Table of Contents
ESG report 2023
2023 was an active ESG year for Argentum. In preparation for the CSRD (EU’s new directive for sustainability reporting), Argentum is incorporating non-financial information into the company’s annual report this year. This report is a shorter version of the ESG-chapter in our annual report, which is translated to English.
As a fund investor, Argentum follows up with all managers in its portfolio through an annual ESG survey. For the reporting year 2023, Argentum is using a new platform for data collection for the first time. All managers are asked to evaluate their portfolio companies, with a particular focus on how they follow up on value chains in the portfolio companies and continue last year's questions on natural risk.
For the third time, Argentum is also collecting data as part of the ESG Data Convergence Initiative (EDCI). The findings clearly show that the work with ESG in the portfolio companies remains high on the agenda for the managers and that the data basis is continuously improving.
Early in the year, it was decided to create a new position in the organization dedicated to ESG work, and in May, the Head of ESG was hired. The role reports directly to the CEO and is responsible for developing Argentum's sustainability strategy, following up on the portfolio, and conducting ESG due diligence before investments. Through this position, the company has strengthened its competence, which is necessary to ensure responsible and sustainable management in an increasingly complex field.
New this year is that the company, in addition to measuring Scope 3, has also included Scope 1 and 2 in the company's carbon accounting. This means that Argentum now has a complete climate account for its own operations.
The Transparency Act was adopted by the Norwegian government, which came into force on 1 July 2022. The first statement for our own work related to due diligence assessments was done in 2023. This statement can be read here.
The SFDR regulation was introduced in Norway in 2023, and all funds established by Argentum Alternative Investments after this have been classified as Article 8 funds under SFDR.
Argentum’s strategy related to ESG and sustainability
Through profitable investments, Argentum contributes to sustainable value creation. The company’s main objective is to achieve the greatest possible returns over time within a sustainable framework. Argentum believes that responsible and sustainable value creation provides the best return in the long run. The company places high demands on the funds in which it invests and has integrated concern for good ESG into its investment process, where managers have to describe the assessments made with this in mind. Argentum follows up on the fund managers’ ESG work each year, and the findings are summarised in this CSR report. The company has also established relevant KPIs linked to sustainability in order to follow up on the work.
Argentum has identified seven main points that form the foundation for our work in the area of ESG and sustainability:
- Thorough ethical guidelines that are actively communicated internally and externally.
- Integration of the ethical principles into the company’s investment processes, including primary, secondary and co-investments.
- Dialogue with the funds Argentum invests in regarding the implementation of ESG in operations as well as monitoring and reporting.
- Engagement in the industry and contributing to increased focus on ESG, for example via our website.
- Environmental awareness internally in our own activities and operations.
- Raising ESG awareness in our own organisation.
- Annual reporting on our internal and external ESG activities.
Argentum’s ethical guidelines are regularly revised. These state, among other things, that “In its investment activity, Argentum shall integrate considerations targeted at good corporate governance, the environment and society at large”. Each year, Argentum also prepares a report on corporate social responsibility in respect of its own activities and specifically of the status at portfolio level.
From the reporting year 2023, this reporting is included in a separate chapter in the company's annual report. Read the full ethical guidelines on our website here here.
Achievements of Goals
Argentum measures the progress of our work related to ESG, and in 2023 we have three KPIs on ESG linked to remuneration:
- The proportion of fund managers who have taken concrete steps to further develop their ESG policy/ESG routines (minimum 55 percent).
- The proportion of fund managers who include the UN Sustainable Development Goals in their ESG work (minimum 60 percent).
- Percentage change in the portfolio companies' greenhouse gas emissions (ownership-adjusted), (decrease by 5 percent).
All goals were achieved in 2023.
Industry standards followed by Argentum
In addition to Argentum's own ethical guidelines, we base the company's investment activities on the principles of the UN Global Compact and UN PRI. For many years, Argentum has asked fund managers in the portfolio if they are familiar with and base their business on the principles of the UN Global Compact, both when investing in new funds and following up on old ones. Argentum also investigates whether the managers have signed the UN PRI before new investments.
