[Sustainability] ESG Investment Policy
ESG Consideration Process at Integral
Integral became a signatory to the United Nations Principles for Responsible Investment (PRI), a global guideline published in 2016, and established internal ESG regulations. Under these rules, we incorporate ESG perspectives into all investment activities (hereinafter referred to as “ESG Investment Activities”) according to the following process.
Our company has established a “Sustainability Promotion Office” that drives and leads our ESG Investment Activities while conducting reviews and monitoring. The members of the Board of Directors, Management Committee, and Investment Committee regularly receive reports on ESG Investment Activities and discuss measures to further enhance these activities.
Pre-Investment Phase
At the initial stage of investment consideration, we conduct negative screening by applying an ESG checklist that broadly covers ESG issues to all potential investment targets. When significant ESG issues are detected, we conduct due diligence through external experts and, based on the findings, consider measures to resolve and overcome the relevant ESG issues from the perspective of ensuring sustainable growth of the investment target. For some investment targets, we not only fulfill the “defensive” requirements based on negative screening results but also position sustainability as part of the investment theme as an “offensive” strategy to strengthen competitiveness.
Post-Investment Phase
After investment, we continuously work to provide ESG-related management support that contributes to enhancing the corporate value of our portfolio companies through trial and error. The types of ESG initiatives that lead to value creation and the degree of emphasis required for such initiatives vary significantly depending on each portfolio company’s circumstances. Through our management support function called “i-Engine,” Integral’s investment professionals (seconded staff) are dispatched to portfolio companies. With support from the Sustainability Promotion Office and careful consideration of the portfolio company management’s requests, they guide the implementation of ESG requirements in the most appropriate manner and schedule, aiming to build competitive advantages and pursue new business opportunities through ESG initiatives.
Monitoring and KPI Management
To achieve sustainable growth in our portfolio companies, we believe it is beneficial to focus not only on financial metrics but also to set and track KPIs and intermediate indicators using non-financial metrics in areas such as climate change measures (GHG emissions) and human capital enhancement. We will continuously monitor the achievement of these KPIs and milestones.