Definitions

We define Responsible Investment as “The integration of impact and ESG considerations into investment processes and ownership practices with the belief that these factors can have an impact on financial performance” (UNPRI). 

ESG is process driven—it focuses on the how—the internal principles, processes and practices that dictate the way in which an organisation operates, or behaves. Impact is outcomes driven—it focuses on the what—the social or environmental outcomes of an organisation’s operations or behaviour (VentureESG). 

We define any external efforts, as an example, our carbon offsetting program and philanthropic donations, as part of our Corporate Social Responsibility (CSR).

Supporting Frameworks

UNPRI: Although not a signatory, Northzone strives to operate in accordance with the UN Principles of Responsible Investing.

SFDR: SFDR: Northzone is not currently subject to the European Union Sustainable Finance Disclosure Regulation 2019/2088 (“SFDR”). However, although not bound, we voluntarily align our practices with those of an Article 8 fund. This commitment reflects our dedication to contributing to the evolution of global best practices. 

Invest Europe: As of 2025, we have adopted the Invest Europe framework in the hope of reducing the reporting burden for early-stage companies and harmonizing cross-investor reporting. 

SDGs & IMP: To assess impact in the investment processes, we use the frameworks of the UN Sustainable Development Goals and the Impact Management Project as the basis for our own evaluation.

How we operationalise ESG in the investment process

The most important impact we can have as a venture capital fund is on our investment selection. Over the years, we have carefully designed a process where responsible investing and impact considerations start during our sourcing process and continue through portfolio value-added services and reporting.

Sourcing
We are committed to accessibility and diversity as core principles in the sourcing and pipeline management of our deals. To ensure an inclusive and broad-reaching sourcing process, we take the following steps:

• Diverse deal flow: We proactively work to expand our network and sourcing reach, intentionally seeking founders and leadership teams from diverse backgrounds and perspectives.
• Using accessible language: Across our website and all written communications, we prioritize clear and inclusive language to lower barriers to engagement.
• Tracking and benchmarking: Through our CRM system, we track the diversity of founding teams, using this data to identify gaps and continuously improve our sourcing efforts.

Negative Screening (Exclusion list)
We are acutely aware of the responsibility that comes with our investment selection and its potential consequences on the environment and society. As such, we refrain from investing in sectors or activities deemed to have a considerable negative impact. 

We do not invest in or engage with the following restricted activities:

• products or services deemed illegal under host country laws or regulations or international conventions and agreements
• produce / trade in tobacco, weapons/munition, pesticides/herbicides (subject to international phase-outs / bans), sex work, pornography, as well as companies where more than five percent of total sales come from the distribution of these products 
• produce or are involved in the production of fossil fuels, including unconventional extraction of fossil fuels, such as oil sands and deep-sea drilling in particularly sensitive areas.

We will also exclude companies who/whose: 

• do not comply with international standards and conventions regarding human rights, environmental concerns, anti-corruption, or labour laws
• product/service/business model is rooted in or reliant on exploitative tactics, either of a certain demographic or an at-risk group

Positive Screening

We value companies that integrate positive impact into their business models, regardless of sector. At the time of investment and annually, we assess alignment with the UN Sustainable Development Goals (SDGs). This alignment doesn’t mean a company must define itself as impact-driven, but rather that its mission and operations have the potential to contribute to a better society.

Within ESG, we promote a “progress over perfection” mindset — committing to companies that show clear intent to continuously improve their practices and performance over time.

Sustainability Due diligence 

As part of our pre-investment process, we assess ESG risks and the net impact. This includes sector- and company-specific ESG materiality (using materiality maps developed together with Apiday), founder attitudes toward responsible scaling, and potential externalities that may impact long-term business viability.

Sustainability Clause

We aim to include a Sustainability Clause in the final deal documents for all rounds we lead, drawing on best practices from Leaders for Climate Action (LFCA) and VentureESG. This clause is intended as a value-alignment exercise, recognizing that responsible business practices evolve based on a company’s industry, stage, and growth trajectory. At a high level, this clause includes a commitment to:

• Appoint a sustainability lead within the management team to oversee progress.
• Foster equal opportunity in recruitment, hiring, and workplace policies.
• Adopt a Sustainability Policy addressing key environmental, social, and governance factors relevant to its sector.
• Assess its environmental impact when appropriate, measuring and analyzing its carbon footprint using recognized frameworks (e.g., GHG Protocol, SBTi) to guide reduction strategies.

