Environmental, Social and Governance (ESG)

Environmental, Social and Governance (ESG) Criteria is a set of standards for a company’s operations that investors use to screen potential investments.

 
 

What is ESG?

Environmental, Social and Governance (ESG) Criteria is a set of standards for a company’s operations that investors use to screen potential investments. This means that we at Inventure – and your other potential future investors – can choose you as an investment target if you comply with the ESG criteria. As a subject, it’s becoming more and more important and investors are required to be increasingly aware and alert of the subject.

Environmental criteria measure how your company performs as a steward of the natural environment. Examples:

  • Standards and certificates

  • Environment program

  • Impact on energy efficiency

  • Impact on global warming

  • Impact on carbon emissions

  • Impact in biodiversity

  • Fundamental business risks and opportunities for the company merging from environmental factors

Social criteria examine how a company manages relationships with its employees, suppliers, customers and the communities where it operates. Examples:

  • Standards and certificates

  • Personnel / HR policy

  • Well-being at work

  • Human rights

  • Labor rights

  • Product liability

  • Fundamental business risks and opportunities for the company merging from social factors

Governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights. Examples:

  • Composition of the employee base and/or Board of directors

  • Consideration of diversity when recruiting or appointing Board members

  • Communication of issues raised by the Board with management

  • Actions taken to safeguard against illegal practices (i.e. corruption/fraud)

  • Consideration of anti-bribery and corruption, unfair labour practices, human rights abuses, and other malpractices.

You can read more on the subject and evaluate your company’s performance against ESG aspects e.g. here:

https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp

https://www.investeurope.eu/media/523237/Invest-Europe_ESG_DD_Questionnaire.pdf

When thinking of your own ESG strategy and policy, please consider these subjects. We will ask or portfolio companies about this annually. You can read our own ESG strategy here.