Max Odefey, co-founder of German private equity firm Genui, describes his sustainability priorities for the year ahead.
What is your top sustainability priority for 2024? What will count as a success?
A top priority in 2024 is to ensure we are on track within Genui and regarding the support of our portfolio companies to achieve the SBTi targets we have committed to. The majority of our portfolio companies have realised equal pay. Achieving equal pay in the remaining companies is a key 2024 target of the respective management teams.
Being a buyout investor, our investment strategy is to achieve attractive financial returns for our clients and create positive impact on people and planet. We are in a unique position to work with outstanding entrepreneurs who have founded and massively scaled businesses. Our additionality comes from investing into purposeful companies and supporting them when growing their businesses. Our second fund is invested into a majority of companies with a positive impact business model. From 2024 onwards with our upcoming third fund, we have the ambition to close the final gap and invest only in businesses that create positive impact and deliver attractive financial returns.
Together with some of the Genui Entrepreneurs, we have founded the Entrepreneurs’ Social Impact Foundation (USC), which has been funded with €125 million and has the target to improve the opportunities for children and youth. In 2024, we have the objective to build out the organisation and to support scaling social businesses working to systemically improve the education of children.
Where have you reached on your portfolio decarbonisation/climate journey? What is next on the ‘to do’ list?
All Genui II portfolio companies measure their carbon footprint, annually review reduction measures and invest in offsetting projects for the remaining emissions.
By way of example, our Swiss medical laboratory Labor Team is the sustainability leader in its segment. It took a pioneering role by building a logistics system based on train and bicycle transport saving more than 800 tons of CO2. A switch to 100 percent water-powered electricity saved close to 120 tons CO2. Lighting is gradually switched to LED and 12 electric car charging stations have been installed.
We acknowledge that the climate crisis is one of the biggest challenges of our time and commit to achieving net zero by 2050. Hence, going forward, will encourage our portfolio companies to, like ourselves, align with science-based climate targets to limit global warming to 1.5C and reduce their negative environmental footprint accordingly.
ESG data: do you think the industry has now reached a good place in terms of data frameworks?
In our view, there is no lack in terms of number of frameworks, but the harmonisation of frameworks and collaboration of various standard setting organisations should be further progressed. In the past 12 months we saw increased activity among leading associations. Being part of the Invest Europe ESG Working Group also helps “being close” to the dynamic regulatory and market developments, shaping industry standards and establishing best practices.
ESG data: are you now finding ESG data (both your own and industry benchmark data) to be genuinely decision-useful for investment decisions?
In our view, the private equity industry should contribute to advancing sustainability by integrating ESG into the investment process and by prioritising investments creating positive impact.
Consequently, benchmarking ESG data is beneficial in setting ESG objectives, improving data quality and assessments. But when it comes to investment decisions, the focus lies on the evaluation of the business models’ (positive) impact on ecology and society. In our view, the gathering, monitoring and reporting of ESG data is part of good governance and corporate culture, at Genui we call it “good entrepreneurship”.
What is the next step in your ESG ‘journey’ when it comes to nature?
A successful transition to a carbon-neutral economy is crucial for safeguarding our ecology, society and economy in the long-run. Genui is supporting this transition by encouraging our portfolio companies to reduce their negative environmental footprint. While our top priority is to save emissions, we also recognise the need to offset unavoidable emissions.
While we are constantly sharpening our decarbonisation strategy, offsetting ours and the portfolio companies’ unavoidable carbon emissions in “the right” way is important. That is why we work with a purpose-driven consultancy in Germany and Brazil providing support to make an effective contribution in addressing the climate and biodiversity crises. The focus lies on identifying local projects aiming at forest conservation, especially in the biodiverse Amazonian rainforest, thereby promoting biodiversity, and providing long-term socio-economic benefits to improve the lives of neighbouring indigenous communities.