Signatory type: Investment manager

HQ country: Singapore

Openspace invests in early and mid-stage transformative tech-enabled businesses across Southeast Asia, through funds with a total committed capital of over US$600m. We believe in long-term value creation strategies that lay the groundwork for our portfolio companies to scale sustainable businesses across multiple geographies.

We have one of the largest operational teams of any venture capital firm in Southeast Asia, comprising experts in tech, data science, product, branding and ESG investing.

The rationale for our ESG value creation work

We view ESG risk management and value creation as critical, especially in Southeast Asia, where there is relatively easy access to lower-income and lower-skilled workers and correspondingly a need to fairly compensate, train and develop individuals professionally over the course of their employment.

There is also more demand for superior talent than there is supply and therefore employee engagement is paramount. World Bank Enterprise Survey data, for instance, shows that in the Philippines, Indonesia, and Malaysia, 10% – 15% of employers face skills shortages.

Furthermore, investor, consumer and business expectations around responsible businesses are lower in this region compared to global standards. In 2019, Measuring Sustainability Disclosure: Ranking the World’s Stock Exchanges 2019, a report by Corporate Knights and Aviva, ranked 47 global stock exchanges based on the sustainability disclosures of their listed companies. Stock exchanges based in Singapore, the Philippines and Indonesia ranked 24th, 30th and 36th respectively.

We are strongly committed to enabling our companies to hold themselves to higher standards on issues such as stakeholder engagement and employee and customer safety and security.

Good ESG management sets our portfolio companies apart from the competition in terms of talent attraction and retention and customer loyalty. It also prepares them to expand into more mature markets or list on stock exchanges.

Having ESG best practices in place also enhances their ability to raise capital from sophisticated global investors that are more advanced in their ESG incorporation practices. This has surfaced in fundraising discussions with large global investors, including our own limited partners.

What we do

As the ESG priorities of our portfolio companies can differ depending on their business models and maturity, we work with teams on a bespoke basis to identify their ESG gaps with reference to the relevant IFC Performance Standards, SASB industry guidelines, local labour and environmental regulations, and other industry-specific guidelines, including the Consumer Protection Principles and standards for Green Data Centres.

We form our assessment through a mixture of interactions including documentation, photo and video review, video conferencing with management teams and employees, and where possible, in-person site visits either by our team members or outsourced consultants.

We then negotiate action plans with our investees. These include:

  • establishing an environmental and social management system;
  • developing and enhancing internal and external stakeholder management channels;
  • implementing processes to manage key risks, including technology platform safety (e.g. no bullying or harassment, no inappropriate teacher-student relationships), data governance and consumer protection.

We would only veto an investment on ESG grounds if a company’s business activities fell into our exclusion list or if background checks on founders led us to believe they are engaging in suspicious activities or have no intention of developing good ESG practices.

Post-investment, we work with our portfolio companies to address the ESG gaps identified. We do this in close collaboration with the management teams to ensure strong ownership and effective implementation, and draw on the expertise of our investors, co-investors and external consultants to bolster our knowledge building and execution efforts.

Challenges in implementation

As many of our portfolio companies are in the early stages of development, their understanding of ESG issues is typically low and they do not have dedicated resources to spearhead these efforts.

The responsibility for addressing the ESG gaps can lie with CEOs, COOs or human resources heads, depending on the risks in question. As such, we find that practical prioritisation is key to effective engagement. We understand that not everything has to be done at the same time or requires the highest level of detail.

We focus on establishing internal organisational structures to manage ESG risks (including crafting job descriptions for ESG hires), raising awareness of ESG risks and opportunities specific to each company, and providing hands-on support and advice to encourage the timely development and implementation of internal policies and processes in a way that takes business priorities into account.

Example 1: Nutrition Technologies

Nutrition Technologies is an organisation focused on driving food security through the supply of feed ingredients and agricultural products. The management team is highly committed to transparency and thought leadership on sustainability issues and is keen for its ESG approach to become more technical and systematic, in line with international standards.

In our pre-investment assessment, we identified that Nutrition Technologies could benefit from environmental and social risk management (focused on issues such as factory emissions, labour practices, working conditions and food safety). It could also develop upside in the form of business expansion and future fundraising – verified sustainability measurements and proper risk management would position it well for ESG-focused customers and institutional investors).

In 2021, we worked with Hera Capital Partners, an ESG-focused co-investor in the company, to propose and establish a sub-committee to guide and support the company in its ESG journey.

The company has since developed a sustainability roadmap with support from this sub-committee. Early steps include conducting a detailed life cycle assessment with a third-party consultant to establish baseline sustainability performance for the ESG issues identified and highlight areas for future improvement, and identifying key frameworks, certifications and organisations to engage with.

Our shared eventual goals are to establish sustainability systems to measure, monitor and report on key metrics, which would position Nutrition Technologies favourably regarding its growth prospects, as more customers focus on proven sustainability. We also want to focus on future fundraising rounds and a potential listing or exit in the future.

Example 2: Love, Bonito

Love, Bonito is a female-focused fashion label with 16 stores across Singapore, Malaysia, Indonesia and Cambodia. It plans to expand into other markets, including the US, following a recent US$50m fundraise.

Post-investment, we conducted more than five hours of ESG workshops with key members of management including the chairman, CEO, CFO, COO and heads of product, branding and design.

These workshops focused on raising awareness around environmental and social best practices in the apparel industry, differentiating between greenwashing initiatives (e.g. having a small recycled materials product section online) and practices with real impact (e.g. ensuring that all factory workers are paid a minimum wage and have safe working conditions).

They provided practical examples of the value of managing environmental and social risks as an ongoing operational necessity, including consumer perception, investor expectations, and regulatory trends.

These workshops also included a deep dive into Love, Bonito’s specific risks and opportunities, including labour and environmental practices in their manufacturing supply chain and management of their Scope 1 and 2 emissions.

The management team discussed these risks in detail and determined areas where they would approach environmental and social management from a risk perspective (e.g. pollution control) and where they would proactively look to drive positive impact (e.g. waste reduction and social empowerment, particularly for women).

They have since developed an internal commitment statement to sustainability that broadly addresses these risks and are actively recruiting for a head of sustainability and impact to develop and drive their ESG efforts moving forward. We advised on the job description and helped to review candidates. We plan to work closely with this hire and Love, Bonito’s management to institutionalise its ESG structures over time.


We continue to have high conviction in the potential for strong ESG practices – to manage risk and capture opportunities – to drive sustainable value creation for companies over time, and are increasingly seeing our portfolio companies share this conviction and consequently taking on internal ownership of these initiatives.