2020 marked the beginning of Norselab’s journey for creating net positive impact through investments in meaningful technology companies.
In their recent Meaningfulness Report, they shed light on their impact philosophy and how it translates into practice through both strategy and daily dealings.
Launching a fund for net positive impact
In preparation of the launch of Norselab’s first venture fund, the founding team identified several emerging trends positively impacting the Norwegian startup ecosystem, setting the scene for new opportunities in the venture segment.
While the ripple effects of digitization and purpose-driven behaviors are already clear in the consumer world, we are yet to see the full-blown effects of these powerful trends in the industrial and business worlds.
As Norselab established Norselab Fund I in June, the aim was to capitalize on this coming wave. By investing in industry-related technology companies with a net positive impact on people and the planet, the Norselab team set out to build a new generation of successful industry companies where sustainability is at the core of the business.
- At Norselab, we ask: Where and how can we create positive impact, fast? We believe that investing in companies that enable the sustainable transition of important industries with large negative footprints is our single biggest opportunity to create positive impact at scale, explains Norselab’s Chief Investment Officer, Yngve Tvedt.
- Norway is also a very good place to invest in industry-related companies. Norway has a solid industrial heritage, and now also a booming startup ecosystem to take on industry challenges, he adds.
During the Fund’s first six months of existence, the Norselab team raised NOK 600 million, with fundraising continuing into 2021. In the same period, investments were made into 7 companies representing 5 different industries.
The report shows how Norselab’s impact philosophy differs from the more traditional approach to sustainable investments.
- We aim for net positive impact, which means that we go beyond the classic ESG approach, says Norselab’s Chief Communications and Sustainability Officer, Maria de Perlinghi.
- All too often, companies focus on marginal contributions they may produce by fine-tuning their operations. We believe it’s much more interesting to look at the products and services that generate revenues for the company. What happens when the products or services of companies are put to use? If sustainability is truly part of their core business, every new customer or user will add to the company’s positive contributions. We call these companies “impact native”, she explains.
Norselab’s approach also entails considering both the pluses and the minuses of a company’s impact. The positive impacts should outweigh the negative according to the fund manager. While Norselab’s Meaningfulness Report emphasizes that many fail to consider the negative effects of their activities, it is also transparent on the fact that Norselab still has a way to go to quantify the impacts in a meaningful way.
An Approach Based on the Sustainable Development Goals
Norselab’s definition of sustainability is based on the UN’s Sustainable Development Goals (SDGs). This means that they do not only focus on the environment, but include economic and societal aspects.
The Fund’s portfolio companies target six different SDGs through their product offerings. One of the key achievements of the Fund’s first six months has been to document this and develop relevant metrics. Showcasing companies that bring new technologies into traditional industries, the fund has a significant footprint within goals 8 (Decent Work and Economic Growth) and 9 (Industry, Innovation and Infrastructure), which focus a lot on the transition towards more sustainable economic activities, alongside goals 2 (Zero Hunger), 5 (Gender Equality), 12 (Responsible Consumption and Production) and 13 (Climate Action).
The way forward
Although the report accounts for Norselab’s progress in 2020, it also highlights the aspects they have to work on to deliver on the commitments described in their ”Meaningfulness Policy”.
De Perlinghi explains that they are satisfied with what they have achieved as a team in 2020.
- We believe we are on the right track when it comes to our way of considering impact and linking it to the companies’ product offerings. But with the ambitions we have set for ourselves when it comes to sustainable investments, we’ll have to stay on our toes, she says.
The report emphasises Norselab’s intention to build a top-of the range approach to sustainable investments. In conclusion, they list a series of priorities for 2021, including the introduction of a measurement method they wish to implement across screening, investment processes, portfolio management and reporting.
Among their other priorities are the impact assessment scheme in the investment process and the implementation of the EU taxonomy. Finally, the report hints to the recruitment of an additional team member to strengthen the sustainability area.
The full Meaningfulness Report can be accessed or downloaded below.