UN Global Compact
The UN Global Compact is based on ten principles related to human rights, labor standards, the environment, and anti-corruption. Read more here.
UN PRI SIGNATORY
The UN PRI is related to environmental, social, and governance issues, including that ESG should be included in the investment process. Read more here.
EDCI
The European Data Convergence Initiative is an industry initiative aimed at establishing a standard set of ESG indicators for fund managers and fund investors, which will ease the reporting burden and provide investors with more insight into the companies in the portfolio.
Invest Europe
Argentum has incorporated Invest Europe, the European industry association for private equity, its standard for responsible investments in the follow-up of managers.
GRI
The internal reporting on corporate social responsibility at Argentum is based on relevant indicators from the UN Global Reporting Initiative (GRI), which, among other things, shows our impact on the environment.
Tax and Jurisdiction
Argentum's tax policy is based on the principles of compliance with national and international tax rules, openness and transparency, and not contributing to harmful tax practices. Argentum follows the OECD guidelines on tax and invests only in jurisdictions that follow the global forum's standard for transparency and information exchange for tax purposes and have entered into tax information exchange agreements with Norway. Argentum makes information about the fund's jurisdiction visible on our website and in the annual report. Argentum's guidelines are further described in the company's tax policy.
Argentums ESG-process
Argentum is committed to having good ESG routines and will continue to develop the processes before new investments and in the follow-up of managers. In connection with the implementation of SFDR, we have strengthened our processes related to the integration of sustainability risk in investment decisions.
New investment in a fund (primary)
Before investing in a new fund – a primary investment – an ESG Due Diligence (ESG-DD) is conducted. This is an analysis of, among other things, the manager's investment guidelines, ethical guidelines, and working methodology with regard to ESG. In addition to gathering information, we have a dialogue with the manager about how they themselves gather relevant information before making investments in a portfolio company, as well as how this is followed up and reported during the ownership period. We also include questions about ESG in the reference checks conducted by the managers. Findings and assessments from ESG-DD are presented in a separate section in the investment recommendation.
In addition to ESG-DD, Argentum has set up a standard agreement in the form of a side letter that all managers must agree to before committing capital to a new fund. The side letter has a separate section for ESG. This includes, among other things, that the managers accept:
- That Argentum's investment activities are based on the principles of the UN Global Compact and UN PRI.
- That they have received Argentum's ethical guidelines and are encouraged to develop similar guidelines.
- To consider the social, environmental, and ethical consequences of current and planned investments.
- To report annually on ESG to Argentum.
Investment restrictions are also part of the agreement, and Argentum does not invest in funds that do not accept these.
Investment in the secondary market and Co-investments
For secondary investments, Argentum assesses the manager's ESG policy, investment restrictions, investment strategy, and underlying portfolio before making an investment decision. Because Argentum does not have influence over the existing agreement, as the fund is already established, a thorough process is necessary to assess the fund's existing portfolio.
Argentum is committed to forming a good impression of the manager's ESG work, and this process is more comprehensive if it involves a manager Argentum is not familiar with. The manager is followed up annually in the same way as for our primary investments. All investments are followed up in our annual ESG survey sent to all managers, including co-investments.
New commitments in 2023
In 2023, Argentum committed capital to nine new funds in the primary portfolio: Forbion Ventures Fund VI, BID Equity Fund III, Cow Corner 2, Helix Kapital Fund III, Norvestor IX, and four other funds.
In total, Argentum has committed 528 million NOK to these funds, and all managers have accepted our side letter. They have committed to annual reporting on their ESG work to Argentum or have their own ESG routines that cover our reporting satisfactorily.
Two of the managers are new to Argentum's portfolio. Before Argentum invests with new management environments (primary investments), a thorough evaluation of the ESG work of the relevant fund is conducted to ensure that the new manager has established satisfactory ESG guidelines.
The graph above shows the distribution of investment focus for new fund commitments in 2023 measured in percentage.
The graph above shows the distribution of investment focus for new fund commitments in 2023, measured in percentage.
