NOVEMBER 11 2024
Nordic Capital is dedicated to building capacity and sharing best practices across its firm and portfolio companies. To support this mission, it has developed a comprehensive set of ESG training programs, tools, templates, and guidelines to implement high sustainability standards - across Nordic Capital and its portfolio companies. Launched in 2014, Nordic Capital’s ESG training program comprises three evolving modules that are continually updated to reflect the latest ESG insights and regulatory requirements. This view specifically examines the first module, ESG I – Corporate Compliance.
The recent ESG I training session brought together over 144 participants, including Nordic Capital employees, board members, and key executives from portfolio companies. Featuring insights from leading sustainability experts, the event offered in-depth guidance on essential sustainability and governance topics—areas increasingly vital in today’s corporate landscape. With ESG regulations surging by 155[1] % over the past decade, companies must now adapt to rapidly evolving standards across diverse jurisdictions. In addition, Nordic Capital provides its portfolio companies with a Governance Toolkit, a resource designed to equip them with foundational policy templates in key governance areas, ensuring legal compliance and promoting ethical business practices.
The first topic covered during the training was Business ethics and governance: a foundation for sustainable growth. Business ethics and strong governance are vital for sustainable growth, especially as ESG standards gain prominence. By 2023, all Nordic Capital portfolio companies had adopted whistleblower policies and/or system, reflecting their commitment to transparency. With 88% of institutional investors factoring ESG into their decisions[2], portfolio companies should integrate ethical guidelines and training to foster accountability, meet stakeholder expectations, and mitigate governance risks.
The second topic covered was Navigating the evolving ESG regulatory landscape. The increasingly complex ESG environment now includes over 2,400 regulations worldwide[3], with the EU leading many initiatives. The CSRD (Corporate Sustainability Reporting Directive) alone impacts around 50,000 companies across Europe, requiring more comprehensive sustainability reporting. As international agreements like the Paris Agreement continue to drive regulatory changes, companies must develop robust compliance strategies and integrate sustainability into their core operations to stay ahead of evolving requirements and mitigate risks associated with non-compliance.
The third topic covered was Supply Chain Management and Compliance, in collaboration with the Nordic Capital Procurement Office, Nordic Capital are driving Sustainable procurements as one of the key focus areas. With 73% of consumers now willing to pay more for sustainable products[4], effective management of supply chains has become critical for maintaining ethical standards and mitigating risks. Notably, 71% of Nordic Capital portfolio companies have implemented a supplier code of conduct, demonstrating a clear commitment to operational transparency. To ensure compliance, companies should conduct regular audits and risk assessments across their supply chains. Providing training for suppliers on ethical practices and compliance standards can further reinforce these efforts. Building a culture of accountability throughout the supply chain is essential for driving sustainable growth.
The last topics discussed was Digital compliance and cybersecurity. As cyber threats continue to rise, with global cybercrime damages projected to reach $10.5 trillion annually by 2025[5], robust cybersecurity measures are essential for compliance and business resilience. All onboarded Nordic Capital companies now report their cybersecurity status quarterly, reflecting the heightened focus on digital resilience. To safeguard their operations, portfolio companies should implement comprehensive cybersecurity training programs and establish clear protocols for reporting and addressing incidents. Regular assessments of digital security measures are also crucial to ensure ongoing compliance. By prioritising cybersecurity, companies can protect their assets and maintain trust with stakeholders.
In conclusion, this ESG Training event at Nordic Capital not only underscored the necessity of sustainable practices in contemporary business but also equiped portfolio companies with the essential tools to navigate the complexities of today's regulatory and operational landscape. As the business environment continues to shift, Nordic Capital remains committed to supporting its portfolio companies in implementing effective strategies that foster responsible and sustainable growth, ensuring they are well-prepared to face future challenges.
[1] ESG News, 2023. Global ESG Regulation Increases by 155% Over the Past Decade - ESG News
[2] Edelman Trust Barometer, 2022. PowerPoint Presentation
[3] Eco-Business, 2023. Global ESG regulation increases by 155 per cent over the past decade | Press Releases | Asia | Sustainable Business
[4] Bain and Company, 2024. The Visionary CEO’s Guide to Sustainability | Bain & Company
[5] World Economic Forum, 2023. Why we need global rules to crack down on cybercrime | World Economic Forum