Our approach to impact
When we consider potential investments, the company’s ability to create a net positive impact is one out of three key selection criteria.
“Impact” is a many-faceted term. Many consider “impact investing” as an extension of philanthropy. However, impact investments are more frequently defined as “investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return” (The Giin).
The latter comes closest to what we do at Norselab, but we like to take it one step further; We believe that profit and impact go hand in hand. Given the state of our world and current megatrends, the best long-term returns will be generated by companies that truly contribute to a more sustainable future. We therefore invest in net positive companies believing that they will also generate superior long-term returns.
Aiming for net positive impact also means that we go beyond the traditional ESG approach. Although most companies generate some positive effects, many fail to consider the negative effects of their activities. Our impact philosophy is that a company will only be beneficial for people and the planet if the positive effects outweigh the negative. That is what we mean by net positive impact.
This approach requires us to look at the integration of sustainability objectives in the company’s products and services. We don’t care so much about the small things; whether employees walk or drive to work, or whether travel is offset with Co2-quotas. We look at the big things; how a company makes money. We look for products and service offerings that are sustainable per se, or that are designed to drive more sustainable behaviours among customers. When they do, we call them “impact native”. Then, there is no retrofitting of impact - impact native companies make their core business about impact.
Check out our portfolio to learn more about the companies that have already made the cut.
A dedicated policy
Norselab has a Meaningfulness policy dedicated to our impact philosophy. The policy outlines the principles to which we hold ourselves accountable to, and which all stakeholders can expect us to respect and fulfil.
The policy includes internationally recognized frameworks that form a solid foundation for responsible investments. We adhere to the ethical principles of the UN Global Compact in the areas of Human Rights, Labour, Environment and Anti-Corruption and subscribe to the UN’s Principles for Responsible Investment. To us, they are a given for any investor claiming to invest responsibly.
We also use the Sustainable Development Goals as a strategic framework for considering the positive impacts of our investments. This means that our impact approach is not limited to climate change or social aspects - we consider the whole range of focus areas, including impact related to e.g. “Decent work and economic growth” (SDG 8), “Industry, Innovation, and Infrastructure” (SDG 9), “Responsible consumption and production” (SDG12), to mention some. We believe that it’s our responsibility as investors to contribute to this globally recognized roadmap for sustainable development and economic growth.
The full ten principles of our policy can be found here.
How we measure impact
We care particularly about holding our portfolio companies accountable by their impact indicators just as much as by their financial indicators. Also, we think it’s particularly important to use best-in-class measuring tools that match with our impact philosophy.
This is why we have chosen to collaborate with Upright Project on measuring net impact. This Finnish tech company has built an AI-enabled quantification model for investors to measure the net impact of companies. Very much like Norselab, their model focuses on the products and services of companies when calculating the sum of their positive and negative impacts.
While the traditional ESG approach aims to describe how companies conduct their business and comply with certain standards, net impact is the sum of a company’s positive and negative impacts on people, planet, society and knowledge.
For Norselab, this provides a method for consistent measuring of impact across screening, due diligence, follow-up and reporting. The very first net impact analysis of our portfolio will be made available in our Meaningfulness report on our website by this May.