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Responsible investing is a core element of MPEP’s DNA. As a specialist for primary fund investments in the lower mid-market buyout segment, we use ESG not as a compliance exercise, but as a structured value creation tool to improve the long-term risk-return profile of our investments.
ESG assessment in the lower mid-market operates under significantly different conditions than in larger parts of the private equity market. Governance structures tend to be more heterogeneous, ESG reporting is often less standardized, and data availability varies widely across companies, fund managers, and regions.
In this environment, a strictly exclusionary screening process is often neither effective nor value-enhancing. It may limit access to attractive opportunities without meaningfully improving the risk-return profile of an investment. What is required instead is a differentiated ESG approach with a nuanced understanding of the operational realities in the lower mid-market.
MPEP’s strength lies in navigating these specific conditions to identify ESG risks early and support improvements that are both realistic and aligned with long-term value creation.
The UN Principles for Responsible Investment (PRI) is an international organization that works to promote the incorporation of ESG factors into investment decision-making. We are fully committed to the six principles and also a signatory of the UN PRI.
Level 20 is a not-for-profit organization founded with the aim of improving gender diversity in the private equity industry. We have become a sponsor of Level 20 in 2022.
Our responsible investment strategy follows a clear principle: engage and improve.
Rather than relying on rigid upfront exclusions, we pursue a development-oriented ESG approach and actively engage with our fund managers to strengthen ESG practices over time. The objective is to embed ESG considerations into operational and strategic decision-making, where they can meaningfully support long-term value creation.
Up to 30% of commitments may be allocated to general partners who are still in the process of building robust ESG frameworks, provided they demonstrate:
By combining deep lower mid-market expertise with an development-oriented ESG strategy, MPEP positions responsible investing as a driver of sustainable performance, not a constraint. The result is a disciplined ESG framework that enhances resilience, supports sustainable growth, and unlocks potential that would otherwise remain inaccessible in the lower mid-market.
It is our firm belief that there is a positive correlation between doing things the right way and generating market-leading returns. Incorporating ESG criteria into the investment process not only helps to quantify risks that might be overlooked by traditional due diligence more easily, but also increasingly provides opportunity for value creation.
Liliane Armel
Managing Director
ESG is integrated systematically across MPEP’s fund selection and monitoring process. This includes exclusion screening, ESG due diligence, binding ESG-related commitments prior to investment and ongoing monitoring throughout the fund lifecycle.
ESG due diligence is conducted using MPEP’s proprietary ESG assessment framework. The assessment focuses on governance structures, the integration of ESG into investment decision-making, transparency and reporting practices, as well as the manager’s operational capability to implement ESG measures at portfolio company level.
MPEP applies defined ESG minimum standards across all investments while following a development-oriented approach in the lower mid-market. Within this framework, up to 30% of commitments may be allocated to managers with developing ESG frameworks, provided they demonstrate clear willingness and sufficient operational capability to improve.
This approach allows ESG standards to be applied consistently while enabling active engagement where improvement potential exists.
ESG developments are monitored on an ongoing basis using an internal ESG scorecard aligned with the Principal Adverse Impact (PAI) indicators under SFDR and relevant metrics of the ESG Data Convergence Initiative (EDCI).
This framework supports structured oversight, progress tracking and constructive engagement with managers.