Before we dive deep into our new ESG policy, we want to clear the air (literally and figuratively). Sustainable investing, also known as socially responsible investing (SRI) or impact investing, is a term used to describe investments that prioritize positive social change by considering financial returns at the same time as the moral impact of investments. Along a similar line, ESG investing refers to a methodology of investing that takes into consideration different environmental, social, and governance (ESG) factors and objectives.
Although there are indeed differences between these different terms, they are often used interchangeably to exemplify the growing notion that financial performance is strongly connected to external forces and that investments must provide more than simply financial returns.
Sustainable investing through a validated and comprehensive ESG policy is about making a difference, to both private organizations and society. But it’s so much more than just ticking boxes! That’s why CEMEX Ventures has announced its new ESG policy to drive value and stimulate growth for CEMEX, the environment, and the societies in which it operates through a sustainable approach to investing and partnering with startups.
Let’s take a deeper dive!
Deep Dive: Our ESG policy
ESG at CEMEX Ventures
Environmental, Social and Governance (ESG) principles are crucial to our operations because as the Corporate Venture Captial (CVC) and open innovation unit of CEMEX, we aim to add value through a robust portfolio of companies and strong investment model.
As a sometimes minority stake investor, we acknowledge that we are limited in applying or enforcing all our principles within the activities of our portfolio companies. Nevertheless, we will always provide the best advice and support to drive responsible and sustainable business practices within the construction technology industry.
At CEMEX Ventures, our understanding of ESG is the following:
- Environment: Our purpose is to build a better future. To do so, we must address humanity’s most pressing issue: climate change. We are supporting CEMEX in leading the industry toward net-zero CO2 emissions, while also promoting a circular economy, in order to achieve environmental excellence and preserve biodiversity. We have set the most ambitious 2030 targets available to the industry, thus, we consider the environmental impact and potential of each investment or partnership.
- Social: CEMEX seeks a better future for employees, customers, shareholders, investors, suppliers, and the communities in which we live and work. We foster employability, diversity and inclusion, resilient and sustainable cities and communities, health and safety, and respect human rights to help safeguard our people, communities, supply chain, and everyone who interacts with our company. We put Health and Safety first, with a high social impact strategy to drive economic health, inclusion and climate justice.
- Governance: We are committed to achieving superior performance reflected in strong and sustained economic growth. With a high degree of integrity, we adopt high ethical standards and best practices in corporate governance that go beyond simple adherence to laws and regulations.
Responsible investing
In addition to considering investments according to our four focus areas: Green Construction, Enhanced Productivity, Construction Supply Chain, and Future of Construction, the integration of ESG policies in our investment decisions allows us to fulfill our overarching mission to create high value for CEMEX by helping it achieve its strategic priorities and company values:
- Ensure Safety
- Customer Centricity
- Pursue Excellence
- Work as one CEMEX
- Act with integrity
CEMEX’s United Nations priorities
Moreover, we are aligning our actions to contribute to CEMEX’s United Nations priority and its Sustainable Development Goals (SDGs).
Our objective is to create positive value and have tangible impact through our investments by prioritizing opportunities that help accomplish the following goals:
UNPRI signatories
Sustainable investing is more than simply acknowledging ESG issues and corporate social responsibility, it consists of establishing a commitment to the environment and society through investment activity that provides concrete value. Becoming signatories of the United Nations-supported Principles for Responsible Investment (UNPRI) allows us to publicly demonstrate this commitment.
As UNPRI signatories, joining a formal and global network of entities dedicated to responsible investment ensures that we are on the right path and adhering to the best sustainable industry practices through a series of independent audits.
ESG criteria in the investment process
Our new ESG policy has a well-structured evaluation process for all initial and follow on investments in which responsible investing principles and ESG factors will be considered during both the pre-investment/agreement and post-investment/agreement phases.
Pre-investment: Due diligence & ESG Committee
Before we invest in or initiate a partnership agreement with any startup or third-party organization, we use a comprehensive and broad approach to identify potential ESG risks and opportunities. This allows us to complement the investment process from a non-financial perspective.
Through a tailored due diligence (DD) questionnaire, we integrate ESG criteria to conduct an overarching analysis of our different potential investments. Our DD questionnaire considers the following topics:
- Commitments
- Climate
- Energy
- Circular economy
- Diversity
- Community
- Health & Safety
- Human Resources
- Ethics & Compliance
- Antitrust
- Cybersecurity
- Reporting
Once due diligence has been completed, CEMEX Ventures’ ESG Committee is responsible for interpreting all findings in the next step of the investment funnel.
The purpose of the committee is to establish an internal ESG score for each startup based on the due diligence research. The committee also identifies risks, opportunities, and defines potential actions and recommendations regarding the inclusion of ESG issues in each startup’s operations and/or business models.
Post-investment: Reporting & monitoring
However, our ESG policy doesn’t end there. We continue to monitor the financial and non-financial performance of our portfolio companies, taking into account ESG issues, using a structured data collection process. Likewise, we conduct a holistic examination of the yearly progress of each portfolio company by reevaluating their ESG score for internal use and consideration.
We also report the evolution of our portfolio companies to UNPRI to comply with their ESG reporting requirements and to ensure the continuous improvement of our portfolio companies’ internal processes.
CEMEX Ventures aims to enforce the importance of periodic reporting as a “best practice” for investors relations and transparency, while also measuring the impacts of our portfolio companies to assess where they stand in terms of their ESG journey.
Training & best practices
We want to start off on the right foot and foster a healthy relationship with our portfolio companies from the very beginning! Therefore, we will initiate all investment or partnerships agreements with an onboarding program to help startups understand basic ESG principles and the important role they play to CEMEX and CEMEX Ventures. This is an opportunity to communicate our expectations and share what we have to offer.
During this program, the ESG committee will share their findings, concerns, and opportunities that were identified during our internal ESG due diligence investigation and translate them into actions in order to tackle identified challenges and turn them into growth opportunities. CEMEX and CEMEX Ventures will also provide access to CEMEX University resources to help with specific ESG issues and provide sustainability training. In addition, we will share certificates, courses or public commitments ensure continuous improvement and guarantee best industry practices.
Finally, one of our goals in presenting our ESG policy is to establish relationships with other venture capital funds that are also empowering ESG actions and responsible investment practices. We want to understand other policies, learn about failures, and share experiences to be able to put into practice a continuous improvement of our policy and provide useful guidance to our shareholders. Comparing our strategies with our peers will allow us to implement top industry standards and identify more resilient businesses with a wider impact for CEMEX.
We will promote responsible investment practices among our partners, the investment community, and society at large. And when possible, we will communicate openly in private discussions and participate as speakers in conferences and events with the aim to encourage and share ESG best practices.
The construction industry revolution starts with responsible investment! Join us as we make investing in the future of construction more sustainable.
