ESG considerations – responsibilities as an investor

Impact investing is a key part of our mission at the Development Bank of Wales.

Just as we value collaboration and entrepreneurial energy, we are also conscious of our responsibilities as an investor into the people, communities and businesses of Wales.

Historically, we would have talked about the need to balance commercial return with social impacts – perhaps accepting lower returns if social impact was high. Today, businesses do not consider this a trade-off – they understand the importance of strong ESG credentials as a key value creator.

We see this value most clearly demonstrated in our portfolio companies. Health & Her is a great example of a company with big social impact, and it was a great honour for us to see them recognised as part of the BVCA’s Vision 2022 initiative. Founded in 2017, it is the first holistic menopause hub - offering products, specialist advice and symptom tracking through their innovative menopause app.

Health & Her has a strong social purpose, striving to make menopause care as accessible as possible, including working with businesses to implement policies which support menopausal women in the workplace.

As demonstrated by Health & Her, ESG principles must be embraced authentically both by investors and companies – they must be baked into business practices, rather than relegated to a stand-alone department. ESG considerations are part of our investment appraisal, and our value creation plans when we look to support companies after our initial investment. We also believe in supporting a ‘just’ transition, where businesses are not left behind. We may still invest in a company which is just beginning its ESG journey but use our expertise and investment to support them make this a priority.

We do not just look to help businesses with their own ESG credentials, we practice what we preach. At the Development Bank of Wales, we’ve been on our sustainability journey since we launched in 2017, and have been carbon neutral since 2019. We are a real living wage employer, and a signatory to the prompt payment code, and we continue to pursue our own net-zero strategy alongside participating in the Welsh Government’s drive for net-zero status by 2030.

Even so, we know we have more to do. Despite the immediate outlook with its challenges, the focus on ESG can no longer simply be an added extra. Instead, ESG principles can lay the foundations for steering a company through difficult times – thanks to diverse teams, high-quality jobs with a social purpose, with businesses embedded in their communities and making efficient use of resources.

These ingredients all make for an attractive business, to investors, customers, employees and acquirors alike.

Rhian Elston
The Development Bank of Wales