Impact, Adamantem Capital
“It takes time to change and influence behaviours, and the shift to responsible investing with the plethora of complexity it throws up is quite a fundamental one. I believe that time engaging with people to create understanding, buy in and commitment is always well spent. Once you have that, the impact you can have is significant.”