For a growing number of businesses, ESG has shifted from a box-ticking exercise to a way of creating sustainable value. Inflexion’s ESG Director Jennie Galbraith hosted a panel with three Inflexion portfolio companies at the 2022 Portfolio Exchange to discuss their ESG journeys.
Jennie Galbraith, ESG Director at Inflexion
Being competitive with ESG helps companies to avoid risk as legislation trickles down – from packaging, to decarbonisation. But ESG isn’t just about risks; it’s about actually growing your business, with benefits ranging from better employee engagement to improved cashflow and reduced costs.
“Inflexion are clear they take ESG incredibly seriously, and I definitely feel I’m pushing on an open door,” explains Jennie Galbraith, who joined Inflexion as ESG Director at the beginning of 2022.
She is aware of the need for a flexibility in supporting the portfolio’s ESG efforts owing to the very different journeys the 56 businesses are on: some companies are just establishing frameworks, while others are applying for B Corp certification. “We need to develop something that will really work for your business, so we adopt a bespoke approach to meet our minimum standards on carbon and D&I.”
Three frontrunners within the Inflexion portfolio share their experience in driving these important issues.
Differentiating by staying ahead of the ESG curve - Medik8
Embracing sustainability for the next generation of automotive transmission systems - Xtrac
Prioritising social mobility at the core - Sparta Global
Inflexion led the buyout of the premium skincare brand in 2021. Elliot Isaacs, Founder, shares the inspiration for Medik8’s continued ESG focus.
ESG is core to Medik8 and has been since the outset. We’re a consumer brand, so we have significant expectations from our consumers in this area. Medik8 was certified as ‘website neutral’ in 2021 – meaning every delivery made from the website was carbon offset, backdated to our first online sale in 2013. That’s tens of thousands of deliveries. In 2022, the entire business became certified carbon neutral with ‘virtual-zero’ scope 1&2 carbon emissions and SBTi targets in place to reduce scope 3 carbon intensity by 21% by 2025 and achieve net zero by 2040, having signed up to the Climate Pledge. We also have ambitious waste targets including “zero-factory-waste-to-landfill by 2026”. These targets are only possible because we develop everything in-house and manufacture 90% of our products, meaning we have total control of a large part of our supply-chain vertical, and can measure and manage its impact effectively. We also have targets in place for ethical business and social investment.
Because of the time it takes to achieve these goals, we try and stay ahead of customers’ demands– it’ll be too late if you only react when the consumer tells you (and they will!).
ESG is a key mega trend so I think customers will still look for sustainability even in a cost-of-living crisis. It doesn’t add much to the ticket price but is a differentiator, so it makes a lot of sense for us to continue.
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The high-performance transmissions manufacturer underwent an Inflexion-led buyout in 2017, and CEO Adrian Moore says an ESG focus helps attract talent.
We are in the midst of a once-in-a-generation opportunity as the automotive industry transition from internal combustion to electric and hybrid. We are well placed to benefit from this, and we are: Last year 25% of our business was for hybrid and electric vehicles (EVs); next year it’ll be 40% as we embrace the next generation of transmissions. It’s been the focus of our growth.
The stats are impressive, but we didn’t have them when we agreed to pursue this – we had to make a big strategic decision. Motorsport had started to look at EV and hybrid (Formula E started eight years ago), and moving to a new series like that opens us up to new customers. Our conviction in this opportunity helped inspire our buyout; we wanted to be part of this transition opportunity and knew what the tech path needed to be. We needed the support of an investor around the business, and Inflexion was the right fit.
Our expanding coverage of hybrid and electric has benefits beyond new customers. It’s put us at the heart of the tech change towards sustainability, and that’s appealing to new graduates. If you have a new engineering degree, you don’t want to work making pistons or for an internal combustion engine maker as you know it’s a dying industry. We are better able to attract and retain talent because of where we are and where we’re going.
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The technology and training services provider partnered with Inflexion in 2020. Purnima Sen, Chief People and Compliance Officer, explains the importance of corporates prioritising social mobility.
Addressing the world’s most pressing environmental and social challenges and driving better outcomes, requires bold and coordinated action not just from governments and large corporates, but also from smaller private institutions and individuals across the globe.
And that’s why Sparta has social governance at our core. It helps us attract better talent as potential employees feel more inclined to join a company with better ESG credentials, and better ESG credentials means more loyal customers. During this post-COVID downturn, clients are pickier, selecting companies with strong ESG ratings. They know that in times of unexpected problems, these are companies thinking not of short-term profits but of long-term social impact, labour laws, fair policies – and these will endure in the longer term. Even if you’re not an environmental business, put your actions into social governance. Positive action and transparency on ESG matters can help companies protect their valuations as more global regulators and governments mandate ESG disclosures. And finally, efforts to ensure sustainable practices will help maintain greater shareholder satisfaction with board leadership.
At Sparta we’re focused on having a strategy in place around democratising digital, promoting social mobility through youth employability and challenging recruitment processes to level the playing field in tech. Our strategic actions have deepened our efforts to help close the racial wealth gap through continued transparency around pay equity and increased diverse representation. It’s about bringing a diverse group of individuals into technology therefore fostering greater economic growth through fair tech employment.
ESG is incredibly important for our customers, who are looking for partners that align with their own objectives and together we can have a meaningful impact.
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