Environmental, Social and Governance
Developed ESG standards and ranking for a venture capital firm
25 Jul 2022
Context
A
venture capital firm was interested in a third-party report to validate their
compliance with ESG investing standards
Our
Approach:
Identified
60+ parameters across IFC, World Bank, SASB, and other establishments
- Categorized
the parameters into the three ESG pillars – Environment, Social, and Governance
risks
- Further
categorized the parameters into 12 sub-pillars within the three ESG pillars
- Environmental
(Emissions and pollution, environment / ecological impact, resource use, policy)
- Social
(Human rights, Community Health and Safety, Workforce, Product responsibility,
Customer welfare)
- Governance
(Management and Board, Corporate Behavior)
Shortlisted parameters for the portfolio companies using:
- Relevance
of parameters within the company’s industry & nature of operations
- Alignment
with the size & scale of the company
Assigned weights and rating scales as per the short-listed parameters:
- Importance
of the ESG parameter in the firm’s overall industry
Assigned
scores based on each of the parameters:- In-depth
conversations with the management teams of the firm
- One-on-one
discussions with the firm’s employees
- Interviews
with the firm’s customers
Praxis
value delivered:
- Developed
ESG reporting standard and subsequently ranked the corporate actions and
performance of the portfolio companies
- Supported
in rating ESG-compliant corporate actions of each of them
- Helped
measure the impact created on different environmental and social metrics
- Highlighted
best governance practices of the companies