Policy for Responsible Investments
By setting a Policy for Responsible Investments, Frumtak Ventures aims to promote a healthier working environment and improve interaction between stakeholders. The Policy is based on other rules and policies that Frumtak Ventures has, such as its investment policy and rules on operational and ethical conduct.
Frumtak Ventures promotes responsible investments as it assumes that such a policy will positively impact the outcome of investment projects in the long term and lower operational risk. The Policy is intended to define a framework that enables the company to intertwine social responsibility with investment decisions.
Responsible investments entail that:
- Frumtak Ventures complies with laws and regulations that apply at any given time and in any market.
- Investments made by Frumtak Ventures will always aim to keep negative impact at a minimum and promote the positive impact of the investment on the environment, employees and other stakeholders.
- Frumtak Ventures commits to seek continuous improvements in the fields of environment, social and corporate governance.
- Frumtak Ventures adopts a risk assessment procedure where environmental, social, and corporate governance factors are considered when investing in companies.
Frumtak Ventures’ Policy for Responsible Investments is based on Principles for Responsible Investment, (UN PRI) which are an international organisation of investors who work together on implementing certain basic standards on responsible investments and are supported by the United Nations.
The six main principles of PRI are:
- We will incorporate environmental, social and corporate governance factors into investment analysis and decision-making processes.
- We will be an active owner and incorporate environmental, social and corporate governance factors, into our ownership policies and practices.
- We will seek appropriate disclosure on environmental, social and corporate governance matters by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry.
- We will work together to enhance our effectiveness in implementing the Principles.
- We will report on our activities and progress towards implementing the Principles.
The purpose of the Policy is to create an effective and credible approach to controversial matters that relate to responsible investments and also aim to achieve an acceptable profit level on investments. In the Policy, there is an emphasis on active reporting on responsible investments. Such reporting supports the analysis, comparison, and evaluation of different investment opportunities. Environmental, social and corporate governance factors are all important when evaluating investment opportunities. It is the opinion of Frumtak Ventures that companies who consider these factors enjoy a benefit in the long term.
The economic environment in Iceland is limited in many ways which affects the operational and investment environment that Frumtak Ventures operates within. The enforcement of the Policy must consider the available investment opportunities at any given time.
Frumtak Ventures assumes that the integration of environmental, social, and corporate governance factors when evaluating investment opportunities leads to better decisions and limits the financial risk for the company.
The operational procedures of Frumtak Ventures regarding responsible investments are based on the following methodology:
- Active conversation
Frumtak Ventures works with other investors and stakeholders on increasing the understanding and importance of responsible investments in Iceland. Frumtak Ventures emphasises working with companies on pre-defined priorities that are appropriate for the company in question. The objective is to be a participant in building up a well-run company for the benefit of investors and society.
- Integration in investment decisions
In the investment process, environmental, social and corporate governance factors are integrated in the analysis of the company, in the attempt to get a holistic picture of the company in order to better analyse the opportunities and risks associated with the investment. When evaluating such risk, the company should follow the same principles as when evaluating financial risk. Risk assessment can be different for different industries and asset classes.
Frumtak Ventures will not automatically exclude investment opportunities on the premise that environmental, social and corporate governance factor are not fully compliant, but advocate, support and push for a positive development in these matters.
When evaluating investments, the following items are observed:
- International laws and treaties that Iceland is a member of
- License to operate
- UN Global Compact
- OECD Guidelines for Multinational Companies
- Icelandic Chamber of Commerce, Nasdaq OMX Iceland and Federation of Icelandic Industries guidelines on corporate governance
- Invest Europe guidelines on corporate governance and responsible investments
Frumtak Ventures is a member of Iceland SIF. This organisation works on increasing investor knowledge on the methodology of sustainable and responsible investments, facilitating dialogue on the subject.
Frumtak Ventures puts an emphasis on that its partners participate in or observe the guidelines on responsible investments in their operations. Frumtak Ventures looks to co-operate with other investors, fund managers, analysts and stakeholders in implementing responsible investments in Iceland.
This policy is published on Frumtak Ventures’ website www.frumtak.is.
The board of Frumtak Ventures approves this policy and observes that it is complied with.
The board of Frumtak Ventures reviews this policy annually.