Wellstreet considers the impact that its portfolio companies have on environmental, social and governance factors. A particular focus is made on such factors where Wellstreet believes that we can make the biggest positive change as investor and shareholder. Wellstreet invests in companies where we believe we can contribute towards a positive impact in environmental, social and corporate governance through-out their value-chain. By doing this we drive development step by step in the right direction.
Potential sustainability risks and potential positive and negative impact on sustainability factors are screened as a part of the initial due diligence before investing in a portfolio company. Sustainability risks and sustainability factors are also monitored during the investment period together with other material risks and aspects in order to assess risks and opportunities and incorporate necessary actions. For our Fintech Fund I, an article 8 Fund, we specifically follow up on our chosen PAI Indicators. This is done by continuously collecting data from portfolio companies and, when necessary, actively engaging with portfolio companies. Educational activities, board representation, operational support, strategic discussions with executive management, are just some of the ways through which we engage with them to bring sustainability forward in their agendas.
In Wellstreet’s view, sustainability risks could affect the value of investments and, as a result, the value of the fund. However, given the type of investments within our investment scope,Wellstreet concludes that sustainability risks as such impact the returns of the funds only to a minor extent. The relatively low exposure to ESG risks is mainly due to the size of the companies, low dependence on natural resources for e.g., production, and the region the companies are present on.
Wellstreet will at all times act as a responsible owner. Wellstreet considers the due diligence guidance for responsible business conduct developed by the Organisation for Economic Co‐operation and Development (OECD) and the United Nations‐supported Principles for Responsible Investment. Wellstreet will act in a manner to influence the portfolio companies in material aspects relating to sustainability through the board of directors and/or through the shareholders’ meeting. Wellstreet is of the firm opinion that a focus on sustainability is the best way to increase resilience and competitiveness in any business and thereby the best way to generate an attractive financial return to investors.