Role of GRC in new investments
GRC has been introduced as a separate due diligence work stream for all new investments made by Kinnevik. All potential new investments are evaluated in terms of its CR environment and GRC performance. In instances where potential investments do not adhere to relevant standards, or are not considered to be susceptible to the required improvements, Kinnevik refrains from the investment.
How Kinnevik works with its investee companies
Kinnevik strives to influence its investee companies through both clear requirements and guidelines, and by actively supporting and monitoring the investee companies in their efforts to put appropriate business structures in place. Being active owners within investee companies, Kinnevik uses a two-tiered approach to develop GRC within its investee companies - through board representation and through the Kinnevik GRC and investment teams. This active 4 step approach is described below.
1. Understanding of significant CR risks in the portfolio
The majority of the potential CR issues and challenges for Kinnevik are derived from the operations of the respective investee company. The risks identified by the investee companies comprise a wide range of risk areas which may all, to some extent, affect Kinnevik and the company's other stakeholders. CR topics that are assessed to be most important and have the greatest relevance both to Kinnevik and the company's stakeholders are the following:
- Prevention of bribery and corruption
- Maintaining an ethical supply chain, including consideration of human rights and labour standards
- Country risks associated with operating in emerging markets
- Compliance with laws and regulations
2. Defining and communicating investee company requirements
A key element in influencing the investee companies is explicit expectations, requirements and guidelines within relevant areas. Kinnevik's senior management, in cooperation with the Board of Directors, has formulated and established policies to address relevant matters related to GRC and CR, primarily through the Code of Ethical Business Conduct (Code of Conduct), the Whistleblower Policy and the Corporate Responsibility Policy (CR Policy). In formulating these policies, Kinnevik has used the Ten Principles of the UN Global Compact and the OECD's guidelines for multinational enterprises as its starting point. All employees are expected to read and comply with the Company's policies. In addition to the established policies Kinnevik actively promotes compliance with all laws, rules and regulations in each jurisdiction in which the company conducts business, and every employee and other representative of the company is expected to comply with the laws of the country in which they operate.
3. Supporting the development of GRC structures
Another key element in influencing the investee companies is through active ownership, both through board representation, and by actively supporting and monitoring the investee companies. The Kinnevik GRC team works closely with the investment management team, the Kinnevik board representatives, and investee company management teams to develop the investee companies' GRC environments. One example of activities the GRC team and investment team do to support the investee companies is on-site visits. These facilitate the development of a GRC roadmap outlining relevant development initiatives with the investee company. The GRC team also ensures the CR topics and risks which are of most importance for the investee company's industry and business are identified and reported to its Board of Directors, including actions taken.
4. Monitoring progress of GRC development
To ensure that the investee companies are developed in line with Kinnevik's expectations, progress is followed up regularly by Kinnevik's board representatives and by the investment management teams.
Progress of GRC development within the Kinnevik portfolio is also monitored by the GRC team and regularly reported to the Kinnevik Board of Directors. Furthermore, GRC is a standing item on Kinnevik's agenda in most board meetings where management is present, and progress towards the investee companies' GRC roadmaps is assessed.