East Ventures team
East Ventures, a venture capital (VC) firm operating in Indonesia and Southeast Asia, recently revealed its East Ventures Sustainability Report 2024. The report demonstrates the firm’s ongoing dedication to incorporating Environmental, Social, and Governance (ESG) frameworks into its operations and ecosystem. It highlights the firm’s progress in creating positive societal impacts while maintaining responsible business practices.
East Ventures has established guidelines that support its investment decisions, focusing on sustainable investments. It integrates ESG and impact management principles, serving as a guiding principle in promoting responsible investing practices and improving corporate governance within its portfolio companies.
In a recent email interview with e27, East Ventures Partner Melisa Irene elaborated on the firm’s approach to ESG and how it is encouraging its portfolio companies to embrace it.
East Ventures’ investment strategy is designed to generate positive impacts and mitigate ESG risks. Through its ‘Doing Good’ approach, the firm evaluates the potential positive environmental and societal outcomes of its investments using a Theory of Change framework. Simultaneously, the ‘Avoiding Harm’ aspect focuses on risk mitigation by integrating ESG standards into the selection process and ensuring ongoing compliance with regulations and best practices.
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To understand the process better, read an edited excerpt of the conversation below.
What particular challenges do you face in promoting ESG in your work? How do you tackle them?
ESG risks and opportunities encompass a wide range of topics, including greenhouse gas emissions, diversity and inclusion, and business ethics. Each topic is governed by various standards and frameworks that outline the highest level of ESG performance for companies. Aligning with all these standards and frameworks requires significant effort and resources, necessitating prioritization.
Our approach is tailored to the specific characteristics of our business and portfolio companies. We employ a materiality-driven strategy, meaning that by collaborating with our portfolio companies, we identify the priority of ESG topics most relevant to their respective industries. This allows us to focus on the most critical ESG risks and opportunities rather than addressing them all uniformly.
Furthermore, we consider the maturity level of our portfolio companies when implementing ESG practices. We do not expect our portfolio to meet all ESG criteria immediately at the expense of their financial sustainability. The bottom line is that the companies must comply with relevant ESG regulations. Beyond compliance, we work together to develop an ESG and impact action plan with our portfolio companies, outlining immediate and long-term improvements. Thus, ESG becomes not just a compliance exercise but a value-adding initiative that promotes company growth.
What steps do you take to promote sustainability in your portfolio companies?
Our investment team and ESG Specialists actively collaborate with our portfolio companies to integrate ESG principles and maximize opportunities for sustainable growth and impact creation.
For example, we assisted one of our portfolio companies in the agriculture sector in identifying their specific ESG risks and opportunities for improvement. The project resulted in recommendations for aligning with sustainability best practices to reduce biodiversity risk and enhance environmental and social management practices.
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Following the project, we worked with the company to develop a strategy to enhance internal processes and address their respective ESG risks more effectively.
Let us get back to the basics: How is implementing sustainability good for businesses?
Sustainability is a long-term objective that can be achieved through ESG integration. ESG elements are increasingly influential in global business and investment decision-making. This trend stems from the realization that sustainability and responsibility are crucial for risk mitigation and opportunity creation, leading to lasting value generation.
As a venture capital firm, our role in shaping the future involves supporting innovative companies that drive positive change. By incorporating ESG criteria into our investment strategies, we aim to create value for our investors, portfolio companies, and society at large.
We actively seek investment opportunities in companies aligned with our ESG commitments. Our investments focus on enterprises that address local challenges, improve efficiency and effectiveness, and have a significant positive impact. Our sustainable investment strategy aims to build a portfolio that generates meaningful impact, contributing to long-term value creation.
What aspects do you wish to improve on in your sustainability journey?
For the past three years, we have been releasing our annual Sustainability Report to evaluate our efforts and assess our operations and initiatives in line with long-term sustainability/ESG goals.
We have gained valuable insights that have helped us optimize our operations and have begun incorporating them recently. We believe that by doing well, we also want to do good. Therefore, we are looking to introduce more initiatives and collaborate with relevant stakeholders to further create impact and promote sustainability.
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What is your major focus on sustainability this year?
We are committed to continually enhancing our sustainability initiatives and upholding our principles and commitments. From an investment perspective, we will continue to make investments that align with our ESG commitments.
Additionally, we remain dedicated to supporting initiatives in this space; for example, we have once again launched the Climate Impact Innovations Challenge with Temasek Foundation to empower climate-tech solutions in Indonesia and Southeast Asia.
We have also introduced a free web-based emission calculator for companies in Southeast Asia known as ECOVISEA.
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Image Credit: East Ventures
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