Review of the Portfolio in 2023
Argentum conducts an annual review of the status related to ESG for the funds in the portfolio. This is partly a review conducted by Argentum's ESG team and partly self-reporting from the managers themselves. All managers in Argentum's portfolio are invited to respond to an ESG survey, where we ask them to evaluate the risk in the underlying portfolio in line with the UN Global Compact. Additionally, we ask the managers to report data in line with EDCI. In 2023, Argentum's portfolio consisted of 94 different external management environments, and we received responses from 86 managers.
Background for this year’s questions
When collecting data for the financial year 2023, we used PositionGreen's platform for the first time. Previously, the managers received questions via email, but this year they were invited to respond directly on the platform. This has been a significant transition for Argentum and the managers, but the response rate remains very high, in line with previous years.
This year's ESG survey builds on the questions from the previous year. Our focus has been to gather information on the development of the managers' ESG guidelines, information on climate risk and opportunities, data security, and measures taken to prevent corruption. We have also chosen to repeat the questions on how the funds are preparing for the EU taxonomy for sustainable activities, SFDR, and how they relate to the UN Sustainable Development Goals.
The annual survey evolves in line with current regulations and trends. In 2022, we added questions regarding net-zero strategy and science-based climate targets, as well as questions about biodiversity and ecosystems. In 2023, er added questions about the value chain to gain insight into whether this is something the managers of the funds focus on in their portfolio.
As a member of the ESG Data Convergence Initiative, Argentum has also issued the data template for the project to managers, asking them to report on KPIs linked to emissions, renewable energy consumption, diversity of board members, injuries, new employees and employee engagement.
Questions in this year’s ESG survey
Below you can find the questions we asked the managers in this year’s ESG survey of the portfolio:
- Policies and guidelines
- Please state whether you changed ESG policies/guidelines in 2023 and whether you plan to make changes in the future. Please comment.
- Please state if there have been any breaches on ESG policies/guidelines in the reporting year. We kindly ask you to inform us of any breaches as soon as possible.
- During the due diligence processes/ pre-investment phase
- Please state whether there have been any recent developments regarding the evaluation of ESG factors in the due diligence process.
- Were any specific ESG issues discovered in DD processes during the reporting year?
- Key topics - Climate risk and opportunities
- Please comment on how portfolio companies are exposed to physical climate risks and the opportunities to reduce such risks.
- Have you identified any climate-related risks or opportunities that could significantly impact the return of your fund or individual portfolio companies?
- Have you developed a net zero strategy and defined science-based targets for the portfolio companies, or do you have concrete plans for doing this in the future? Please comment.
- Have you identified risks related to biodiversity and ecosystem services in the portfolio companies?
- EU regulatory changes
- Which measures have been taken to prepare for the EU taxonomy for sustainable activities and the upcoming CSRD regulation?
- Do you plan for current or future funds to comply with articles 8 and/or 9 of the Sustainable Finance Disclosure Regulation (SFDR)?
- What guidelines/practices are used to ensure that the most significant negative consequences (so-called 'principal adverse impacts' or PAI) that investments have on sustainability factors are assessed and taken into account?
- Do you plan for current or future funds to comply with articles 8 and/or 9 of the Sustainable Finance Disclosure Regulation (SFDR)?
- UN Sustainable Development Goals
- Do you integrate the UN Sustainable Development Goals (SDGs) in your ESG work?
- Which of the SDGs are most relevant to your ESG activities? Please specify your relevant SDGs.
- Data security
- To what extent have specific measures been taken to ensure adequate data security in the portfolio companies?
- Anti-corruption
- Do any of your portfolio companies have operations in areas where corruption is typically widespread?
- Which company(-ies), and what anti-corruption measures have been taken?
- How are these measures being monitored?
- Reporting on ESG factors
- Please comment on the development of the reporting from your portfolio companies on ESG-related issues, especially regarding ESG-related key performance indicators?
- Do you plan to make future changes to your ESG reporting to your LPs in the future?
- Value creation related to ESG
- To what extent do you see that ESG efforts have had a positive financial impact on any of your portfolio companies?
- Please highlight any other positive externalities related to ESG focus in the portfolio companies on the community and other stakeholders.
