We asked Mathew Joseph from Kinnevik a few questions on ESG investing and reporting in venture capital funds:
In your opinion, how has the venture capital industry changed due to the rise of sustainable investment? What trends and alterations can you predict for upcoming periods?
During the past years, increasing amounts of capital are being ear marked by investors and stewards of capital for sustainable investments. The definition of what is a sustainable business has evolved and will continue to evolve in the coming years. The venture capital industry is adapting to incorporate ESG into their investment process. A large number of LP’s and other stakeholders are demanding that venture capital funds do more to ensure that capital is deployed in businesses that have a positive ESG impact on our society and the planet. Personally, I believe that the best (most valuable) companies are ones that make a positive ESG impact. After working in this space for more than seven years, I can see that returns and ESG performance have a positive correlation.
How does your fund incorporate ESG criteria into investment decision making? What kind of ESG investing strategy do you currently follow in the fund?
We are a sector focused investment company with an entrepreneurial spirit. We have integrated ESG into the investment cycle. Our pipeline meetings include a member of our Sustainability team who keeps an eye out for ESG impact of companies . We talk about material topics, stakeholders, key ESG risks and opportunities, and due diligence focus areas in our investment memo. Our due diligence includes an ESG DD where we meet members of the management team who are responsible for ESG to get a sense of the tone at the top related to ESG. The due diligence helps us establish the base of a company’s ESG initiatives; from where we work with management teams to build long term sustainable and profitable businesses.
When it comes to the ESG reporting, what are your LPs’ expectations on ESG reporting and what kind of data do investors prioritize in the reports? In your opinion, are the GPs able to provide the required relevant data?
We are a Swedish listed company and have shareholders and analysts who increasingly want to know more about our ESG performance and how we work with ESG across our portfolio. Our annual sustainability report published on our website has evolved since we started publishing them in 2014 to include more granular information. We publish data on Kinnevik and our portfolio companies. The venture capital industry has not yet standardised ESG reporting for companies. We focus on metrics and KPI’s that would apply to most companies and given Kinnevik is an active owner, we have access this data.
Interested to get more insights?
Join 500 Global, Antler, Kinnevik, Elaia, Partners, Hadean Ventures and other VCs to discuss ESG investing and reporting topics deeply from different perspectives at our free webinar ESG in VC funds. CFOs best practices, standards and challenges. See you on the 16th of March 2022 at 4 pm CET.
This free virtual webinar is organized in cooperation with VESTBERRY, VC portfolio management software used by industry-leading fund managers.
About Mathew Joseph, Sustainability Director at Kinnevik
I was born and raised in India. I am a Chartered Accountant and a Certified Public Accountant and spent the first few years of my working life with a big four accounting firm. However, realised that I was not cut out to be an accountant and joined the Kinnevik group back in 2003 as an operational auditor. After doing that for a couple years, I was lucky to have the opportunity to be an operational CFO at one of our portfolio companies and over a decade transitioned to a COO. My first experience in an M&A was when we sold one of our operations in Denmark, when I was attracted to investments. I was then fortunate to join the team at Kinnevik and set up the Sustainability function. I have done this since the fall of 2014 and have been through an amazing journey with a lot of learnings and positive experiences. ESG continues to fascinate me and I believe that the companies that are truly able to operationalise ESG will have the highest likelihood of becoming long term sustainable and profitable businesses. We are living in a time where there is a lot of buzz around ESG and it is extremely important for companies like Kinnevik to make sure we have the right approach externally with our founders and companies as well as internally with our team. In terms of hobbies, I have a wonderful family and tend to spend any of the free time I have with them. I love the outdoors and sports – anything that involves a racquet. I also enjoy reading and international music.
