Organisation: Gimv
Signatory type: Investment manager
HQ country: Belgium
The approach, initiative or process
Gimv is a private equity investor listed on Euronext Brussels which has been a member of the BEL ESG index since 2023. We invest in small to mid-sized growth companies via our five investment platforms: consumer, healthcare, life sciences, smart industries and sustainable cities.
Between 2019 and 2021, we developed a responsible investing policy under which we implemented an initial internal environmental, social and governance (ESG) due diligence approach to perform qualitative ESG assessments of target investments. To build on this, in 2021, we launched an annual portfolio ESG survey approach that enables us to monitor the ESG maturity of our portfolio.
After a three-year period during which we used a combination of the internal ESG due diligence framework and the annual portfolio ESG survey, it became clear that further development of the due diligence framework was needed to:
- enhance the approach in view of the ESG experience we had acquired;
- align the due diligence framework with the annual ESG survey framework;
- anticipate the implementation of EU sustainability related regulatory initiatives.
In 2023, Gimv took a significant leap when we developed an advanced ESG due diligence tool, aligned with the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS).
The tool is structured into five layers, in line with the ESRS. The first layer encompasses the general requirements and disclosures (ESRS 1 and ESRS 2), as well as environmental (E1–E5), social (S1–S4) and governance (G1) categories. Each of these standards is broken down further into detailed topics, as outlined in Annex I of the CSRD. The waterfall approach we have taken can be tailored to meet the specific circumstances of a target company, while also ensuring that all applicable aspects of ESG are covered in a standardised manner and with sufficient granularity.
At the fifth and deepest layer each material topic is broken down into specific questions. By assigning weighted scores to these questions, our tool provides a precise, quantitative assessment of each ESRS standard. This granularity delivers detailed insights and enables us to identify specific areas in need of improvement. The tool facilitates the initial ESG evaluation of target companies, as well as systematic categorisation and continuous monitoring. It features a traffic light system – red for critical issues, yellow for caution, and green for satisfactory areas – making it easy to prioritise action points for managers. Our systematic and transparent approach ensures that even companies not yet subject to CSRD benefit from future-proof ESG evaluations. This comprehensive ESG tool addresses risks in the supply chains of our portfolio companies by tackling both environmental and social concerns, closely aligning with the CSRD’s objectives.
The quantitative assessment allows for internal benchmarking; we are able to compare target company results to the information we have aggregated over the past three years of portfolio surveys. Since its implementation in 2024, our ESG due diligence tool has been integrated into all new investment evaluations. The development process involved significant effort to translate the CSRD’s comprehensive requirements into key actions. Key challenges included understanding Annex I of the CSRD and ensuring our tool was comprehensive and user friendly.
The result is a robust due diligence framework that not only meets current regulatory demands but is also adaptable to future changes. Our proactive approach has already shown significant benefits, with our due diligence processes yielding clearer, more actionable insights than we have had previously.
The measures to ensure transparency and generate outcomes
The ESG due diligence tool professionalised our responsible investment approach and delivers robust, quantitative analysis compared to more conventional, qualitative methods. By systematically categorising information and pinpointing ESG attention points, the investment teams, supported by Gimv’s sustainability team, can develop targeted action plans that directly address issues identified. This ensures continuous improvement and alignment with CSRD standards and contributes to the annual ESG maturity monitoring of our portfolio.
The tool’s traffic-light system allows us to track progress because we can assess ESG performance quantitatively year on year. The scoring methodology, ranging from 0 (insufficient) to 4 (outstanding), offers managers straightforward guidance on evaluating against each standard, enhancing the clarity and usability of our reports.
For example, in our due diligence of a care provider, our tool assigned an average score for the S4 “consumer and end-user” standards. Detailed analysis revealed that the issue was not customer satisfaction but rather the restricted nature of quality KPIs. This discovery prompted the investment team to address this specific challenge. After comparing potential solutions, ultimately the team opted for the formation of a committee dedicated to ensuring the systematic control of setting quality metrics and monitoring appropriate KPIs.
Gimv’s ESG governance structure – the Gimv ESG Office – which includes the CEO, chief financial officer, chief legal officer and Gimv’s sustainability manager, is dedicated to coordinating and overseeing these processes. Having this governance in place ensures consistent implementation of Gimv’s sustainability strategy and the application of Gimv’s responsible investing policy while maintaining high standards of transparency – see Gimv’s Due Diligence Tool.
PRI disclaimer:This case study aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. It is written by a guest contributor. Authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories.
Gimv disclaimer:The information contained in this case study is based on the information provided by Gimv to PRI on its internal ESG due diligence framework in the context of the submission for the PRI Awards 2024. The internal ESG due diligence framework described in this case study is proprietary to Gimv, and all references are purely for the purpose of example.