- Value chain
- How does the company proactively monitor and manage ESG-related risks across its entire value chain, and what mechanisms are in place to ensure accountability and transparency in addressing potential ethical, social, and environmental issues throughout the various stages of production, distribution, and consumption?
- How does the company monitor and address ESG risks in its value chain, specifically in terms of governance practices?
Findings from the ESG-survey in 2023
We have received feedback from 91.5% of the managers (86 out of 94) and are pleased that the response rate remains very high even though we have switched to a new platform for data collection. This shows that the focus on ESG in Argentum's portfolio is very satisfactory and that the managers are able to report on developments from year to year.
In the next paragraphs, we summarize the findings from this year's survey.
1. ESG guidlines and breaches in the portfolio
From the responses we have received, it is clear that the work with ESG in the portfolio companies is high on the agenda for the managers. We are very pleased to see that all managers with active portfolio companies in their funds include specific ESG questions in their DD processes. Several managers report that they have further developed their ESG checklists and developed their own frameworks for following up on ESG in 2023.
Two breaches were reported in 2023. When reporting breaches, Argentum emphasizes how the breach was handled and what measures and routines were implemented to prevent recurrence. Argentum has followed up with the relevant managers and considers the cases closed.
2. ESG Due diligence
In the survey, Argentum asks whether there have been changes or developments in the evaluation of ESG factors in the due diligence process performed by the managers in 2023 and whether any ESG challenges were uncovered in the DD process.
The responses show significant similarities to previous years, and we see again this year that an increasing number of managers conduct an analysis of climate-related risks and opportunities in the DD process for the companies and industries where this is relevant. Furthermore, several managers continue to focus on updating guidelines in connection with SFDR and the reporting requirements that come with being an Article 8 or 9 fund under SFDR. Some managers are also working on double materiality assesment to prepare for CSRD reporting and are incorporating this into their routines and guidelines.
Several managers report that they have declined investments based on findings in the DD process. Examples highlighted include concerns about poor reputation, high risk of unsatisfactory governance, high climate exposure relative to their investment strategy, or what they consider unethical investments. In summary, this year's responses show that ESG DD processes in the portfolio are an important tool for uncovering risks.
3. Key topics
Climate risks and opportunities
For the question related to climate risk, the reporting from the managers shows that this largely depends on the investment focus and the industry in which the portfolio companies operate. For example, it is highlighted that unpredictable weather is considered to pose a high risk for industries such as textiles and agriculture, while extreme drought and changing sea levels pose a high risk for tourism and shipping/logistics. For the majority of managers, climate risk is still considered low based on their investment focus.
So far, only a few managers have developed structured processes to identify and manage risks and opportunities related to biodiversity and ecosystems. Some managers have included this in the due diligence process and in the follow-up of portfolio companies, while others plan to focus on this topic in the coming years. Generally, we perceive this field as still relatively immature in our portfolio.
At the same time, it is clear that more and more managers are taking climate risk into account and analyzing this before making investments where it is deemed necessary. In most cases, the analysis will focus on individual companies that are particularly exposed to climate risk, while some managers have established routines to map climate risk both generally in the due diligence process and in the existing portfolio. Some managers also report that they use the Taskforce for Nature-related Financial Disclosures (TNFD) where they measure various indicators related to nature and biodiversity.
In general, managers are keen to reduce climate-related risk in the portfolio and to be aware of any opportunities in this context. Several managers have also provided examples of portfolio companies exploring new business opportunities related to this.
Regarding the question related to net-zero strategy and science-based climate targets, only a few managers, 13 in total, have so far developed a clear net-zero strategy or had their science-based climate targets validated. This represents 15 percent of the managers. However, more managers (30 managers, 36 percent) report that they plan or are in the process of establishing this for their portfolio companies. For 49 percent of the managers, no plans have been developed for this yet. Compared to last year's responses, it is still encouraging that a majority of managers either have plans for it, are in the process, or have already established such a strategy. Several managers state that they are focused on reducing climate emissions and improving data collection in the portfolio.
The graph above shows responses to the question: “Have you developed a net zero strategy and defined science-based targets for the portfolio companies, or do you have concrete plans for doing this in the future?”
