Zouk will primarily look to be the majority or sole investor in portfolio companies without excluding minority investments. Zouk looks to have control over the investee company. Zouk seeks control over various matters including the business plan, ESG issues, major contracts signed by the company and future capital increases among others.
Following investment, ESG remains a key focus throughout Zouk’s ownership. Zouk seek to monitor all the key impact criteria that were identified through due diligence and documentation. It is often the case that the ESG performance criteria are closely correlated with some of the key performance indicators (“KPIs”) for a business.
Zouk monitors portfolio companies closely and will typically have a board seat. Through its investment agreement, Zouk will ensure it has information or consent rights over all material contracts and agreements that the company enters into. Zouk’s documentation will also ensure the company is well governed, with independent representatives on the board where required to enhance risk mitigation.
Zouk’s ESG Process –Monitoring
- Monitoring exists to ensure companies deliver on their impact potential and continue to implement high ESG standards post investment
- The investment team selects the most appropriate / meaningful impact metrics for tracking, based on the ESG due diligence and Investment Committee recommendations
- Because sustainable impact is inherent to the value proposition of Zouk’s portfolio companies (and not merely a matter of compliance), these metrics tend to be identical or closely correlated to the business’s core operating KPIs
- This strong alignment simplifies the monitoring exercise and lessens the administrative burden on both the investment team and management
- Monitoring sustainability metrics through board meetings and discussions helps to position to companies well for exit from a sustainability angle