The great importance of sustainable investment

27/09/22

How investment company JAB is keeping up with ESG developments

'When developments go quickly, we need to take direct action.’ For Luuk Hoogeveen, CFO of investment company JAB Holding (JAB), this is a universal rule for future proofing. The importance of sustainable investment and the increasing desire among stakeholders for a valuable ESG strategy is just such a development, he explains. 'We have taken our responsibility in this area and set really ambitious goals.’

It is a unique position with which to have a positive impact: an investment portfolio with a value of some fifty billion dollars. JAB – whose investment portfolio includes brands such as Douwe Egberts, Dr. Pepper and Panera Brands – focuses on long-term investments in the consumer goods and services sector. 'This is a way to truly support the ESG transition as an investor,’ says Hoogeveen.

Strategize and accelerate ESG approach

Hoogeveen is the first to admit that everything revolves around generating returns. 'We are not an NGO and we need to make money for our shareholders and investors. But our goal is to do the right thing for society as well as for our investors.’

So how can we set up a strategy that generates returns with ESG as a building block and an integrated part of the business operations? And how can an ESG approach be accelerated while also being established in a dynamic way that continues to reflect relevant developments around ESG? These were the core questions with which JAB approached PwC’s ESG team.

Upskilling is essential

The starting point for that team was the strategy, as Hoogeveen explains. 'From this standpoint, benchmarks were determined to integrate the strategy into the reporting and improve the ESG rating. There was also a strong focus on training all employees, which was an essential step considering the importance of ESG for our organisation. Everyone needs to be involved and to have a sound basic knowledge of ESG material, making upskilling a must.’

‘Generating returns and having an impact on a sustainable world is a continuous process’

Luuk Hoogeveen,CFO of investment company JAB Holding

Own responsibility

Armed with an in-depth materiality analysis and impact matrix, JAB and PwC together designated four ESG priorities, with climate change and energy first and foremost. And this has had an impact on all companies in JAB’s portfolio.

'They all need to ensure that their climate and energy policies conform to the Paris Agreement,’ continues Hoogeveen. 'We can have everyone report on emissions and keep score, but will that achieve our goals?’ JAB takes a different approach. 'We encourage all companies in our portfolio to address this issue and be responsible. We help them to get ready by offering the right tools, involving the right suppliers and facilitating conversations and training. Our strength lies not just in the consolidation of data but setting relevant and collaborative goals with everyone taking their own responsibility.’

Looking to the future: from project to process

Hoogeveen can look back on a successful transformation to date. 'On an investment level, we have created more traction thanks to our transparent communication, the annual conversation at board level and the setting up of an ESG collaboration forum to enable sharing of best practices with all companies within our investment portfolio. Many of our companies have now also formulated an ESG strategy and account for themselves periodically via a sustainability report.’

Attention to qualitative and reliable data

The next step is clear, says Hoogeveen: 'While the path has been laid out for the coming year, we now have to integrate ESG even further into our business operations. This means continuing to set goals, updating the materiality matrix and staying ahead in the market.’ The need for qualitative and reliable data will continue to be urgent, he emphasises. 'How do we get the data, how do we check the data, how do we improve our reporting, and how can we increase the reliability of our ESG information in our reporting to stakeholders?’

Integrating ESG into the entire business operations requires an ongoing focus that will never end. Hoogeveen realises that JAB does not have the capacity to keep up with all ESG developments and will therefore lean on the knowledge and expertise of PwC. 'We started this journey as a project but generating returns and having an impact on a sustainable world is a continuous process.’