EUs regulatoriske endringer
The response to the question related to the EU taxonomy and CSRD regulation shows that the majority of managers have the necessary knowledge of this. Regarding the EU taxonomy, the work on this will depend on where the managers are located, as this is primarily relevant for managers operating in the European market. Some managers have mapped which portfolio companies will be considered sustainable under the taxonomy. How the companies are covered by the taxonomy will largely depend on the sector and size of the portfolio companies. For the upcoming CSRD regulation, the managers are now working on mapping which portfolio companies will be covered by this, and they are focused on training and raising awareness in the portfolio, especially related to double materiality assessment and identified deviations.S
The managers operating in the European market have updated their websites and documentation in accordance with SFDR. A total of 57 managers confirm that their next fund will be an Article 8 or Article 9 fund under SFDR, in addition to another 19 managers who plan or have started working on this. This is an increase compared to last year, where 55 managers stated that their previous or next fund would be classified as Article 8. Only eight managers report that the SFDR regulation will not be relevant for their next fund. We also see that few managers plan to raise capital for Article 9 funds, with only two managers planning to raise only Article 9 funds in the future, while another eight managers plan to raise both Article 8 and Article 9 funds under SFDR.
The extent to which managers report how the negative consequenses of investment decisions for sustainability factors are taken into account (PAI) varies. For managers covered by SFDR, several use the exemption rule for PAI reporting, due to the size of the company and the manager. Some managers collect data for all indicators, while some collect data for selected indicators. The managers who have come the furthest include the PAI indicators also in the screening process and in the DD process before the investment.
The managers who do not plan to raise an Article 8 fund are largely managers who are no longer active or managers who are not covered by the SFDR regulation.
The graph above shows responses to the question: «Do you plan for current or future fund to comply with articles 8 and/or 9 of the Sustainable Finance Disclosure Regulation (SFDR)? »
UN Sustainable Development Goals
The majority of managers report that they actively use the UN Sustainable Development Goals (SDGs) in their ESG work. A total of 61 managers report specific SDGs that are relevant to the fund's and/or portfolio companies' activities. This is an increase compared to the number of managers who used the UN SDGs in their sustainability work in 2022. It is clear that the UN SDGs are now well established throughout our portfolio.
Data security
Data security is considered very important by the managers. The trend from recent years' reporting continues, where we see that more and more managers are focusing on cybersecurity, especially in the industries where this is most relevant. This is due to both the increasing threat from such crime and the fact that portfolio companies are becoming more digital. Most have their own routines to ensure good handling of data security.
4. Anti-corruption
To map the work related to anti-corruption, the managers are asked if they have exposure in areas where corruption is widespread, which companies this may apply to, and how this is followed up. The reporting we have received indicates low exposure to corruption, and that the managers who have portfolio companies with operations in countries where corruption is widespread are aware of this and have established good routines and guidelines to follow up and avoid it. Some mention that they, for example, have stricter follow-up and requirements for ethical guidelines, procurement contracts, and other guidelines where they see that the portfolio company is in areas with a high risk of corruption. The identified risk is largely related to the supply chain and to some extent to their own operations in certain portfolio companies.
5. KPIs related to ESG
The work of developing KPI related to ESG continued in 2023. Several managers have established ESG-specific KPIs related to each individual portfolio company instead of general KPIs across the portfolio. A large proportion of the managers state that they follow their own set of KPIs regarding ESG in the portfolio and that the development of these is reported in separate ESG reports. These are also shared with investors. We still see an increase in managers who join the ESG Data Convergence Initiative and obtain KPIs from the portfolio in connection with this project.
In general, the reporting to investors is getting better, with several managers including ESG reporting as part of the regular quarterly reporting. In addition, more and more managers are publishing their own ESG report, and several also have plans to do so in the future. The quality of the reporting is also improving, and more managers are using third-party verified data in their reporting.
