At Evli Growth Partners we back ambitious, impact-minded entrepreneurs driving transformation across industries. Some recent highlights include our lead investments into Refurbed, with a mission to cut electronics emissions by 70%, as well as Tylko setting new standards in how furniture is designed, sourced, produced and delivered. As a third, CGTrader strives to transform the visuals of internet, eliminating the need for physical products. Given the elevated demand for sustainable alternatives across industries, there are evidently huge growth opportunities across markets. Yet, given the often limited resources within startups and scaleups, the capabilities to tap into such opportunities may often be limited. This is where we see the role of investors, and more importantly active owners, come in to play in supporting and strengthening the sustainability agendas across companies.
What does this mean in practice? Here are some insights into how we integrate ESG across our investment process and lifecycle; from entry to exit and beyond.
Starting off with the pre-investment phase, our approach follows standard pre-screenings and potential exclusions according to our investment principles. Yet what differentiates our approach somewhat in the deal phase is the comprehensive internal ESG assessment conducted together with each target company. In order to stray away from the risk of becoming a “tick in the box” exercise by way of standardized questionnaires, our approach focuses on in depth management interviews. The target of such management discussions, together with the founders and/or management team, is to map out the company’s ESG readiness, their strengths and weaknesses and lay out the foundation for the common ESG work going forward. Finally, to ensure commitment across all parties, we always include ESG as an integral part of the Shareholder’s Agreements.
ESG Assessment Steps
Moving on to the ownership phase, one of our key initiatives is the co-creation of an ESG Policy, a concrete action plan and KPIs for the company based on the ESG assessment. In order to tie such KPIs with the company’s wider business plan we also incorporate sustainability as a core component in the companies’ 100- and 1000-day plans. Through our active Board work these KPIs are then monitored and integrated into the companies’ daily operations. Portfolio examples include Refurbed with set annual climate targets to double their annual reduction in CO2 emissions and WEEE in 2021, while on the social side targeting a 50-50 gender split and monthly monitored eNPS. With Tylko we are planning to conduct company-wide supply chain mapping to systematically monitor key sustainability parameters across the value chain.
In addition to focusing on sustainability in operations, we have strong focus on the actual impact the companies are having. As signatories of the UN Global Compact, the world’s largest corporate sustainability initiative, we work closely with our companies in driving awareness and action in support of the sustainable development goals. In line with the companies’ ESG policies and action plans, we map our portfolio across the UN SDGs, with notable focus on the topics of climate impact, industry innovation, responsible consumption and equality.
Although we follow a rather company specific-approach to ESG given our investments across industries and business models, we do see high value in leveraging peer to peer learnings. Given our pan-European investment focus we see high relevance in taking a global – rather than national – approach to ESG, especially as the companies continue to scale and expand across borders. To facilitate the sharing of best practices across our portfolio, we organize bi-annual ESG workshops and trainings for all our portfolio companies. This Spring we hosted a training on diversity, equity and inclusion, with Inklusiiv, while last fall our workshop was facilitated by our climate-partner Compensate.
With the help of Compensate we have, since the beginning of 2021, also started measuring our portfolio’s carbon footprint on bi-annual basis. The aim of the initiative is to first and foremost support our companies in starting to systematically measure and reduce their carbon emissions with hands-on support from Compensate. Finally, as a stance towards active ownership EGP has committed to offsetting its own share of the portfolio companies’ total net emissions. So far, we have offset our fund and portfolio’s emissions over the past few years, since being founded, and are committed to continuing our journey as a fully climate neutral fund going forward.
Looking back at our initiatives over the past years, we are confident that the need for investor support in ESG will become even more important given the increased urgency in both climate- and social-action. Reflected through our founder- and management team-testimonials, we continue to see our role as active owners around ESG as important as ever.
“For us, it was crucial to find investors that see the potential of our business model, share our mission and who, just like us, do not only measure success by return but also the ESG. Evli turned out to be that partner and has already helped us take the next steps. We were seeking support in the introduction and execution of our ESG policy – and are very pleased and grateful for the support we received.”
– Benjamin Kuna, Co-Founder & Chief Business Officer
“I really appreciate the coaching and guidance on ESG. It has been very valuable in how we think about our business and what impact we can have on the community. In addition, a greater understanding of the more formal reporting requirements and frameworks applied by established companies has been very helpful to learn.”
– Emily Villatte, Chief Financial Officer at Acast
“The three things we value the most are the contacts to other funds, support on ESG policy, and strategic advice on how to grow further. The combination of sector expertise and VC expertise is great and very helpful. ”
– Peter Windischhofer, Co-Founder & Managing Director at Refurbed
Eager to learn more? We’ve developed a comprehensive ESG Yearbook laying out our ESG approach with sustainability case studies from our portfolio companies. To access the report, do get in touch with our Head of Sustainability Petra Tammisto.