Across all its investments, Swedfund encourages the following:
- Adhere to internationally recognized standards for (i) sustainability; (ii) business integrity; (iii) anticorruption; (iv) corporate governance; and (v) human rights.For example: UN GC, IFC Performance Standards, OECD-guidelines for MNE
- Adopt and implement a whistleblowing service in order to make it easy to anonymously report serious irregularities.
Across all its investments, Swedfund requires the following:
- Comply with legal and regulatory requirements.
- Comply with ILO's Core Conventions and ILO's Basic Terms and Conditions of Employment.
- Comply with the Harmonized EDFI Exclusion List.
- Adhere to applicable IFC Performance Standards.
- Adhere to Swedfund's requirements on anti-corruption.
- Provide ESG information (including human rights) and on development results, as requested by Swedfund.
- Comply with Swedfund's requirements with respect to Swedfund's monitoring of its investments.
In addition to these requirements, Swedfund sets more long-term requirements in its direct investments regarding the supplier chain and human rights. For the full policy, see swedfund.se
In addition to the above mentioned norms our RI approach also includes:
- EDFI Exclusion List
- EDFI Guidelines for OFCs
- EDFI Harmonized Environemental and Social Standards
- The World bank group's corporate governance development framework
- UN guiding principles on Business and Human Rights
Our business model is based on three pillars: Impact on society, Sustainability and financial viability. By establishing development targets and working closely with our portfolio companies, we can monitor developments and ensure that they evolve in the right direction.
Impact on society - Swedfund aims to help create jobs with a good working environment and good employment conditions.
- Job creation
- Share of women in senior management
- CO2e emissions
- Overall impact/benefit
Sustainability - Swedfund aims to help create sustainable enterprises in the world's poorest countries.
- Human rights and working conditions
- Business ethics and anti-corruption
Financial viability- Swedfund aims to help create enterprises that are profitable in the long-term and therefore financially viable in the world's poorest countries.
- Return on equity
CRITICAL PARTS OF OUR BUSINESS MODEL
Our business model integrates the global goals through our three pillars. But it also manages risks, the inputs we make and the investments we take on.
As a development finance institution, risk is pivotal to our business. Swedfund invests in countries and areas where the risks are more numerous and potentially more serious than they are in developed markets. Accepting risk is part of our mission – to improve the living conditions of people in poverty by creating sustainable businesses and decent jobs in developing countries.
Swedfund invests in places in the world where, although there is strong need for foreign capital, private investors often consider the risks to be too high. Consequently, our greatest risks lie in our investments. Risk management is therefore an equally natural part of our business as it is in our portfolio companies.
The more sustainable and advanced companies Swedfund can join forces with and build, the better the outcomes for the community in which they operate. In its operations, Swedfund is exposed to many different factors that are difficult to influence. We manage risks at different levels: strategic, investment, operational and financial. Sound risk management is both a prerequisite for the business and a potential way of improving development results.
We always invest with a long-term perspective, usually between 7 and 10 years. A vital long-term objective for our investments is that they must always contribute to realising Agenda 2030. Our strategic sustainability goals relate to a three-year period, which is the medium term for us. Our long-term approach and sustainability are the source of an important part of our additionality and enable us to act as a catalyst. Our long investment cycle also means that we have a portfolio, which combines investments from 2005 and onwards. Earlier investments were made in line with a partially different mission and our working methodology then also differed from our current approach.
Our mission is to invest in operations and countries which qualify for development financing in accordance with the OECD/DAC’s definition. We prioritise investments in the least developed countries and in low-income countries, and also invest in post-conflict countries. We shall invest where the need is greatest, but our new owner directives also give us the opportunity in exceptional cases to invest in upper medium-income countries. One example of an exception may be investment in renewable energy in an upper middle-income country, with the aim of reducing CO2emissions. This kind of investment benefits poorer countries, where climate change may have the most severe consequences.
Our sustainability focus areas
- Decent work
- Environment& Climate
- Gender Equality
- Anticorruption& Business Ethics
- Human Rights
Our three priority investment sectors are Renewable energy, Financial institutions and Funds, and Healthcare
1. Financial institutions & Funds
The finance sector is viral for a country's economic and social development. Lack of access to finance is one of the greatest limiting factors in businesses’ ability to grow in developing countries. Swedfund finances banks and funds in under-financed markets, and this enables them to increase their financing and lending to businesses and entrepreneurs. Our ambition is to help build a finance sector which is inclusive with particular focus on women entrepreneurs and owners of small businesses.
2. Energy & Climate
Entrepreneurs in developing countries cite deficiencies in electricity supply as another major obstacle in running and developing their operations. Swedfund invests in renewable energy since the development of climate-friendly energy is one way of accelerating progress towards Agenda 2030.
During 2018, Swedfund adopted a new focus sector, Health. However, investments in the health sector have been taking place for many years and the encouraging development results that these investments have contributed to have led to health becoming a separate sector. Many of the investments within health are made in the form of share investments. In many cases, Swedfund is a shareholder who also plays an active role on the board of directors. This gives us an opportunity to support the enterprise’s development by contributing our experience and special focus on sustainable development.