6. Financial Impact of ESG
The majority of managers consider that the work on ESG has a positive financial impact on the companies, although it is difficult to isolate from other measures being taken. Several managers state that this is not something they measure specifically, making it challenging to quantify the financial impact of ESG work. Some managers mention that they measure ESG indicators during the procurement phase, and these values contribute to giving the companies a "score." This indicates that the valuation of companies may be positively influenced by good ESG practices. Many managers also believe that this will become more evident later in the ownership period and/or at the time of sale. Several also highlight that the work done on ESG in the company has been a crucial contributor to achieving a good sale price, and that not having ESG on the agenda is not an option. There is also increasing reporting about climate measures in portfolio companies that can contribute to a positive financial effect.
The managers also highlight that companies with increased engagement related to sustainability have a positive effect on employees, customers, and suppliers. Examples of this include an improved reputation due to the purchase of carbon credits or participation in various initiatives that employees find meaningful (beach cleanups, volunteer work, and similar activities). Argentum has received several examples of companies where ESG work has had an assumed positive financial effect or contributed to a higher sales value. Several companies also contribute to society in other ways, both as important employers and through other social initiatives. Furthermore, we see that different accreditations are something the managers strive for.
- Value chain
For the reporting year 2023, Argentum included questions about the value chain for the first time in the survey sent to the fund managers. We believe it is important to highlight the responsibility portfolio companies have throughout their value chains, and thus sought to gather information on how this is followed up by our managers.
It is very positive to see that the vast majority are aware of their own value chain and have established routines related to evaluating and monitoring it. This is done by developing procurement guidelines, using certifications, and collecting various guidelines from the portfolio (such as ethical guidelines). Several managers also describe that they have an increased focus on responsible value chains, and that this is something regularly monitored by their ESG managers.
Risk Assessment in the portfolio
For Argentum, it is essential to have knowledge about how risk is distributed within the portfolio. We measure this annually by asking managers to assess their portfolio based on low, medium, and high risk in the following areas:
- Labour rights
- Human rights
- Environment
- Corruption
For the reporting year 2023, we received risk assessments from 79 out of 94 managers, covering 1019 portfolio companies. It is quite an extensive task for the managers to provide this information, and we are pleased with the high response rate.
Overall, this self-reporting indicates that managers assess the risk as low or medium. Only 2 percent of the portfolio companies are considered to be at high risk concerning human rights and corruption.
Fund Managers’ ESG practices
In addition to managers themselves reporting on ESG directly to Argentum through our annual survey and their own ESG reports, Argentum has been assessing five indicators of how the managers' ESG practices are evolving since 2018. We particularly find it important to track transparency within the portfolio, and we believe it is crucial for managers to be open about their guidelines and publish them publicly.
In summary, the 2023 assessment shows that managers are continuously working on updating their guidelines and that there is still a positive trend towards increased transparency.
Summary of the 2023 Assessment
| Indicator | Status 2023 | Status 2022 |
|---|---|---|
| How many of our managers have their own ESG policies for investments? | 94 out of 94 (100%) | 91 out of 91 (100 %) |
| How many of our managers have their own ESG policy? | 84 out of 94 (89%) | 79 out of 91 (87 %) |
| How many funds report on their ESG activities to the investors? | 9 new commitments have committed to this. 116 new commitments have previously done so. | 10 new commitments have committed to this. 106 new commitments have previously done so. |
| Transparency: Do the fund managers report on transactions and portfolio companies on their website? | 93 out of 94 managers (99%) | 90 out of 91 managers (99 %) |
| Transparency: Do the managers have an ESG policy on their website? | 61 out of 94 managers (65%) | 58 out of 91 managers (64 %) |
Argentum’s own activities
Argentum annually reviews ESG in its own operations. This review is based on our sustainability strategy, and we look at selected targets of the UN Sustainable Development Goals and indicators from the UN's Global Reporting Initiative (GRI). Below is a summary of this review for 2023.
