By Zoë VanderWolk, Partner and Head of IR and Sustainability at ETF Partners
Since the founding of ETF Partners in 2006, we have been singularly focused on creating a sustainable world through supporting innovation. By investing in exciting, impact-focused businesses and facilitating major exits, we have demonstrated to the investing world that sustainability is not just a buzzword — it is also a profitable necessity.
We’ve pioneered a profit-with-purpose model and developed a scientific, data-driven method to evaluate our portfolio companies in more detail than just financial figures, ensuring that each business is tangibly on track to improve both their growth and green credentials. Over the past three years, our Annual Impact Reports have aligned the UN’s Sustainable Development Goals with the industry-leading Impact Management Project criteria to create a holistic score that both the ETF Partners team and portfolio boards can use to track their progress across our five pillars of investment: Alignment with SDGs, Impact Potential, Additionality Through Innovation, Impact Performance and Financial Maturity.
The release of our 2023 Impact Reports highlights a number of key improvements and advancements across our funds over the past year. Overall, 2022 demonstrated a return to growth following the economic difficulties caused by the Covid-19 pandemic and lockdowns in 2020. As consumers and businesses have adapted to a new normal, the focus on sustainability and digitalisation has remained increasingly central, making the meaningful measuring of impact more important than ever.
Across our two portfolio funds, gains have been made cumulatively, with both SDG Alignment and Impact Potential criteria increasing in Fund 3 and the average impact score of Fund 2 rising from 3.6/5 last year to 3.8/5 this year.
In terms of individual successes, 2022 also saw several impressive highlights from entrepreneurs and their businesses generating impactful improvements. Leading carbon accounting company Normative scored 4.6/5 overall in their impact score, reflecting a bumper year that saw 207 million tonnes of CO2 processed by the platform. Through providing companies with accurate reporting of their carbon emissions, Normative identifies high carbon intensity sectors and suppliers to reduce carbon footprint within the supply chain. As one of the newest companies in the ETF portfolio, Normative’s full impact still lies ahead and it has made a meaningful start, meeting at least three SDGs.
Another significant performance came from AI-driven maritime logistics and monitoring platform DeepSea Technologies. Also scoring a high 4.6/5 overall in their impact score, 2022 saw Deepsea post an 80% year on year increase of their tracking capacity, monitoring 25.6 million kilometres of shipping routes and producing a 50% CAGR since investment in 2020. Since nearly 90% of the carriage of world trade occurs by sea, shipping accounts for 3% of the globe’s emissions — equivalent to the carbon footprint of South America as a whole. DeepSea’s technology is therefore crucial in optimising shipping routes and ultimately reducing CO2 emissions by 12% per kilometre tracked, thereby making a hugely significant impact on the environment.
In fact, much of the ETF Partners portfolio has displayed notable impacts across several of the measurement criteria. Car sharing software Vulog is currently being used on five continents, for instance, fulfilling their potential to reduce by a factor of 10 the number of cars on the road and accelerate the deployments of electric vehicles to improve air quality and traffic. While the number of cars on the Vulog platform has increased by ten times since initial investment in 2015 to reach over 15,000 cars, with 90% EVs. Similarly, IoT software company, Wirepas, has expanded its technology into smart metering, smart lighting and asset tracking. In 2022, the company increased the number of nodes operated to nearly 6 million, with a CAGR in its impact KPI of 37% over the last three years. Finally, microbiome conservation platform Eagle Genomics posted a huge 140% growth in impact performance over the last three years, showcasing how microbiome datasets are becoming increasingly important in the fight against climate change.
Ultimately, through combining qualitative and quantitative data along with detailed and ambitious criteria, the ETF Partners Annual Impact Report is leading the way in ensuring that our investments deliver on returns that are both profitable and purposeful. Through actively managing environmental impacts, our 2023 Report has shown significant strides forward in sustainability across industries as varied as shipping, car sharing, biodata, and AI tech, all while producing exciting new avenues for growth in the future. Our environmental impact will only continue to bloom from here.
For the full Impact Report please email [email protected].