As interest and activity in environmental, social and governance (ESG) investments grows, investors are feeling increasing pressure to ensure they have a strong responsible investment policy in place that accurately communicates their commitment to ESG.
Kennet, a private equity investor that specialises in the Software as a Service (SaaS) technology sector, initially approached Sancroft for support with the development of a suitable Responsible Investment policy and ESG-specific KPIs for their portfolio companies.
Anticipating demands, the firm wanted to be able communicate their ESG efforts to current and prospective investors.
In order to draft a relevant and accurate responsible investment policy for Kennet, Sancroft conducted a market scan into the current and future ESG topics front of mind for investors and investigated the key ESG risks and opportunities relevant to the SaaS technology sector.
Distilling this work, Sancroft produced a summary of responsible investment best practice for Kennet to help them to identify their ambition level and ideal market positioning. Following discussions with key stakeholders within Kennet’s investment team, during which we helped Kennet articulate their ESG ambitions, Sancroft drafted the firm’s Responsible Investment Policy.
The Responsible Investment Policy was supported by ESG KPIs. Sancroft captured the lessons learned from Small and Medium-sized Enterprises (SMEs) and fast-growing business models in the effective and value-adding implementation of ESG and sustainability activities, to ensure the approach to the generation of KPIs was focused, realistic and ultimately would be welcomed by portfolio companies and investors. This research resulted in portfolio company level KPIs generally suitable to the SaaS sector and respectful of the resource and management limitations of the organisations in scope.
Kennet now has a clear understanding of the evolving ESG landscape and requirements from investees. This understanding was used to underpin its Responsible Investment Policy.
Sancroft’s approach directly informed a new set of KPIs for portfolio companies, enabling them to monitor and evaluate their portfolio companies ESG performance, allowing further and deeper communications with investors.
