Responsible Investment Policy 2023
ESG and impact apply to our entire investment process from sourcing and screening to due diligence, portfolio management and liquidity events. We address these topics with precision and analysis, continuously enhancing both our topical understanding and the returns on our funds.
In 2023, we undertook a thorough materiality analysis and evolved our ESG policy into a more encompassing Responsible Investment Policy. This website version summarises the main aspects of the policy for responsible investments and illustrates how we incorporate impact and ESG considerations both throughout the investment lifecycle and within our firm’s operations. We put these concerns at the core of our operations because we know their importance for our long term success.
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).
UNPRI: While not officially a signatory, Northzone is committed to operating in line with the UN Principles of Responsible Investing.
SFDR: Northzone is not currently subject to the European Union Sustainable Finance Disclosure Regulation 2019/2088 (“SFDR”). 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.
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 sustainability and ESG in the investment process
As a venture capital fund, our most significant impact lies in our investment selection. Over the years, we’ve meticulously honed and crafted a process that integrates ESG and impact considerations from the sourcing stage and extending through our portfolio platform services and financial reporting.
At the heart of our sourcing and pipeline management lies a steadfast commitment to accessibility and diversity. We are constantly taking measures to simplify our sourcing process through proactive outreach, employing accessible language, and diligently tracking our deal flow.
Negative Screening (Exclusion list)
We are acutely aware of the responsibility that comes with our investment choices and their 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 no investments and do not operate in any of the activities listed below:
We will also exclude companies who/whose:
We value companies that tie their business model to positive impact, irrespective of their sector. As part of our investment assessment, we evaluate potential alignments with the Sustainable Development Goals (SDGs).
Post-investment portfolio support
Once we have committed to invest in a company, we continue to use our active ownership to support responsible scaling practices. Our support is meticulously crafted to cater to the specific needs of each company, addressing their distinct challenges.
How we operationalise ESG in our firm
While ESG and impact considerations are crucial in guiding our investments and assisting our portfolio companies, they are equally pivotal in shaping the internal management of our firm. We aim at applying the same ESG considerations and the same standards we measure our portfolio with to ourselves.
Venture investing is a partnership game. We continuously collaborate with LPs, with founders, with other VCs and with experts around the world. Especially on impact and ESG related issues, we emphasise the importance of international collaboration and welcome constructive dialogue. These are some of the collaborations that we actively promote:
For more information, please contact our Head of Sustainability, Anna Skarborg