For every investment, part of our investment proceeds are spent on ESG efforts on the portfolio company and where the company is based.
Inventis has integrated environmental, social and corporate governance (ESG) into our investment process over time. We are of the firm belief that companies which integrate ESG standards tend to be more conscientious, less risky, and thus more likely to succeed in the long run.
Our ESG policy is in line with the United Nations' Principles for Responsible Investment (PRI) definition of responsible investment: "Responsible investment is an approach to investing that aims to incorporate ESG factors into investment decisions, to better manage risk and generate sustainable, long-term returns".
Managing risks lies at the heart of our investment philosophy. We are committed to responsible and sustainable investing, as well as the formal integration of ESG principles.
To demonstrate our commitment, for every investment, part of our investment proceeds are spent on ESG efforts on the portfolio company and where the company is based.
During the portfolio management stage, we are committed to working together with our portfolio companies to achieve our overall strategic outcome, inclusive of financial growth, business stability and ESG objectives.
Our ESG Committment
Integrating ESG Criteria into our Investment Decision Making Process
We have implemented a proprietary ESG company rating process dividing the ESG analysis into three major components:
Environmental: This characteristic is of core importance to us as it directly impacts the community. We do our part to address growing concerns on climate change. Key sub-components include:
Greenhouse gas emissions
Natural resource conversation such as forestation
Other pollution control measures such as air, water, land, noise, etc
Social: We believe in generating a positive social impact in the businesses we invest in. Broadly, we evaluate this characteristic based on the following parameters, including and not limited to:
Product quality and safety
Health and safety of employees
Training of employees
Governance: The governance quality component further consists of four sub-components:
Quality of the board and diversity
Ownership and control structure
Other governance matters such as taxation
During the company rating process, we attribute a score to each of our ESG criteria of between 1 and 10. The final ESG scorecard is the aggregate value of each criteria, although some factors tend to have more weightage than the others.
Generally, our ESG rating process is not a filtering process, but instead forms part of our overall evaluation of our investment targets. After identifying the areas of improvement, we will then devise an appropriate and feasible ESG proposal and work with the management to realise the plan should we proceed with the investment.
To Act as a Responsible Owner and Investor
We place utmost importance to business ethics, respect for our limited partners (LPs) and is committed to the highest degree of transparency. On behalf of our LPs, Inventis is acting as shareholder in our portfolio companies. As responsible shareholders, we ensure that management teams are monitored and held accountable for their corporate actions, as well as to make sure their ESG objectives are met. We also evaluate how management teams manage and reduce any other ESG-related risks.
As our investment horizon is typically 5 years for each investment, Inventis considers the long-term investment horizon to be aligned with the interests of our LPs and the philosophy supported by the PRI.
Inventis has been advocating education and promoting the economic and ESG benefits of private equity to the general public in China since inception in 2000 and is continuing to do so.