Ownership Period
Since 2013, FSN has supported portfolio companies with identifying and managing their most material ESG topics. Across the portfolio, Decarbonization, People, and Governance have consistently emerged as key ESG topics. To help portfolio companies mitigate risks and capitalize on opportunities within these areas, the FSN ESG team has developed set of standard ESG tools and processes that can be applied throughout the entire investment lifecycle. Implementation of these is supported by a clear annual wheel, execution structure, and the hands-on guidance from the FSN ESG team.
ESG Priorities
Our ESG Priorities Approach is designed to ensure a sharp focus and continuous improvement of each portfolio company’s financially material ESG topics. It ensures both a holistic approach to ESG, and integration in the overall strategy and operations.
Focus on what matters
All ESG topics are not equally important for all companies. Since 2013, we have supported portfolio companies in focusing their resources on the material ESG topics that create value.
At the start of the ownership period, we discuss the ESG due diligence findings with the portfolio company management team and board (see here for our ESG due diligence methodology). Based on financially material impacts, risks and opportunities, portfolio company management determines the company’s ESG Priorities. Decarbonization, People, and Governance are topics included in all portfolio companies’ priorities. Remaining priorities are company-specific and will depend on the industry and market.
Decarbonization
Decarbonization is a cornerstone of FSN’s ESG approach. To achieve FSN’s science-based target (“SBT”) of having 60% of invested capital set their own SBTs by 2026, we support portfolio companies to 1) measure their scope 1, 2, and 3 GHG emissions, 2) develop a decarbonization plan and SBTs with the SBTi, and 3) reduce emissions in line with the decarbonization plan developed.
To further assist FSN portfolio companies, we have created a decarbonization guide to help them measure scope 3 emissions pragmatically, set SBTs, explore decarbonization initiatives, assess cost-effectiveness with a Marginal Abatement Cost Curve tool, and implement and commercialize their initiatives. By providing hands-on support to portfolio companies, we enable them to move beyond GHG emissions reporting and into value creation.
People
Research demonstrates a correlation between an engaged, diverse workforce and increased productivity and profitability. Therefore, we aim to recruit and hire top talent in the portfolio companies and to foster meritocratic environments that enable teams to reach their full potential.
Employee engagement
FSN measures employee engagement yearly at all portfolio companies using the Employee Net Promoter Score (eNPS) and support them in developing initiatives targeted at enhancing employees’ wellbeing, sense of inclusion, and psychological safety. By focusing on employee engagement, we seek to build high-performance cultures that attract top talent, enable collaboration, and allow the best ideas to win.
Diversity and inclusion
We believe that, among other factors, the most successful teams reflect functional, national, and gender diversity. These attributes are important because they can; enable informed decision-making, based on relevant functional expertise and career experience; strengthen global competitiveness by supplementing local market knowledge with international perspectives; and broaden the range of diverse viewpoints, driving more robust discussions and ultimately, better decisions.
People in the value chain
Risk of breach of human rights varies across industries and geographies. However, people in the value chain are important for all FSN portfolio companies. We expect all portfolio companies to have a Supply Chain Code of Conduct implemented and follow up with their suppliers.
Jesper Isaksen, Partner and Head of Talent, discusses the importance of diversity on portfolio company boards of directors
Governance
How companies are run matters. The objective of our Governance processes is to ensure that FSN portfolio companies have good governance and operate in line with high ethical standards, with a focus on continuous improvement.
Included in our Governance approach are clear roles, responsibilities and processes with regards to ESG as well as high expectations when it comes to ethical business conduct.
