Human Rights and Venture Capital — towards a pragmatic tool

At VentureESG, our mission is to educate VCs on ESG issues most pertinent to both them and the startups they invest in, and to provide them with fit-for-purpose tools and resources to be able to effectively integrate ESG into their fund operations and end-to-end investment process.

To this end, we, alongside industry partners and research institutions, are carrying out a series of research projects into specific sectors, and sub-issue areas — this latest one, sponsored by Luminate, is on Human Rights in Venture Capital. The post has been co-authored by Joanne Azem, Human Rights Research Fellow at VentureESG.

Human rights are universal and cut across civil, political, economic, social, cultural and environmental issues. In the context of early stage and high growth tech companies, human rights cover a wide spectrum of topics: from freedom of expression, employment contracts and labour rights, to data practices and privacy, supply chains, and the diversity of your team.

Although the concept is universal, many technology companies and VCs do not see the relevance of human rights in their day-to-day work. While emerging technologies such as social media, (generative) Artificial Intelligence (AI) and facial recognition have enormous potential benefits, they also pose significant risks to human rights. From enabling surveillance, undermining democratic processes and facilitating discrimination, the UN’s B-Tech project lists some of the potential risks that are relevant for tech investors, such as:

• Gathering large volumes of personal data (e.g. Google)
• Selling products to governments which may put vulnerable populations at risk (e.g. Palantir)
• Hyper-personalisation which could lead to discrimination (e.g. targeted advertising)
• Using algorithmic bosses limiting labour protection for workers (e.g. Uber)
• Models that are informed by, or inform, the personal choices and behaviours of populations without their knowledge and consent (e.g. Meta)

To address this emerging issue, we developed a pragmatic human rights due diligence tool for VCs over the course of the 12-month project funded by Luminate. The tool, covered in detail in the accompanying white paper ((VentureESG White Paper #4), provides VCs with a fundamental understanding and guidance on business and human rights to ensure more responsible tech investing going forward and support VCs in aligning with the UN Guiding Principles on Business and Human Rights (“UNGP”).

Methods and process

In the first phase of the project, we examined available toolkits on business and human rights to develop implementable guidance. Along this process, we engaged with UN representatives and civil society organisations, including Amnesty International, Investor Alliance for Human Rights and the Business and Human Rights Resource Centre. In the second phase of the process, we systematically collected feedback on the framework we developed from VCs across stages, geographies and sectors. The final iteration of the framework at the end of this document is the product of this two-sided feedback process, co-produced with VCs and LPs from our VentureESG network.

Tool

Based on the UNGPs, our framework aims to ensure the protection of human rights, reiterate the role of VCs in respecting human rights and guarantee an effective remedy to human rights violations. The framework includes guidance and questions which VCs may refer to when implementing a human rights framework based on the following fundamental pillars: human rights commitment policy, human rights due diligence and remedy. You can find the in-depth White Paper here and to gain access to the tool please reach out to us at hello@ventureesg.com.

For more information about VentureESG and how we’re working to support Venture Capital funds with implementing ESG across their fund operations and end-to-end investment process, fill in this form, or drop us an email at hello@ventureesg.com.