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EXECUTIVE SUMMARY

 

  • Economic, Environmental, Social, and Governance (“EESG”) factors are at the core of Gaia Global’s investments, based on a belief that EESG can lead to strategic value-add in addition to minimizing risks to long-term sustainable growth.
  • We incorporate EESG throughout the lifecycle of prospective and portfolio investments, starting with intentional sourcing all the way through purpose-driven exits. Measurement of key metrics and active engagement with stakeholders allows us to partner with companies to not only manage risk factors but also highlight strategic opportunities to make a positive
  • Collaborative stewardship allows us to leverage both our internal expertise and industry best practices to drive innovation and disruption, bringing transformational new products, methodologies, and business models into fruition.
  • We invest selectively with a critical lens towards sustainable impact and have identified macroeconomic trends and verticals where capital deployment can be in alignment with the United Nations Sustainable Development Goals.
  • Finally, we believe that accountability and transparency are essential components of the future economy – that’s why we seek to adopt, adhere, and report on our EESG progress regularly. Gaia Global Funds is a provisional signatory to the UN Principles for Responsible Investing, and continues to evaluate frameworks, standards, and industry commitments as they evolve to align with best practices.

 

ESG COMMITMENT

  1. As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time).
  2. We also recognise that applying the UN Principles for Responsible Investing may better align investors with broader objectives of society. Therefore, where consistent with our fiduciary responsibilities, we commit to the following:
  • 1. We will incorporate ESG issues into investment analysis and decision-making processes.
  • 2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
  • 3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  • 4. We will promote acceptance and implementation of the Principles within the investment industry.
  • 5. We will work together to enhance our effectiveness in implementing the Principles.
  • 6. We will each report on our activities and progress towards implementing the Principles.

 

EESG CONSIDERATION

  1. At Gaia Global, we incorporate EESG throughout the investment life-cycle via three complementary approaches: an initial screen, thematic alignment determination, and integrated management.
  • 1. Our initial screens are designed to filter investment opportunities in accordance with the values we seek to support.
    • 1.1. We utilize a mix of norms-based and positive screening whenever filtering through investment opportunities.
    • 1.2. From a norms-based standpoint, focus is on exclusions for companies, individuals, or government entities failing to meet international standards on human rights, labor organisation, corruption, money-laundering, environmental conservation, and other governance concerns.
    • 1.3. From a positive standpoint, focus is on identifying sectors, companies, or projects that have social or environmental benefits.
  • 2. Thematic alignment adds a layer of intentionality to the evaluation and prioritization of investment opportunities.
    • 2.1. We have identified several core macroeconomic themes focused on driving a material positive impact on society and the environment.
    • 2.2. These macroeconomic themes, such as mitigating climate change, defining circular economies, and efficiently managing supply chains, require transformative business models and products. Our capital deployment is poised to capitalize on and capture these opportunities.
  • 3. Throughout our investment underwriting and management process, Gaia takes into account and evaluates the risks and opportunities associated with EESG factors.
    • 3.1. After screening and thematic alignment, EESG factors are considered in due diligence through an evaluation of existing and potential economic, environmental, social, or governance impacts.
      • 3.1.1. During corporate-level diligence, Gaia will evaluate whether the target company has an ESG or Impact Policy in place.
        • 3.1.1.1. In the case of target companies with no formal policy in place, Gaia Global will work in partnership with the company to draft and implement an appropriate policy within 24 months of investment.
        • 3.1.1.2. In the case of target companies with limited or insufficient policies, Gaia Global will work in partnership with the company to bring the policy up to industry standards within 24 months of investment.
      • 3.1.2. Gaia will also request documentation on economic, environmental, social, or governance impacts resulting from direct or indirect operation of the target company, use of the company’s products or services, and actions of the company’s employees.
        • 3.1.2.1. This documentation should include all legal and regulatory permits, mandatory or voluntary environmental, biodiversity, or community based assessments, and policies encompassing stakeholder engagement.
      • 3.1.3. If applicable, material EESG risks should be identified and integrated into any financial modeling or risk management.
    • 3.2. EESG is further integrated into the fundamental decision matrix for the Investment Committee, serving as one of three essential elements of any approved investment.
      • 3.2.1. EESG risks and opportunities should be explicitly identified in all investment memorandum presented to the IC.
      • 3.2.2. Key EESG metrics should be established alongside benchmarks and targets for each investment to be measured during the holding period.
    • 3.3. Final approval of any investment is contingent upon appropriate documentation of EESG policy, reporting, and metric requirements.

 

STEWARDSHIP WITH STAKEHOLDERS

  1. While most stewardship activities may be conducted through service providers or portfolio companies directly, internal staff will be encouraged to work closely with portfolio companies to arrange, manage, and evaluate the efficacy of stakeholder engagement activities.
  2. Gaia Global is committed to conducting stewardship activities collaboratively, particularly when it comes to stakeholder engagement, education, and empowerment.

 

IMPACT-DRIVEN ALIGNMENT

  1. As part of Gaia Global’s commitment to EESG, we seek to take into consideration a selection of the UN SDGs that are in alignment with our thematic investment priorities.
  • 1. This includes SDGs 2, 7, 9, 12, 13, and 15, as outlined below:
    • 1.1. SDG 2: End hunger, achieve food security and improved nutrition, and promote sustainable agriculture.
    • 1.2. SDG 7: ensure access to affordable, reliable, sustainable, and modern energy for all.
    • 1.3. SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.
    • 1.4. SDG 12: Ensure sustainable consumption and production patterns.
    • 1.5. SDG 13: Take urgent action to combat climate change and its impacts.
    • 1.6. SDG 15: Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat deforestation, and halt and reverse land degradation and biodiversity loss.
  • 2. Consideration of the UN SDGs includes ensuring that all investment professionals are adequately trained and equipped to evaluate any connections between a potential investment and potential societal impact.
    • 2.1. Staff are encouraged to reference additional impact-oriented resources in evaluating investments for economic benefits.
    • 2.2. For example, Gaia Global seeks investments with at least three of the dimensions modified from the Impact Compass, defined by Stanford Center for Social Innovation.
      • 2.2.1. Addresses a Dire Societal Need
      • 2.2.2. Designed for Effective Intervention
      • 2.2.3. Addresses the Issue in Depth
      • 2.2.4. Ability to Deliver at Scale
      • 2.2.5. Anchored by Strong Organizational Governance
      • 2.2.6. Adds Value for all Stakeholders

 

ACCOUNTABILITY AND TRANSPARENCY

  1. Each investment brought to the Investment Committee is sponsored by one of the firm’s Partners, who are responsible for ensuring delivery of sustainability and impact outcomes alongside commercial outcomes.
  • 1. The Sponsoring Partner reviews all sustainability and impact plans, metrics, and reporting throughout the life of the investment.
  • 2. This work may be supplemented by input from the Head of ESG and Impact.
  1. The firm plans to engage a third-party organization on a biannual basis to provide assurance that the firm is applying and adhering to best practices within the sustainability and venture capital industries.
  • 1. EESG audits may, on occasion, be solicited for specific funds or products.
  1. For transparency, the following will be made available publicly:
  • 1. EESG policies and procedures,
  • 2. One-page summaries of each investment’s key attributes and impact goals, and
  • 3. Annual report on EESG successes and risks.
  • 4. Gaia encourages all portfolio companies to disclose in a similar manner.
  1. IC memorandums will be made available to Limited Partners upon request.