Venture capital firm AC Ventures has empowered startups through the ESG (environment, social and governance) framework and the European Union-compliant systems, giving a baseline strategy to grow promising opportunities in the long term.
ACV is a leading Southeast Asian agnostic venture capital that invests in early-stage companies focusing on Indonesia and ASEAN. The company has empowered startups through the capital, operational experience, industry knowledge, deep local networks and resources creating added value. It includes fintech, e-commerce, agritech, edutech and cleantech within its portfolio. ACV seeks positive societal change in society and economic impact in Indonesia and beyond. With over US$ 500 million in assets, ACV has invested in around 120 technology companies based on their portfolios since 2012.
ACV could produce long-term opportunities
ACV has provided experienced practitioners with a dedicated role in the ESG framework and strategies to the companies.
The ESG framework includes:
- Environment (E): Identification, assessment and management of environmental risks and impacts. That includes resource efficiency, pollution, carbon footprint, waste management and water consumption;
- Social (S): Identification, assessment, and management of social risks and impacts, such as labor and working conditions, community, indigenous peoples and cultural heritage;
- Governance (G): Prioritizing diversity of the board of directors and staff, clear codes of business conduct, risk governance, culture and sustainable supply chain management.
Lauren Blasco, Principal – Head of ESG at AC Ventures, told Indonesia Business Post on October 31, 2022, that the company was trying to implement its strategy and framework through a baseline. She said having a baseline was important in measuring and managing strategy or framework, and could not be done based completely on assumption.
Huge domestic potential
According to the World Economic Forum, ASEAN is predicted to be the fourth largest economy by 2030 while Indonesia will be the world’s 16th to 7th largest economy during that time. With a population of over 270 million and despite the COVID-19 pandemic, Indonesia’s GDP growth is still on track at 5%.
Blasco said Indonesia was uniquely positioned to benefit from Southeast Asia’s awakening digital economy. Over 40 million internet users have come online in 2021 alone during the pandemic and internet penetration reached 75%. The digital economy will surpass US$1 trillion by 2030 in the region. This is due to the highly urbanized youth as a strong growth driver, setting an increase in diversification and supply chains.
ACV will focus entirely on Indonesia as one of the largest and most important market in Southeast Asia. The company will position capitalization on Indonesia’s digital transformation, making it the most exciting opportunity for digital investment in the world.
Its baselines would be measured through the Upright Project in quantifying the impact of their portfolio companies. Its platform is based on products and services giving a Net Impact Assessment (baseline). The Upright Project is EU compliant, and ACV had accomplished a common standard with Europe on ESG through the project, it gives the companies that ACV is investing a good footing.
Blasco stated Indonesia will be focused to test product-market fit and then on expansion and replicating its model across the entire region as the best strategy for Indonesia.
Risks in implementing ESG
However, risks depend on the type of business, and there are many risks that would come to play without the baseline. Without a baseline strategy, the entire system would be based on assumptions, which will pose risks on its own.
According to visiglobal.co.id, the implementation of ESG in Indonesia has been very weak since it has performance issues that affect indicators, stakeholders and investment decisions.
