The Growth Fund Manager perspective on ESG

Tapani Varjas, Partner at Juuri Partners

How to turn Environmental, Social and Governance (ESG) goals into actions took centre stage in an online discussion 20 September 2022 when ICMCI brought together representatives of ESG frontrunner companies to share experience and ideas on making it all happen. The participants included Ari Koli CMC, Sustainability Engineer at Nitor, Tapani Varjas, Partner at Juuri Partners, and Tuomas Salusjärvi, EVP, Growth Businesses and R&D at Valio. The conversation was moderated by Kim Karme CMC, CEO of Karme Consulting. The event was part of the Future of Management Consultancy Initiative. 

Tapani Varjas took the discussion on the plane of a Growth Fund manager, Juuri Partners, investing in SMEs in Finland. As ESG is setting the regulatory landscape, in order to drive value and be interesting for investors they need to take ESG matters seriously.  

Investors feel the pressure from the ESG legislation as well as from stakeholders: insurance and pension companies are interested in having a positive impact on society. The pressure is then passed on to fund managers/general partners which need to select investment companies appropriately. On their part, companies need to report ESG to investors. Thus, ESG becomes an integral part of the investment process creating connections at all levels and in all directions.

Regulators want to find out how businesses are taking into account the ESG commitments. The Sustainable Finance Disclosure Regulation (SFDR) contains a classification of investment products ranging from not taking ESG risks into account to products targeting sustainable development activities. It becomes clear that if an entity wants to operate in the private equity environment in Europe, it needs to integrate ESG matters into its investment operations. Ultimately, SFDR aims to prevent “greenwashing” and it is expected to be a revolutionary tool for sustainable finance in the EU region.

The regulations and the practice in the experience of Juuri Partners are distilled to the foundations of its approach to ESG: value-oriented, practical, integrated and focused. The company’s main focus continues to be finding ways to invest in businesses with intrinsic value in integrating business strategies and ESG agenda as well as to implement systematic, KPI based approach to monitor progress.

To bring structure in the process, Juuri Partners is a signatory to the Principles of Responsible Investment (PRI), dedicating a team and ensuring better reporting capabilities. Moreover, as a fund manager, Juuri Partners brought the portfolio companies onboard through workshops and KPIs. All these efforts are part of and reflected in its investor communication strategy.

The firm systematized its approach to ensure minimal risks and positive measures at all stages of the investment process: market assessment, pre-acquisition, holding and exit.

For more from Tapani Varjas and a case study of ESG assessed in a portfolio company, please check out this video

For more highlights of the event, please visit the ICMCI YouTube channel

About Tapani Varjas

Tapani Varjas is Partner at Juuri Partners, a financing and business development and growth partner for small and medium-sized enterprises. He has extensive experience of more than 20 years in entrepreneurship, investment banking, mergers and acquisitions, minority ownership, corporate governance and risk management. He is responsible for the development of corporate governance, M&A and financing documentation, risk management and shareholder value creation through management of corporate responsibility in the investment activities.

About the Future of Management Consultancy

Combining a series of events, discussions and publications, the ICMCI Future of Management Consultancy initiative strives to promote the global conversation about the future of the profession towards developing a common vision to help and inspire consultants all over the world.

Designed as an “open source” and inclusive platform, the Future of Management Consultancy is an opportunity to seek answers to pressing questions and to encourage interactive communication and joint idea generation.