DCentral Capital: The Value of Being Ethical
To build a social co-operative Venture Partnership that helps emerging ideas and technologies grow through the shared knowledge of the Global Digital Community. With ethical approaches, BlockChain technology and the power and diversity of the D-Central Community behind us we will disrupt traditional Venture Capitalism by bulldozing its greatest shortcomings.
Traditional Venture Capitalism is broken. D-Central are looking to completely flip the traditional VC model, leveraging the power of the Global Community and the opportunities presented by BlockChain Innovations. In Doing so we will look to address the following, fundamental flaws of Traditional Venture Capitalism:
1: Illiquid and long term investments with average market returns
2: Power and Decision Making Concentrated in the hands of a few Middle Class White Men with very narrow views on the wider world… often believing they are far Smarter at calling the ‘Next Big Thing’ than evidence would suggest.
3: Poor Diversification of Portfolios with the double edged sword of high risk exposure and multiple missed funding opportunities
4: A Complete ignorance of solid, revenue generating companies that don’t fit into the ‘Black Swan’ typecast.
D-Central Capital provides an innovative approach to Venture funding that puts the community at the heart of what it does. Our goal is to decentralise the funding and redistribution of profits from the already rich to those who have the skills and knowledge within the digital community…
We call it VENTURE PARTNERING.
Ethical and ESG Position
The D-Central Team take Ethical and Environmental, Social and Governance (ESG) Issues to its very core of beliefs and apply these beliefs to every investment and funding decision it makes. This is true of both the BlockChain Technology it is based upon and truly believes will be revolutionary to the world as a whole, and to the investments it partakes in. For Blockchain for example…
“Imagine a world where humanitarian aid can reach people affected by crises exponentially faster, where refugees can store their health, education and identification in an uncorrupted system, and where migrant workers can have safer working conditions through smart contracts. This is the world blockchain technologists and humanitarians envision — one with more sustainable and dignified responses to humanitarian crises.” https://techsgood.org/beyond-the-hype-blockchain-for-humanity (accessed 19/02/2018)
For our ventures and investments look no further than the below excerpt from an article in the Financial Times dated 3rd Sept. 2017 (https://www.ft.com/content/9254dfd2-8e4e-11e7-a352-e46f43c5825d accessed 19/02/2018):
“Investors are finding that if they are good to the planet and to people, they also end up, on average, benefiting themselves. There is mounting evidence that funds which observe environmental, social and governance (ESG) standards in their strategies tend to outperform those that don’t by a significant margin. “It is time for ESG investing to become mainstream,” says Isabelle Mateos y Lago, global macro investment strategist at BlackRock, which manages $5.7tn in equities, fixed income, real estate and other assets worldwide. “It is no longer just something for a few tree-hugging individuals to get involved with. In the research process of every team at BlackRock, we are increasingly ensuring that they take ESG into account.” The outperformance of ESG strategies is beyond doubt. In emerging markets, the trend is particularly pronounced: the MSCI Emerging Markets Leaders index, which includes 417 companies that score highly on ESG, has been outstripping the dominant MSCI Emerging Markets benchmark since the 2008–09 financial crisis, with the outperformance gap reaching a record in June this year.
The effect is equally pronounced on a global level. Four indices devised by FTSE Russell, a leading index provider, which select companies involved in energy efficiency, water technology and other green applications, have all garnered better returns than their benchmark, the FTSE Global All Cap Index. Separately, inflows of capital into ESG index-tracking funds on BlackRock’s iShares platform reached a record $390m in July, bringing total inflows since 2009 to $5.7bn.
From a social perspective, the aim is to weed out companies that show scant regard for workers’ welfare and return little to the communities that serve them. For governance, the goal is to filter out state-run companies that engage little with minority shareholders, businesses with opaque disclosure standards and those riven by conflicts of interest and other abuses. “There is a necessity to protect a portfolio against downside risks and this is the number one aspiration of our clients,” says Ms Mateos y Lago. “This is about not losing a tonne of money. If you had invested in the US coal sector in June 2014, you would have lost 85 per cent by the end of 2015.”
For its part, D-Central Capital takes a positive and proactive approach to its Ethical and ESG responsibilities. Specific details of investment funds are provided further in this Whitepaper but in summary the following assessments are made:
· Corporate Governance:
o Effective and representative Boards
o Boards capable of managing risk and compliance
o Boards capable of setting and fulfilling strategies
o Effective management structures with competent succession planning and refresh cycles
o Appropriate remuneration policies.
· Environmental and Social Engagement:
o Comply with all environmental laws and regulations, or recognised international best practice as a minimum
o Identify, manage and reduce their environmental impacts
o Understand the impact of climate change along the company value chain, develop group-level climate policies and set targets to manage the impact where relevant
o Report on its policies, practices and actions taken to reduce carbon and other environmental risks within its operations.
· Employee Relations:
o Follow the international Labour Organizations (ILO) convention as a minimum
o Implement and uphold effective Health and Safety Policies
o Promote equal opportunity and equal pay policies
o Ensure such policies are replicated across its supply chain
o Recognise and adhere to the UN Declaration on Human Rights
· Ethical Operations
o Ensure best practice across all communities in which they operate
o Strict policies on corruption and anti-bribery.
· Negative Investment Criteria:
o As a rule D-Central Capital will NEVER invest in or promote ventures concerned with:
§ Alcohol/ Illicit Drugs
§ Sexual or any other form of Exploitation
§ Carbon heavy industries e.g. Oil, Gas, Fracking
§ Activities known to have a detrimental effect on the environment e.g. logging, palm oil production etc
§ Arms dealing/ weapons manufacture.
Escrowed Investment Funds
As outlined in the diagrams above, only a proportion of Community Member funds will be invested in Ventures at any one time. In order to protect and maximise investors’ funds, D-Central will use an independent third party secured Escrow service to invest unutilised funds into a series of ethically based investment funds. Any request to move funds from Escrowed Investments into Ventures will be done only with the Strict Approval of the Community based on the results of voting rights embedded in the D-Central token.
Please NOTE: The Ethical Investments are only held to a maximum of 49% of total holdings whilst new ventures are sought. As soon as the Venture Fund runs short on cash (80% exhaustion) an application will be made to the community to relinquish a proportion of the Ethical Investment funds to continue to support innovative growth ventures.
D-Central would also love to diversify away from the below model with the support of its community. The below represents a holding model until suggestions from the Community for other, preferably NEW Tech, innovation Ventures such as those mentioned in the articles below… if we can find ways to both change the world and support the BlockChain Revolution we’re all ears!
“The term ‘ethical’ is often used as a catch-all term to describe any fund that is managed with social, environmental, or other ethical criterion in mind. In reality, there are a number of different ethical strategies and a fund manager may employ one or more of these when managing the fund. The main approaches to ethical investing are as follows:
- Exclusion (negative screening) — this involves avoiding companies not meeting certain criteria or involved in certain activities, e.g. tobacco, alcohol etc.
- Preference (positive screening) — in this case sectors are not avoided. The manager will assess each sector, looking for the ‘best-in-class’.
- Engagement — managers of these funds will actively engage with the companies they invest in to promote socially responsible business.
An ethical investment fund which has strict negative screening in place could be referred to as having a ‘dark green’ ethical approach. Funds which focus more on positive screening or engagement could be referred to as ‘light green’.” Dominic Rowles — Investment Analyst Hargreaves Lansdown.