Post-Investment Portfolio Support

After committing to an investment, we actively support companies in their responsible scaling efforts—helping them integrate good governance and sustainability into their growth strategies. While our shareholders agreement outlines specific agreements, we don’t impose a one-size-fits-all structure. Instead, we tailor our support to each company’s unique needs and timeline, encouraging them to continuously improve their practices as they scale.

How we operationalise ESG in our firm

While ESG and impact considerations guide our investments and portfolio support, they are equally integral to how we manage our firm. We hold ourselves to the same ESG standards we expect from our portfolio companies, ensuring alignment in both principles and practice.

• Responsibility & Leadership: While every team member is expected to integrate ESG considerations into their work, overall responsibility lies with our Sustainability Lead, who ensures a cohesive strategy that leverages our unique role in the ecosystem.
• Inclusive Hiring & Workplace Culture: Northzone has always placed the highest value on being diverse by design, embracing different ways of approaching and seeing the world. We strive for a diverse team across backgrounds, nationalities, and perspectives, believing this strengthens our decision-making and performance. Our hiring practices are designed to reduce bias, and we are committed to maintaining an equitable, respectful, and inclusive work environment. 
• Environmental Footprint & Climate Action: We annually calculate our scope 1, 2 & 3 GHG emissions (including 3.15 financed emissions) with the support of a third-party verifier. To reduce our impact, we implement initiatives focused on renewable energy adoption, procurement, waste management, and sustainable business practices related to travel, meetings, and events. Additionally, we actively engage with portfolio companies to raise awareness and support mitigation strategies. In line with SBTi guidelines, we aim to drive real impact toward global climate goals, rather than focusing solely on offsets or neutrality. Guided by Milkywire’s whitepaper on credible carbon pricing, we apply an internal carbon tax — and instead of relying on traditional carbon offsetting, we allocate the funds directly to pioneering climate solutions. We believe these contributions can create climate impact far beyond the Northzone footprint.
• Good Governance: We embed strong governance principles into our decision-making processes, including at the advisory and investment committee levels. We actively track diversity metrics, such as gender and ethnicity representation across our team and boards. To foster a culture of accountability, inclusivity, and ethical decision-making, we equip employees with training and resources to uphold these governance standards.
• Remuneration & Equitable Pay: We are committed to fair, transparent, and values-aligned remuneration practices. Our remuneration guidelines are shaped by a structured review process that considers multiple factors at both the investment and firm level. This includes adherence to firm policies, our Code of Conduct, as well as broader contributions to the firm’s long-term success. The partner group conducts annual salary reviews to ensure fair and equitable pay, with any variations assessed against legitimate, job-related factors. To support fairness and competitiveness, we also periodically benchmark compensation against market standards. ESG performance—including efforts to integrate sustainability and responsible business practices—is considered as part of overall remuneration assessments, reinforcing our commitment to responsible investing.

International collaboration

Venture investing is a partnership game. We continuously collaborate with LPs, founders, other VCs, and experts worldwide to advance best practices, particularly in ESG and impact. We believe international cooperation and open dialogue are essential to driving meaningful progress. These are some of the collaborations that we actively promote:

• ImpactVC – A community of VCs accelerating impact in venture capital. Built on the belief that the next decade’s most important companies will tackle global challenges—and VC plays a key role in scaling them. ImpactVC provides resources and a community to help VCs do impact well. Northzone was an original member, and contributing partner to the VC Impact Playbook and Founder Impact Playbook. 
• VentureESG – A nonprofit founded by VCs in 2021, supporting the global VC and tech industry in adopting cutting-edge ESG practices. With 400+ VCs and 100+ LPs, it focuses on ESG across the VC value chain, from fund management to portfolio support. VentureESG runs peer-learning events, develops tools, and offers ESG training to drive industry-wide adoption.
• DiversityVC – A nonprofit that exists to identify and implement best practices for inclusion in the VC ecosystem through data and research, community and content, and career development. Their key initiative, The Diversity VC Standard, assesses a VCs recruitment, culture, deal flow, and portfolio guidance policies and sets a benchmark for DEI best practices. Nortzone has been assessed twice, reaching level 1 in 2020 and level 2 in 2022. We were also contributors to the Strategic Operations Toolkit launched in 2025. 

For more information, please contact our Sustainability Lead, Sanna Blomkvist (sanna@northzone.com). This Policy was last approved in April 2025 by the Sustainability Lead and reviewed by all Partners.