Principle adverse sustainability | Goodwell Investments

Principle adverse sustainability impact statement

Summary

Although Goodwell seeks to intentionally generate social and environmental impact with its investments, we also consider potential adverse impacts of our investment decisions on sustainability factors. We track this under our risk management framework. This Principal Adverse Impact statement covers the reference period from 1 January 2024 to 31 December 2024.

Principal adverse sustainability impacts are defined under the Sustainable Finance Disclosure Regulation (SFDR) as impacts of investment decisions that result in negative effects on sustainability factors with sustainability factors referring to environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters.

Decisions that negatively impact climate or other environment-related resources, or have negative implications for society, are detrimental to value creation.

The principal adverse sustainability impacts of our decisions are considered throughout our investment process and investment holding period.

Description of principle adverse impacts

Goodwell considers the potential principal adverse impacts (PAIs) of its investment decisions on sustainability factors as part of its impact and ESG risk management framework. These impacts are assessed throughout the investment lifecycle, beginning at pre-investment screening and continuing through active portfolio management.

At present, Goodwell actively tracks board gender diversity across its portfolio companies, with data collected and reviewed on a regular basis. This indicator is reported at portfolio company level and aggregated at fund level where relevant. This is currently the only PAI indicator formally monitored and reported in line with SFDR definitions.

In addition, Goodwell has identified the following PAI indicators from Table 1 of Annex I of the SFDR Regulatory Technical Standards as relevant to its investment strategy:

Violations of UN Global Compact principles and OECD Guidelines for Multinational Enterprises
Lack of processes and compliance mechanisms to monitor compliance with UN Global Compact principles and OECD Guidelines for Multinational Enterprises
Unadjusted gender pay gap
Exposure to controversial weapons (antipersonnel mines, cluster munitions, chemical weapons and biological weapons)

While these indicators are not yet formally tracked across all portfolio companies, the associated risks are addressed through ESG due diligence, IFC-based exclusion lists, contractual provisions, and ongoing engagement. Goodwell is progressively strengthening its data collection and reporting systems to enable more comprehensive monitoring of these indicators over time.

Goodwell also considers biodiversity-related impacts and greenhouse gas (GHG) emissions to be relevant adverse impact areas. Formal tracking of GHG emissions has commenced on a pilot basis in collaboration with portfolio companies in the agricultural sector, supported by external expertise, with the intention to expand coverage as reporting capacity improves. This currently focuses on Scope 1 and Scope 2 emissions.

Goodwell follows a phased and risk-based approach to expanding PAI coverage, prioritising indicators based on materiality, feasibility, and data availability. As systems mature, Goodwell aims to enhance disclosure, introduce historical comparisons, and provide greater transparency on actions taken to prevent or mitigate identified adverse impacts in future reporting periods.

Description of policies to identify and prioritise principal adverse impacts

As a firm with its roots in impact investing, Goodwell has developed a comprehensive Impact and ESG policy, which is operationalised through its Impact and ESG Management System. This system guides how sustainability risks and potential principal adverse impacts (PAIs) are identified, assessed, and managed across the investment lifecycle.

PAIs are considered at multiple stages of the investment process. Prior to investment, potential portfolio companies are screened using IFC-based ESG due diligence tools, sector-specific checklists, and exclusion lists to identify activities that may cause significant environmental or social harm. These assessments inform investment decision-making and help prioritise material ESG and impact risks.

During the holding period, Goodwell monitors ESG and impact performance through structured portfolio company reporting, informed by recognised frameworks such as GIIN IRIS+, GRI indicators, and internally developed ESG KPIs. While formal, comprehensive tracking of all SFDR PAI indicators has not yet been implemented across the portfolio, selected indicators—most notably board gender diversity—are actively tracked and reported at portfolio company and fund level.

Goodwell takes a phased and risk-based approach to expanding PAI coverage. Additional indicators are prioritised based on materiality, data availability, and the likelihood and severity of potential adverse impacts. Where indicators are not yet formally tracked, relevant risks are addressed through investment screening, exclusion policies, contractual provisions, and ongoing engagement with portfolio companies.

Goodwell’s compliance and ESG & Impact teams are primarily responsible for implementing these policies, with oversight integrated across the broader investment team. As data quality and portfolio reporting capabilities continue to mature, Goodwell aims to progressively expand its PAI monitoring and disclosure in future reporting periods.

Engagement policies

Regarding engagement with our portfolio companies, prior to investment all potential portfolio companies are assessed using our IFC based ESG Risk Matrix, sector focused and gender forward DD checklists to assess whether the company meets our impact mandate. During this process the Investment manager identifies key priority areas regarding ESG, IMM and principal adverse impacts on sustainability factors. An ‘ESG Action Plan’ is created alongside the company where all of the aforementioned factors are considered, and reporting processes are outlined. The investment team supports where gaps are outlined, whether it be governance, capacity building or access to networks. Through these engagements, portfolio companies aim to deepen their impact as well as better measure and report on relevant information in the context of the principal adverse impacts affecting their businesses.

We are not a listed company and it should be noted that Goodwell Investments falls under the exemption of Art 3 (2) b of the AIFM Directive 2011/61/EU and as such is exempted from having an engagement policy. This means that we do not have a specific engagement policy in respect to shareholders. That said investors share our vision to minimise negative impact while maximising positive impact and the consideration of sustainability risks on financial returns. We engage with shareholders through quarterly and annual reporting as well as shareholder meetings.

Adherence to international standards

Goodwell Investment’s Responsible Investment Policy aligns with recognised global standards for responsible business operations and investment practices. These include, but are not limited to, the United Nations Global Compact, the UN Principles for Responsible Investment (PRI), the UNPRI Principles for Investors in Inclusive Finance, the Investor Guidelines for Responsible Investing in Digital Financial Services, and the Global Impact Investing Network’s IRIS+ framework. Goodwell is a signatory to the PRI and complies with all associated requirements and expectations.

This is the founding principle that shapes Goodwell’s entire investment philosophy. Our funds support entrepreneurs delivering essential goods and services to un(der)served populations and building an inclusive economy in their communities, countries, and continent.

We maximise the social and financial impact of every investment we make by focussing on innovative, fast-growing, local companies.