We systematically measure the potential and actual greenhouse gas savings from the technologies we invest in. We also expect our portfolio companies to consider their wider environmental impacts in areas such as waste and water.
With human capital the most important resource for our portfolio companies, we look for them to have strong labour standards policies in place, as well as approaches on key social issues such as health and safety, supply chain management and anti-corruption.
We look for robust governance structures, which provide effective oversight, and avoid excessive concentration of power in any one individual. We also expect companies to identify and manage potential conflicts of interest.
ESG is an essential part of any investment process
Companies that identify and manage potential Environmental, Social and Governance issues will be better positioned to avoid risk and deliver sustainable long-term growth.
Understanding the positive climate impact of our portfolio companies is fundamental to achieving the objectives of the Clean Growth Fund. A detailed Climate Assessment Report will be produced for every potential portfolio company. These reports will identify current and potential future greenhouse gas savings from the implementation of the company’s technology as it scales up, and form the foundation for monitoring actual achieved emissions reductions over time.
In addition, we consider the wider ESG policies and performance of all potential investee companies. Even the most promising climate technologies may not achieve their potential if company performance is undermined by poor governance, gaps in environmental management or workforce issues. The assessment of ESG issues forms part of our pre-investment due diligence, and is an integral part of our post-investment monitoring.
With many portfolio companies being relatively small and fast-growing, we appreciate that formal ESG policies and standards are not always in place. Where our due diligence identifies risks or gaps, we will seek to work with companies to support them in addressing these.