ESG
Due Diligence
Sustainability and ESG considerations are an important factor in SK’s investment decisions. We seek investments where SK’s vision, partnership and unsurpassed industry experience can make sustainability an important part of our transformation strategy.
When we evaluate potential investments, we look for untapped potential and opportunities to create value.
To promote consistency, thoroughness and predictability in our evaluation of potential investments, SK has developed a proprietary ESG due diligence framework. This framework draws on best practices from well-established consultancies, but it is tailored to capture information that is specific to the kinds of companies within SK’s distinct sectors of focus.
Jayesh Taunk
Principal
1.
Preliminary Sustainability Trends and Opportunities Analysis
We rely on our deep industry experience and available information to quickly develop a preliminary view of the company’s sustainability opportunities and risks.
We consider the company’s alignment with sustainability trends, the role of its products in current and future markets, potential policy or regulatory impacts, and most importantly, whether we see opportunities to transform a company’s sustainability profile as part of our value creation strategy.
Conclusions of the Trends and Opportunities Analysis help inform whether SK moves ahead and invests in confirmatory business, legal and ESG Due Diligence by a third party.
2.
ESG Due Diligence Issues Matrix
Our team selects priorities from an extensive list of sustainability and ESG performance topics that could be relevant to companies within our sectors of focus. Examples of topics considered include:
Environment
Climate Impact
Climate Risks
Air Quality Impacts
Water Impacts
Product Stewardship
Waste Management
Social
Occupational Safety
Process Safety
Labor Practices
Human Rights
Diversity
Animal Welfare
Governance
Site Security
ESG Disclosure Practices
ESG Governance
Trade Group Membership
Ethics
Corruption
Priorities are shared with our external ESG due diligence advisor for input, and then the final list drives the advisor’s work to gather information. The process creates efficiencies, provides a clear line of site to decision-critical ESG information, and helps surface important information gaps.
3.
Final ESG Assessment
The SK team leverages information gathered by the ESG Due Diligence Advisor to develop a final ESG overview for the company. The Final ESG Assessment includes updated Trends and Opportunities along with information and key environment, social or governance performance, legacy liability issues. This information is used along with other business and legal due diligence to inform a final investment decision by the SK Investment Committee.