Kuramo Capital Management’s ESG and Impact Report (2023-2024)

Overview of Methodology and Reporting Structure

Kuramo Capital Management employs a systematic, data-driven approach to measure and report the environmental, social, and governance (ESG) and impact of its portfolio companies. The report outlines the methodologies and key performance indicators (KPIs) used to assess job creation and quality, with a focus on the impacts made through its investments. The goal is to monitor the performance of portfolio companies in areas such as employment creation, wage quality, and labor market access, using structured data collection and real-time analysis.

Job Creation Indicators

The report provides a detailed framework for evaluating job creation in its portfolio companies, including:

Number of Full-time Equivalent (FTE) Jobs: The total employment based on full-time equivalent metrics.
Direct and Indirect Jobs: Includes both direct jobs created by Kuramo’s portfolio companies and indirect jobs from companies within the investment portfolios of Kuramo’s fund managers.
Youth and Women Employment: Emphasis on employing young people and women, key demographic groups in job creation.
Newly Created Firms: The creation of firms with more than one paid employee, representing entrepreneurial activity and economic growth.
Employment Contracts and Social Insurance: The report tracks whether employees have formal written contracts and access to social security or welfare.
Living Wages and Wage Equality: Attention is also given to ensuring employees earn a living wage, with analysis of gender wage gaps and overall wage levels within the portfolio companies.
Working Time: The report monitors the average annual working time per employed beneficiary to ensure fair working conditions.

Quality of Employment

Kuramo’s impact reporting extends beyond the quantity of jobs to focus on the quality of employment. This includes assessing:

- Social Security and Insurance: Whether employees have access to benefits such as social insurance or pensions.
- Gender Wage Gap: Tracking disparities in wages between male and female employees.
- Employment Conditions: Evaluating whether employees are working under fair, safe, and supportive conditions that meet international labor standards.

Data Collection and Real-Time Monitoring

Kuramo employs an automated data collection system called Sopact to gather, process, and analyze ESG data in real time. Previously, data collection was manual, but with the transition to Sopact, Kuramo can now access up-to-date insights into the performance of its portfolio companies. The process includes:

Initial Data Request: Investment companies and fund managers submit relevant data periodically on various aspects like financial performance, social impact, environmental sustainability, and governance.
Real-Time Data Analysis: The automated platform allows continuous monitoring of ESG performance, providing actionable insights to improve portfolio management and impact assessment.

The Sopact platform enables:

Automated Insights: Immediate feedback on ESG data, which allows Kuramo to stay informed about the impact of its investments.
Customization: The platform offers flexible dashboards that can be customized for both internal and external stakeholders.

Employment Dimensions Measured

Kuramo evaluates job creation through four key employment dimensions:

Employment Creation: Focuses on job creation at the individual level and its direct impact on investment beneficiaries.
Employment Quality: Measures the improvement of labor market standards, including social security, wage levels, and working time.
Employment Access: Tracks how easily individuals can access the labor market, enhancing market performance and employer demand.
Employment Skills: Evaluates the availability of necessary skills in the labor market, helping to assess the alignment of the labor supply with market demands.

ESG Data and Report Limitations

The report emphasizes that data collection has not been perfect, with some gaps due to inconsistent data submissions from portfolio companies and fund managers. While Kuramo strives for transparency, it acknowledges that not all companies provided data at the same level of detail. As a result, some aspects of the report may not fully reflect the performance of the entire portfolio.

However, Kuramo remains committed to improving its data collection processes, engaging more thoroughly with fund managers and portfolio companies to address data gaps and inconsistencies. Future improvements in reporting standards are being explored, and the firm is working to further automate ESG data collection for better accuracy and efficiency.

Industry Sectors Covered

The ESG and impact report covers a wide range of industries, reflecting the diversity of Kuramo’s portfolio:

Agriculture: Including cassava farming, palm oil production, and livestock trading.
Energy: Focus on renewables, oil, and gas.
Financial Technology: Involvement in digital commodities trading and blockchain-enabled payment infrastructure.
Healthcare: Including pharmaceuticals, diagnostics, and wellness.
Telecommunications and Media: Covering electronic commerce, digital infrastructure, and video production.
Hospitality: Encompassing tourism and quick-service restaurants.

Reporting Methodology and Engagement Process

Data for this report was gathered through surveys sent to portfolio companies and fund managers, which focused on their environmental and social systems, practices, and impact data. The ESG and Impact team conducted extensive reviews of the data to ensure accuracy and consistency. When discrepancies were found, the team engaged the relevant companies to update the data and resolve inconsistencies.

While the response rate was not 100%, Kuramo is committed to improving engagement with fund managers and portfolio companies to enhance the reporting process in future years.

Conclusion

Kuramo Capital Management’s approach to ESG and impact reporting integrates both quantitative and qualitative measures to track job creation and quality across its portfolio. The transition to automated data collection tools like Sopact will streamline future impact analysis, allowing for better insights and continuous improvement. Despite some limitations in data completeness, Kuramo is dedicated to improving its processes and ensuring more transparent, consistent reporting in the future.

While the response rate was not 100%, Kuramo is committed to improving engagement with fund managers and portfolio companies to enhance the reporting process in future years.

Report