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Covid-19 and the Impact on Responsible Investment – an insight into recent ESG initiatives across the Vespa Capital portfolio

September 2020

As is often the case, periods of relative economic instability magnify the lens of scrutiny on corporate practices regarding Environmental, Social and Governance (ESG) responsibilities. The Covid-19 pandemic has been no exception.

We have always believed that the pursuit of sustainable goals is a significant contributor to the intrinsic value of a business and this is reflected in the types of businesses that we invest in. We have formalised our commitment in this regard, becoming a signatory to the UN’s Principles for Responsible Investment in 2019. We are proud that Lumi AGM, part of our portfolio, estimates that this year it could save c. 6,832 tonnes CO2e in travel emissions through the delivery of c.2,000 virtual AGMs. The voice of change has become louder than ever through our investors, our portfolio companies, their customers, employees and all of their stakeholders, collectively driving forward towards greater transparency and improvements when it comes to ESG issues and investing responsibly.

ESG factors touch all the decisions made within our businesses in one way or another and the impacts of the Covid-19 pandemic serve as a helpful reminder that businesses themselves have a fundamental moral contract with society and the environment. During the last few months, our portfolio company Com Laude has launched a Board sponsored and employee led, internal “RISE” programme (Responsibility, Inclusivity, Sustainability and Equality) run by self-selected staff to see how we can better address societal issues. As investors, Vespa Capital has a responsibility to both positively influence the companies in which it invests, while also generating long-term value and superior risk-adjusted returns for its investors. In doing so we aim to broaden the scope of our fiduciary duty, focusing on all stakeholders and not just the interests of shareholders.

During the pandemic, the Vespa Capital team has been renewing and improving its ESG processes and procedures, which has included updating our Responsible Investment Policy, as well as enhancing our reporting and monitoring controls. A number of ESG activities have been initiated across the portfolio during this time and a few examples are summarised below:

Lumi, the global market leader in the provision of software and real time audience engagement technology to facilitate Annual General Meetings, has seen an extraordinary increase in the demand for its virtual solutions, which have enabled shareholders to safely maintain engagement during the pandemic. This has undoubtedly had a huge positive impact not only on the corporate governance of these businesses and, as previously mentioned, has also enabled companies with globally disbursed shareholder bases to reduce the carbon emissions associated with their physical attendance at AGMs.

BioPhorum, a business that facilitates collaboration in the biopharmaceutical sector, has been actively engaging with its clients to work through the challenges of manufacturing a Covid-19 vaccine at scale. This process is not only hugely complex, involving stakeholders from across the various organisations, it is also progressing at a pace that is unprecedented in the realms of vaccine development. Enabling various participants from the biopharmaceutical sector to collaborate as efficiently and productively as possible in a non-competitive manner, creates a powerful platform to accelerate this time critical response.

Com Laude, a leading provider of domain management services to multinational corporate clients, has been particularly active in developing and maintaining a suite of products relating to domain name security and monitoring. Domain names are a mission critical component of a business’ technology infrastructure and maintaining an online presence has been of paramount importance throughout the pandemic. By preserving the security of these vital components, Com Laude has been making a valuable contribution in the fight against cyber criminals, whose activity has unfortunately seen a marked increase during this period.

Additionally, Com Laude has conducted a complete review of diversity and inclusion within the business during this period, as previously mentioned. The aim of which is to continue advancing a diverse, inclusive and accessible culture to the mutual benefit of employees, shareholders, clients and the communities in which they work. The core pillars of this strategy revolve around responsibility, inclusivity, sustainability and equality.

As the wider impacts of the pandemic continue to play out, it is clear to see that ESG factors are playing an ever-increasing role in corporate policy and decision making. As the global economy progresses into the recovery phase in a world dictated by uncertainty, it is vital that the focus on sustainable ESG improvement remains a certainty.