HedgeNordic interviewed Federated Hermes Limited’s Head of Responsibility and EOS, Leon Kamhi, and Principal and Head of Portfolio Strategy and Solutions within Private Equity, Christian Mankiewicz, to find out how the private equity team and EOS at Federated Hermes Limited’s stewardship service work together.

Kamhi, who has spent 24 years with the group and its predecessors, spends most of his time at EOS leading a team of 45 including sector and thematic engagers providing stewardship services to over 70 institutions managing over USD 2 trillion as at 30 September 2025, and sustainability specialists overseeing policy and ESG and stewardship integration across asset classes at the firm. Mankiewicz, who has worked for the group for 11 years, is the Head of Portfolio Strategy and Solutions for Federated Hermes Private Equity and also oversees Sustainability within the asset class as part of his remit.

30 years of evolving PE investing 

Federated Hermes has spent more than three decades developing its PE investing. Hermes started investing in private equity funds in the 1990s as in-house manager for two large UK pension funds and began directly investing into companies in 2001. Hermes Fund Managers Ltd. – one of the founding UNPRI signatories and chair of its drafting committee in April 2006 –  was acquired by Federated Investors, Inc. in 2018 to form Federated Hermes. 

“Sustainability was always part of our DNA and became more formalised in 2010s: we embedded it into the investment process, launched a fund focused on investing in sustainability-driven themes and in 2013 we developed a thematic framework capturing the climate transition as one of our core megatrends,” says Mankiewicz. The latest strategy iteration in 2023 expanded the firm’s sustainability approach. Engagement with both GPs and companies has been systematised, with regular meetings covering climate risk, emissions capture and sustainability.

“Sustainability was always part of our DNA and became more formalised in 2010s…”

Christian Mankiewicz, Head of Portfolio Strategy and Solutions within Private Equity at Federated Hermes.

Federated Hermes’ private equity allocations benefit from EOS’ years of experience across all asset classes in public and private markets. There are weekly meetings and shared forums such as the Responsibility and Climate working groups. “We learn a lot about all sorts of industry trends from EOS,” says Mankiewicz. “We bring skillsets together across private equity, private credit, real estate, infrastructure and public markets. Our entity-level TCFD reporting recognises cross-collaboration across all asset classes and the role each asset class has to contribute,” says Kamhi.

“We bring skillsets together across private equity, private credit, real estate, infrastructure and public markets.”

Leon Kamhi, Head of Responsibility and EOS at Federated Hermes Limited.

EOS provides deep thematic insight and sector expertise that the private equity team can leverage for their investment due diligence and engagement. An example of the private equity team leveraging EOS’s expertise to guide the sustainability due-diligence was on a potential investment in an Australian hydraulic and fluid power provider. While the company was not classified as high risk based on TCFD standards, some of its end customers in mining and energy warranted investigation. “Working together the private equity team and EOS developed a targeted set of sustainability questions covering climate risk, environmental liabilities, governance, and safety, which were embedded into the Investment Review Paper. This ensured that risks were addressed before approval and highlighted how EOS and internal ESG expertise can strengthen due diligence and mitigate material risks,” recalls Mankiewicz.

EOS sector expertise also informs the engagement program by helping to identify thematics specific to each sector, allowing the team to prioritise material topics. “We think that active ownership, stewardship and engagement steer boards to do things that add value over the long term,” says Kamhi.

Blazing trails with “next generation” PE funds 

The private equity team has invested in over 300 private equity funds and over 300 co-investments since inception and currently manages approximately USD 6 billion in AUM as at 30 September 2025. One of the focus areas is on smaller, “next generation” private equity managers, generally started by experienced investors who previously worked for the larger PE firms. These GPs manage smaller funds, often investing in lower mid-market companies’ worth between USD 100 and 300 million. “We are often the first institutional capital in our co-investments and act as the ‘partner of choice’ for next-generation GPs who are working on their first deals. Forming relationships at this stage allows us to help shape sustainability policies early on when teams are small,” says Mankiewicz.   

Data gathering and reporting 

While a decent percentage of GPs do already have a dedicated sustainability team, the private equity team recognises that larger GPs and companies do provide more extensive reporting. For instance, only about 50% of holdings in Federated Hermes’ latest co-investment fund reported on the ESG Data Convergence Initiative (EDCI) templates (mostly European-based GPs). The Institutional Limited Partners Association (ILPA) ESG due diligence questionnaire is another framework for gathering and processing standardised information, but ultimately the private equity team will conduct their own assessments, supported by a Sustainability Specialist. “Our deal teams also need to do their own assessments on a deal-by-deal basis,” points out Mankiewicz.

