The Trendlines Group invests in innovations in agrifood and healthcare, leveraging the group’s experience, partnerships network and resources to go from seed to market. The group invents, incubates and invests in medtech and agrifood technology companies in Israel and Singapore, and provides portfolio companies with support including technology development, business development, marketing, commercialisation, investment and financial strategies. The Trendlines Group is led by co-chairmen and co-CEOs Steve Rhodes and Todd Dollinger. Its shares are traded on the SGX and in the US as an American Depository Receipt on the OTCQX International.
1. How does Trendlines integrate ESG considerations into your investing philosophy or business strategy?
Trendlines integrates ESG considerations into our investment life-cycle, using a three-step process:
i. ESG issues within sectors in our mandate: We look at the macro ESG issues for medtech and agrifood technologies, which are the primary sectors in our investment mandate. For example, overfishing has depleted the ability to keep up with food demand from the ocean and with diminishing fresh water supplies, there is an urgent need to provide technologies that enable growing fish on land sustainably.
ii. How portfolio companies are impacted by ESG risks and opportunities: As part of our due diligence when we engage and evaluate specific companies, we need to understand how they are impacted by ESG-related risks and opportunities. As active investors, we can influence portfolio companies and support them with their longer-term ESG plans. This way, we can prepare them for long-term growth.
iii. Review governance policies and processes: We pay close attention to governance policies and processes in the way we interact with and manage our portfolio companies. We set an example in our governance, and portfolio companies are required to have clear accountability, control and reporting policies and mechanisms in place for both financial and non-financial matters.
2. What are some key material ESG factors for Trendlines and how are these factors identified?
Each year, we do a comprehensive scan to identify sustainability issues that are relevant to our business. We prioritise the issues based on their relative importance to Trendlines and how they impact the assessment and decisions of our stakeholders. The shortlisted material issues are presented to the board for validation and approval. Management tracks and reviews the ongoing progress in managing the material issues. Trendlines’ four-step process in its materiality assessment:
i. We do a broad scan to identify sustainability issues that are relevant to our business.
ii. We prioritise the issues based on their relative importance to Trendlines and how they impact the assessment and decisions of our stakeholders.
iii. The shortlisted material issues are presented to the board for validation and approval.
iv. Management tracks and reviews the ongoing progress in managing the material issues.
Some key material ESG factors for Trendlines include the management of portfolio companies, business ethics and governance, and regulatory compliance.
Trendlines promotes responsible and ethical operations among all its portfolio companies. We help companies establish strong governance pillars using comprehensive risk management. We have a director on all of our portfolio companies’ boards and take the responsibility of their management very seriously.
Firstly, for the management of portfolio companies, there are continuous operational assistance and evaluations conducted by our team to help our portfolio companies get a better grasp of their business goals, rules and processes. Other support areas include:
• Developing and refining the narrative for customers, investors and partners.
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• Mentoring, especially related to setting and achieving technology goals, investment strategies and market penetration.
• Preparing business plans.
• Undertaking activities to support start-ups in securing follow-on investments.
• Providing access to our global network of venture/strategic partners and assistance with securing strategic partnerships.
Next, in terms of business ethics, several key corporate policies have been established, which articulate standards of behaviour expected of our employees regarding honesty, integrity, and accountability. The board reviews these corporate policies on an annual basis to ensure their relevance:
• Code of business conduct and ethics policy
• Whistle-blower policy
• Anti-bribery and anti-corruption policy
• Diversity policy for the board.
Last but not least, we focus on regulatory compliance too. In 2022, audits were performed in two areas — Securing Means of Payment and Expenses at Trendlines Medical Singapore, and no significant findings of concern were reported. Our target for 2023 (short-term) are audits on:
• Our purchasing policies
• An internal review on our Sustainability Report.
3. How is the board of Trendlines involved in ensuring sustainability goals are met?
All board members undergo sustainability training. Additionally, two of the current board members have management backgrounds in both governmental and business environmental initiatives in Israel. In 2023, the board was presented with the ESG goals and framework of the group at a special meeting, and discussed and confirmed policies moving forward.
4. What are some of Trendlines’ sustainability commitments and how does the group ensure progress in accordance with these commitments?
The group has a number of policies in place in our corporate governance standards which we adhere to and monitor on an ongoing basis.
Examples of our policies include:
o Code of business conduct and ethics policy
o Whistle-blower policy
o Anti-bribery and anti-corruption policy
o Board diversity policy
o Non-discrimination policy.
• All policies are clearly communicated to our employees, board members, and relevant third parties who have business dealings with the company. During the year, we conduct our mandatory annual training on these policies for our employees.
• Our corporate governance processes, internal control practices and risk management guidelines are scrutinised by internal and external audit frameworks to ensure adequacy and effectiveness.
• Additionally, we conduct an external audit once a year on a chosen aspect of our business and publish the results of the audit.
5. With a wide diversification of portfolio across countries and sectors, how does Trendlines ensure that it meets the regulatory requirements for ESG reporting?
• We recognise that most of our portfolio companies are at the very early stages of development and do not have the resources to do deep ESG reporting.
• Accountability to investors is of utmost importance to us. Our due diligence process facilitates responsible portfolio management and promotes prudent investment decision-making. Following our investment in a company, we see it as our responsibility to mentor the companies in the matters of ESG, as appropriate to each one.
• As corporate advisers and shareholders, we strive to build a culture of open communication and engagement with our portfolio companies to help them grow to their true potential. Towards this goal, we track the following targets: o Valuation process applied to portfolio companies. o Updates received from portfolio companies. o Updates from portfolio companies to their boards and shareholders.
Jihye Lee is associate director, research, at SGX Group
About the 5 in 5 series
This series presents 5 Questions in 5 Minutes with SGX listed companies with a focus on sustainability. Designed to be a short read, 5 in 5 provides insights into SGX-listed companies’ sustainability efforts through a series of 5 Q&As with management. Through these Q&As, management will discuss the company’s sustainability journey, governance structure and commitments, material ESG topics and many more. This report contains factual commentary from the company’s management and is based on publicly announced information from the company. For more, visit sgx.com/research. For more company information, visit https://www.trendlines.com/