Northzone as a whole recognises its responsibility, both as a standalone firm and as an investor, to be a positive factor in ESG matters. Sustainability and the wider ESG focus is key as to how we operate and we try to support initiatives and share resources and guidance where appropriate. Northzone is supportive of the EU SDFR (Sustainable Finance Disclosure Regulation), and is happy to publish its policies in line with the recently enacted guidance.
Northzone currently includes the following factors within our definition of ESG:
The ESG factors listed above are not exhaustive and we will continue to re-visit, refine and add to the list as and when required. For efficiency’s sake, Northzone has formed a smaller group to take day-to-day responsibility for ESG matters, and the Group includes the Head of Talent, the CFO and a General Partner.
We are members of Leaders for Climate Action (LCFA). The organisation was founded with the goal to make the biggest possible contribution in the fight against the climate crisis through owning its actions and demanding stronger measures from political leaders. They have grown a community of over 1,000 members who have pledged over USD 6.6 million which has in turn reduced and compensated for over 350,000 tons of carbon. Northzone was formally certified as a Carbon Neutral company in 2020. Furthermore, the LFCA engagement entails a term sheet clause we’ve added since 2020 to help our companies become carbon neutral.
We have opted to comply with the UN Principles of Sustainable Investing and although this is not signatory, we have incorporated the guidance into our investment processes and are supportive of the EU SDFR.
Integration of ESG in our investment decision process
We acknowledge that as an investor operating with a relatively small team, Northzone’s greatest impact comes from its investment decisions. Northzone has long had a policy of assessing the potential ESG impact of investment opportunities at multiple points in the investment decision process. Our templates for assessing and discussing opportunities include sections specifically on ESG concerns, and an ESG risk assessment is performed on every investment.
Once we approach completion of an investment, we perform an assessment of risks associated with the opportunity’s impact on a number of areas – including sustainability. Where there are heightened risks, Northzone will work with the investment to understand and, if possible, mitigate said risks. As a minority investor, we use our position (typically as a board member) to encourage the portfolio companies to tackle any adverse impact their operations may have.
Monitoring and Encouraging Continuous Improvement of our Investments
As a result of Northzone’s investment focus we are often working with small, digital-first companies that have minimal environmental impact relative to the scale of the business. Furthermore, we are proud that some of the firm’s we support are ones producing positive change with regards to ESG matters. Despite this, we continue to monitor and assess our portfolio over the period of our involvement.
We are proud that many of our portfolio companies such as Tier Mobility, Outfittery, Forto, and Personio among others are also members of Leaders for Climate Action pledging to take action in order to build a more sustainable economy.
The principles behind Northzone’s remuneration policy encourages our investment team to take into consideration the impact on sustainability of potential investments as part of their due diligence. Though there are no directly linked KPIs that dictate remuneration, consideration of ESG factors as applied in their roles is one of many facets considered during performance and remuneration reviews. The GP group as well as the CFO and Head of Talent review the salaries on a yearly basis ensuring that employees are paid fairly for comparable work across the board and any variance is due to legitimate job-related factors. As part of this process, Northzone will continue to review sustainability risk profiles of our Funds.
Northzone has always placed the highest value on being diverse by design, reflecting different ways of approaching and seeing the world rather than reflecting a single investment philosophy. We’re one of the few investors that has a 50/50 gender parity on our investment team. We believe that by being a diverse team, reflecting different backgrounds, nationalities and perspectives, we’re able to outperform our peers. We also recently received our Level 1 Diversity VC Standard certification, which raises the industry standard in terms of diversity commitment.
Expectations of VCs and founders in understanding and responding to the challenges societies face are rightly high. For us, building a diverse team is core to business models being future-proof. Unless this is a key part of a firm’s culture and strategy from day one, your likelihood to survive in a competitive market is at risk.
Principle Adverse Impact Statement
Northzone does not currently consider the principal adverse impacts of its investment decisions on sustainability factors as set out under the European Union Sustainable Finance Disclosure Regulation 2019/2088 (“SFDR”). While we are supportive of the endeavour, the Regulatory Technical Standards are yet to be finalized and formally adopted by European legislators and there remains legal uncertainties. Furthermore, the current draft includes metrics which are not applicable to the majority of companies in which Northzone invests. As the Standards continue to be clarified, Northzone will continue to evaluate and develop our process to adhere as fully as possible to the regulatory framework.
How can you access your data?
We respect your privacy rights. You can contact us at any time to Request access to the personal information we have on you, Correct and amend any details we hold on you, Restrict or delete information that we hold on you. Contact us by emailing vincent at northzone dot com. If you are not satisfied with our handling of your data or the responses received, you have the right to complain to the Information Commissioner’s Office.
How do we collect information on you?
If you contact us by post, phone, email, through the submission of forms on our website, social media channels, or in person, we may retain the communication for records including any information included within it. We also make use of systems that collate publicly available information. In addition, there is information that is collected automatically when you visit our website, such as IP addresses. See our cookies policy below for more details.
What do we collect?
We may collect the following information:
How is the information used?
We use data (including personal data of individuals) for the following purposes and under the following lawful basis:
Where is this information stored?
We are committed to ensuring that your information is secure. In the course of our business, Northzone utilises a number of service providers to store and process data. In order to prevent unauthorised access or disclosure, all information is securely stored with GDPR-compliant services.
Who is the information is shared with?
Sometimes we host events or activities in partnership with other organisations. In those cases, we may share your name and company name with them for the operations of the event or activity. We will not share any contact information with other organisations unless we have your explicit consent.
Links to other websites
Our website may contain links to other websites. We do not have any control over these websites. Therefore, we cannot be responsible for the protection and privacy of any information which you provide whilst visiting such sites and such sites are not governed by this privacy statement. You should exercise caution and look at the privacy statement applicable to the website in question.