Engagement and governance

The team invests in GPs who generally have majority control and board presence for their investee companies, and engages either directly with the GP or with the portfolio company, depending on the relationship.

Together with their partner GPs, the team generally have majority control in their portfolio companies. They also typically have board presence, which is another avenue for dialogue and engagement. “On sustainability topics it is important for us to engage with both our partner GPs and our portfolio companies to ensure successful outcomes, which is something we put a lot of emphasis on as part of our investment due diligence,” explains Mankiewicz.

The Private Equity team has won awards for its frameworks and processes, recently including the BCVA’s Excellence in Sustainability Awards and the Real Deals Sustainable Investment Awards in 2025 – both of which highlighted the strength of their engagement approach. 

Reporting frameworks 

Federated Hermes Private Equity currently has its most recent funds classified as Article 8 under SFDR and produces a full suite of reporting (including TCFD and sustainability reports) for their investors.

“Customised solutions can also be created to meet Impact and Article 9 investment guidelines,” says Kamhi. 

Embracing Energy Transition with targeted investments 

“We think private markets are really important for driving energy transition, because public markets investors are more risk averse and benchmark-conscious while private markets investors are closer to the board and empowered to take actions,” argues Kamhi. Mankiewicz is also excited about being able to pinpoint very precise opportunities in energy transition: “Smaller private companies can provide a pure play on energy transition, ESG software and sustainable supply chains, with much more focused business models.”

“We think private markets are really important for driving energy transition, because public markets investors are more risk averse and benchmark-conscious…”

Christian Mankiewicz, Head of Portfolio Strategy and Solutions within Private Equity at Federated Hermes.

Federated Hermes has invested in solutions connecting the electricity grid to renewable energy, which plays into both climate transition and geopolitical energy security themes and has generated a 2.5x multiple on the investment across its net zero economy megatrend.

Elsewhere in energy transition, the private equity team has invested in three UK firms within this theme.  These include an electric vehicle charging infrastructure engineering firm which is geared to the UK’s electrification agenda and ban on ICE (Internal Combustion Engine) vehicle sales from 2035 and a sustainability consulting and a software group which helps firms to enhance their environmental reporting in response to regulators and clients. The team has also invested in a UK social housing energy and compliance provider that directly contributes to the UK Government’s target to raise the minimum Energy Performance Certificate (EPC) ratings of their social housing stock to C by 2030.

Globally, the team has invested in firms pursuing some similar themes in other countries. In the US, this includes a business spun out of MIT’s Building Science department which provides diagnostics including carbon emissions tracking to help property owners improve energy efficiency and an Infrastructure-as-a-Service provider, which uses high quality satellite earth observation data to measure greenhouse gas emissions globally. Elsewhere in Europe, a Poland-based analytics business provider of cloud-based data hosting and processing services  with contracts with various European public, scientific, and research institutions, such as the European Space Agency was one of the investments in the prior vintage of the team’s flagship co-investment strategy. 

Exclusion and divestment 

At a firm level Federated Hermes Limited excludes activities forbidden by law such as cluster munitions. Specific funds may also have thematic exclusions in line with client demand. Most of Federated Hermes Private Equity’s funds do have additional exclusions on alcohol, gambling and tobacco, amongst others. In addition to the formal restrictions outlined above, there are several red flags that, if identified during due diligence, would likely result in a potential investment being rejected. These include, but are not limited to fraud, poor labour relations, human rights restrictions, inadequate governance, and animal cruelty as well as unmitigable climate risk.  The team is highly focused on identifying that risk early on as they can have an impact on the ability to exit an investment and ultimately, on returns.

 “Ultimately, divestments can be made if climate risk threatens the ability to make a good long-term return,” reveals Mankiewicz.

Additionally, the team can accommodate custom exclusions from investors who have more stringent regulatory needs, for example. The deal team conducts an ESG analysis deal by deal and places extra emphasis on good governance for the latest Article 8 Funds, in line with SFDR’s guidance.

US Political Landscape 

Federated Hermes’ fiduciary responsibility is to aim to deliver risk adjusted investment returns. As such its investment strategy does not pursue a political agenda in the US or elsewhere and its engagement is always carried out in line with local country law and regulations.  On the topic of the Trump administration cancelling wind or solar projects in the US, Mankiewicz says. “In the context of our portfolio, the impact has been very limited and has been mitigated by our focus on ‘picks and shovels’ to the energy transition. As an example, one of our investments is active in the wind turbine aftermarkets and is therefore not directly exposed to new build activity and project cancellations. We try to avoid investments that are too dependent on politics, having learned some lessons from investing in clean tech in Spain in 2010-2011.”