Argentum and the UN Sustainable Development Goals
SDG | Target | Indicator | Status 2023 |
5.5: «Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life | Percentage of women in the company overall, in specialist functions and in management. | The percentage of women is 33.3% in the company overall, 10% in specialist functions, and 0% in management. | |
8.3: «Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services | Number of new investments in fund and amount invested in the funds. | NOK 500 million in nine funds (primary). | |
12.6: «Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle» | Number of managers who have taken concrete steps to further develop their ESG policies/ESG routines. | 50 out of 86 managers (58%) | |
Take ugent action to combat climate change and its impacts. | Development in CO2 emissions among portfolio companies that have reported on this | 71 Companies. Scope 1: Decrease 17% (Median decrease 0.3%). Scope 2: Increase 10% (median increase 5%) |
GRI indicators
The GRI comprises over 80 indicators for economic, social and environmental performance, with certain core indicators that must be reported on unless they are considered to be of limited importance to the company.
GRI is a set of general reporting indicators used by a number of industries, with many of the indicators being of particular relevance to larger companies. For example, Argentum does not have production activities or own buildings, but operates as an asset manager. The company has therefore decided to report on a selection of GRI indicators that are relevant to the company and its activities.
Below is an overview of the parameters Argentum reports on in connection with GRI.
| Indicator | Status 2023 | Status 2022 |
|---|---|---|
| Recycling (paper and IT) | 32% | 43 % |
| Business travel, CO2 equivalents | 40,0 tonnes | 64,0 tonnes |
| Business travel, CO2 equivalents (per FTE) | 1,57 tonnes | 2,44 tonnes |
| Sickness absence | 2,32% | 1,54% |
| Percentage of Women | 33,3% | 32,0 % |
| Skills development (per employee) | 7,33 hours | 11,13 hours |
Environmental indicators
Argentum's business operations involve travelling. In 2023, emissions from this amounted to 40 tons of CO2 equivalents, whereas the corresponding figure for 2022 was 64 tons of CO2 equivalents. This represents a significant decrease compared to the previous year. The reduction also contributes to a decrease in emissions per employee, which has dropped from 2.44 tons per full-time equivalent in 2022 to 1.57 tons per full-time equivalent in 2023.
The reason for the reduced emissions is that travel activity in 2023 was lower than in a normal year, partly due to a lower number of employees. Argentum has previously estimated that emissions over time will be around 60 tons per year and expects that emissions will increase somewhat in 2024. Argentum is committed to not traveling more than necessary to carry out the company's activities, and we extensively use the company's video conferencing equipment for both internal and external meetings.
Argentum has an agreement with an external party for the reuse of obsolete IT equipment and places environmental certification requirements on our suppliers. Argentum has established environmental measures that include paper recycling, as well as the sorting of food waste and plastic waste. The total recycling rate in 2023 was 30 percent, slightly lower than in 2022 when the recycling rate was 43 percent. The numbers are not directly comparable, as the figures for previous years only considered paper recycling. Argentum expects the percentage to increase in the future in line with increased use of the new sorting solutions.
Carbon Account
For the first time in 2023, Argentum has prepared a dedicated carbon account for the company's operations. Scope 1 emissions are associated with heating oil for the company's premises and amounted to 0.39 tons of CO2 equivalents in 2023. The company's Scope 2 emissions come from energy use and amounted to 6.25 tons of CO2 equivalents the same year. The GRI indicators for recycling and waste are included in the company's Scope 3 emissions. In total, 40.8 tons of emissions are linked to these indicators, accounting for 86 percent of the company's total emissions.
| Summary of Greenhouse Gas Emissions (location based) (tCO2e) | |
|---|---|
| Scope 1 | 0,39 |
| Scope 2 | 6,25 |
| Scope 3 | 40,80 |
| TOTAL | 47,45 |
Social indicators
Argentum had 27 employees at the end of 2023, compared with 25 employees at the start of the year. The number of full-time equivalents in 2023 was 25,51, which is used in average calculations in this report unless stated otherwise. Sickness absence accounted for 2,32 percent of total working hours in 2023, a slight increase compared with sickness absence in 2022 when it amounted to 1,53 percent.
Argentum strives for gender equality, and the proportion of women remained stable in 2023, with the company having a female representation of 33.3 percent, compared to 32.0 percent in 2022. In a small organization like Argentum, hiring and departures will result in significant changes in percentages. The proportion of women on the board is 40 percent, while there are no women in the company's management team, which consists of only two people. The proportion of women in the company's investment departments was 10 percent at the end of the year.
