Swedfund aims to contribute to the creation of businesses which are viable in the long term, and therefore requires portfolio companies to establish a management system for environmental and social issues. In conjunction with the initial analysis of a prospective investment, an assessment is made to determine whether a management system is in place. If this is not the case, the scope to bring about improvements is evaluated. If Swedfund opts to proceed with an investment, the requirements for improvements are tied to the financial conditions for the disbursement of funds.
A sustainable development policy must be established and adopted by the management of the portfolio companies. The sustainable development policy lays the foundations for the way in which a business must approach sustainable development, and it is vital that it does not simply become a desk exercise, but is also implemented in the portfolio companies’ operations. The implementation of a management system for sustainability issues is an important step to ensure that the policy is implemented and established.
To determine whether a portfolio company meets the strategic sustainability goal, Swedfund uses monitoring to determine whether the portfolio company has implemented a management system and, if so, whether it includes the relevant components:
- SUSTAINABILITY POLICY A sustainability policy must be established and adopted by the management of the portfolio companies.
- IDENTIFICATION OF RISKS AND IMPACTS A system/routine must be established in order to identify sustainability risks and the areas that are affected.
- PERFORMANCE MANAGEMENT The company's results within identified risks and impact areas must be continually monitored and evaluated in order to measure and improve results over time.
- RESPONSIBILITY AND COMPETENCE A member of the company’s management team must have overall responsibility for sustainable development issues.
- EMERGENCY PREPAREDNESS In the case of fixed installations, action plans must have been established for accidents and disaster situations.
- REPORTING Reporting must take place regularly and at least annually both to the management and to the board of directors of the portfolio company, as well as to Swedfund.
- STAKEHOLDERS Internal and external stakeholders must be identified and consulted in situations which affect them and be given relevant information at appropriate times and intervals.