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Investing with impact is more than just a strategy

Investing with impact is more than just a strategy

By Sam Gilbert-Ward, Business Analyst, Pollen Street Capital

Environmental, social, and governance (ESG) investing is becoming an increasingly integral part of the agenda for businesses of all shapes and sizes, who are keen to embed impact as a fundamental part of their overarching business strategy. Gone are the days where ESG fell squarely on the shoulders of the largest corporates; now, we must all be part of the solution.

More often than not, ESG has been seen as a box ticking exercise, a collection of KPIs, or an assortment of shifting topics that move with consumer trends. However, it’s now becoming recognised as a pivotal set of initiatives that have impact at the core. At Pollen Street Capital, our focus is on our investors and delivering strong, risk-adjusted returns. Within this, is our commitment to responsible investing, embedding ESG into our investment strategy, and delivering results – while working for positive impact for society and the environment.

There is huge potential for investors to have a positive influence through our portfolio. As asset managers, we are well placed to support our partners in increasing and accelerating their impact. We use our Pollen Street Hub to share best practice across a wide variety of business issues, particularly ESG. By sharing knowledge and speaking a common language, we can help companies clearly implement the principles of ESG within their organisations to have a lasting effect.

We help our portfolio companies to build a clear ESG impact frameworks, and a common language that allows ESG to be communicated and understood across all lines of business. With this foundation organisations can truly harness the power of responsibility and sustainability, and see tangible benefits as a result.

Investing with impact: barriers and solutions 

The most common misconception surrounding embedding ESG is demonstrating its importance. However, the main barrier we’ve come across is ensuring taking great initiatives and enthusiasm and making sure they remain aligned behind the businesses’ ‘impact areas’. Every business is positioned to tackle a specific set of issues, and as an expert outside partner we work to bring these out.

We often find that businesses have grass roots initiatives that spring up organically from the passion of the workforce. By putting a structure in place, businesses can unify their efforts and accelerate impact. Implementing an ESG impact framework is also crucial to capture this positive shift, enabling investors and stakeholders to evaluate the performance of businesses based on environmental, social, and governance factors.

At Pollen Street Capital, we map out ‘Impact Areas’ for our portfolio companies. By considering ESG through the lens of a firm’s core competencies and experience, stakeholder priorities, and overall strategy, we ensure that ESG goals are realistic and embedded in business-as-usual.

Digital transformation is key

Technology has an important role to play in helping companies meet their ESG and sustainability goals. Access to appropriate data and analytics is an essential part of the process, to help create informed and realistic plans. ESG or sustainability metrics should be built into existing core business analytics.

Technology is also important in reducing the burden of reporting. Whilst some companies will already be reporting their ESG impact, this will undoubtedly become a mandatory requirement in the future for all businesses. Making use of appropriate tools and technology early on will provide richer insights and consistency of data, as regulations evolve and accelerate the adoption of ESG reporting.

It is also worth considering the environmental benefits of using technology to make the reporting process more efficient. One of the key ways that technology helps companies meet sustainability and ESG goals is as an enabler. Utilising it to generate back-office efficiency will in turn drive broader business benefits, but this activity should also be considered with the potential for positive environmental impact.

Anticipating change

In a world where business transformation and digital development continues to evolve, we look to anticipate change – whether it be in technological advancements, customer expectations, or changes in regulatory standards. This in turn puts us, and our partners, in a great position to accelerate growth as well as driving real change.

Fundamentally, ESG is about the change that comes from empowering and equipping people and businesses with what they need to make a meaningful difference. Utilising a framework and embracing technological advancement are two building blocks for businesses to make a tangible impact, drive business growth and accelerate progress in society as a whole.

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