Diversity and a good working environment are important for Argentum, and the company is committed to reflecting this internally. This includes equal opportunities for all employees. The company is aware that the industry is traditionally male-dominated. The lack of gender equality in the industry poses a business risk, and Argentum considers an equal and diverse working environment as a way to reduce this risk. Therefore, Argentum uses both genders in its promotional materials and recruitment efforts for new employees. The company has flexible arrangements that make it easier to balance career and private life. Argentum continuously works to promote gender equality and strengthen its efforts in this area and is involved in several initiatives aimed at increasing women's interest in finance, investments, and entrepreneurship. Additionally, Argentum has signed the UN CEO Statement of Support for the Women's Empowerment Principles to promote global efforts related to gender equality.
Skill development/training per employee averaged 7.33 hours in 2023, compared with 11.13 hours in 2022. Recruitment to the company will impact the level of training and skill development. Argentum will continue to focus on developing employees' competence in the future.
Raising awareness and positioning
New this year is that the report summarizing Argentum's work on ESG and sustainability will no longer be published as a separate report, but will be part of the company's annual report. With this change, Argentum is moving towards "integrated reporting" and looks forward to further developing this reporting format in future annual reports. An annual meeting specifically related to sustainability work is held with the Ministry of Trade, Industry and Fisheries. Argentum's reports and guidelines are available on our website.
As a member of the UN Global Compact, Argentum reports on its work related to ESG and sustainability. Argentum completed its eleventh report in 2023, which is available on the Global Compact organization's website. Argentum has followed the principles of the UN PRI for several years and signed the principles in 2021. We completed our first UN PRI reporting in 2023. The report is available in the UN PRI database.
Argentum collaborates extensively with Norwegian and international actors to develop ESG work within the industry. The company participated in the Private Equity International Responsible Investment forum and the GSG Global Impact Summit Malaga in 2023 and has attended several conferences and seminars related to ESG and sustainability throughout the year. The company participated in the Shub Summit 2023, organized by Sustainability HUB, with which Argentum has a cooperation agreement. The company also took part in a panel discussion during the British industry association BVCA's ESG conference in London and was represented on stage at ESG100 in Oslo. Representatives from Argentum have also given presentations to other external actors about their sustainability work in 2023.
Throughout the year, we maintained extensive contact with students about ESG and sustainability. We participated as a case company for NHH students in the course "Sustainable Finance," where they interviewed us and created a project with recommendations on how we could improve. In 2023, we continued to focus on how we can attract more women to the finance industry, being the main sponsor for the NHH initiative SHE Innovates, as well as participants at Women's Finance Day, where we also hosted a workshop for female students. Argentum also gave lectures on topics including ESG to a delegation of master's students from Dartmouth, USA.
Argentum is a member of Norsif, the Norwegian forum for responsible and sustainable investments. Norsif is an independent association for asset owners and asset managers, service providers, and industry organizations interested in responsible and sustainable management. Argentum has been active in the organization since its inception.
In 2023, Argentum became a member of NorNab, an independent membership-based association that works for the growth and development of the impact investment ecosystem in Norway. It is an important network for Argentum to participate in for maintaining presence and developing expertise.
The Head of ESG, Sofie Østergaard, brought her membership in the Bergen-based sustainability network to PwC to Argentum. It consists of a group of professionals from other companies in the region who specialize in ESG. The network holds about six meetings a year. In 2023, Argentum presented its ESG strategy and how the company monitors ESG in its portfolio to this network.
Dagens Næringsliv has also established a "by invitation only" network for leading individuals in Norway working with ESG. The network, DN Executive Sustainability, started in March 2023 and has had five meetings in total in 2023. Topics discussed during the meetings included the Transparency Act, integration of ESG in companies, ESG reporting, and value chain mapping.
Argentum has regular dialogue with investors, managers and other stakeholders in connection with the ESG work and has assisted with their work on developing their ESG processes and routines. Argentum will continue its dialogue with Norwegian and international investors in connection with ESG and sustainability work in 2024.