VentureESG — the journey so far and what’s to come

It’s hard to believe that just over a year ago, the seeds of VentureESG were yet to be planted. Initially, we even had trouble finding people in the venture capital world who knew what ESG was, let alone those who were actively engaging with it, in any meaningful manner. The typical response when we started talking to funds was ‘errr, we have an exclusions list — is that what you mean?’ As we were only starting to learn more ourselves, we began with bringing funds together to help one another collectively answer these questions and fill in the gaps; and so VentureESG was born as a collective effort, an ESG-self-help group for VCs.

Twelve months later and we have grown into a strong and engaged community of 200+ VC funds, 70+ LPs and an 18 academic-strong advisory board. It’s been a whirlwind of calls, shared google sheets, frameworks, workshops, the occasional sceptic-heavy conversation; yet despite how excited (and amazed) we are to see where we’ve got to and where the industry as a whole is moving, one thing is clear: we are all still very much at the start of this journey.

Our Global Reach / Members of the VentureESG Steering Committee

We’re wrapping up 2021 by sharing a glimpse of our work to date, and what’s to come as we look to the year ahead which will see VentureESG professionalise further and hopefully continue supporting the industry movement towards meaningful ESG.

What we’ve done over the last twelve months:

• We designed the first-of-its-kind ESG framework for VCs to use across their investment process, with input from subject-matter experts, academics, policy makers, lawyers and funds; we also created a document that outlines how this work has been informed by, how it maps to, and where it stands apart from, existing ESG frameworks
• We have worked to identify what ESG means for funds themselves, in terms of how they operate and are managed, and have built a corresponding ‘Internal Fund Management’ framework, and set of metrics. Our aim is for this to inform and correspond to LP requirements.
• We released a survey with the PRI looking at VC funds’ approach to and engagement with ESG (blog post here with high-level results) — we’re excited to continue our work with the PRI and see their first VC-focused discussion paper building on the survey results, which will be released in late January.
• We brought experts together in ‘Deep Dive’ sessions to enable learning for our community. We covered a large variety of topics, including DEI, the ‘E’ of ESG, Data Security and Privacy, Human Rights, SFDR, with the Carbon Trust, Adapt, the ICO, Amnesty International, BSR and PwC.
• Keen to learn from the mistakes of the public markets, we hosted a webinar with Michael Meehan, the former CEO of GRI and Desiree Fixler, former Head of Sustainability at DWS Group in our first ‘VentureESG Insight’ session.
• As our community has been growing to Canada, LatAm, Israel, India and Japan as well as within Europe and the US, Orbiit has served as a fantastic platform for 1:1 conversations and further community-building.
• While our internal structure has become stronger — with four working groups covering frameworks and metrics, internal fund management, resources and LPs respectively — we set up an academic advisory board with participation from Stanford, Harvard, Oxford, Cambridge, Imperial, LSE, the Ada Lovelace Institute, Brown and NYU among others.
• We launched the US arm of VentureESG at Pre-Money Conference in Miami in December; we are very excited that Tracy Barba at 500 Global will spearhead the activities on the ground in the US — see here for more info
• People have started to talk about ESG in VC; articles have appeared in Sifted/FT, Business Insider, the Stanford Social Innovation Review, Techcrunch and 1E9 (in German) among others. Funds have also begun to publish specific reports with strong ESG components — this year we’ve seen them from Talis Capital, Antler and Balderton, to name just a few.
• Last, but not least, we’ve brought on board some fantastic sponsors, who have been instrumental in facilitating our work. Many thanks to White & Case, the Nasdaq Entrepreneurial Center and Orbiit! We are excited to announce more sponsors and collaborators in the New Year.

What we’re focused on in 2022:

• Tools and resources: based on our industry intelligence and specific input from experts, we are starting to build tools, such as an ESG policy template and Code of Conduct (to be launched in January), and term sheet clauses together with industry partners.
• Internal capacity through training: we are in the planning phase for a specific ESG for VC investors training, covering the whole investment process and internal fund management; as well as working on supporting portfolio management teams with how to help companies set and work towards their ESG targets.
• Accountability through VentureESG membership: in order to avoid ESG-washing — a common problem in the public market world — we are committed to introducing accountability and transparency into our community with a membership system within the first six months of 2022.
• Research: together with our academic advisory board and our research fellows, we will work to fill in research gaps at the intersection of ESG and VC. Our first white paper defining the basics of what ESG even is for VC (and how it differs from impact — often a point of confusion) will appear as early as late January.
• Coordination across industry: continuing our collaboration with the PRI, we will continue to coordinate our efforts with important industry organisations and standard-setters, such as ILPA, Diversity.VC, LfCA and SASB. A first research project on creating a SASB materiality map for VC is under way under the leadership of Susan Winterberg.
• LP focus: building on our strong interest from the LP world, we will focus more directly on facilitating harmonization among their approach to ESG for VCs through our LP community and working group.
• Grow the community: we know that FOMO in VC is real and we will strengthen our outreach and approach to communicating effectively about ESG for VC; our particular challenge on that front will be the US ecosystem which is high up on our 2022 agenda.

We have half-accidentally set up VentureESG in 2021 (as a side-hustle for all team members!) and are now fully committed to driving its first successes further into the world of VC. The demand for meaningful ESG is only growing and we are in a good position to support VCs on their journey with our community.

We want to end the year by saying ‘Thank you’ to all those who’ve been part of VentureESG already — and welcome all of those who are interested in learning more — drop us a line at hello@ventureesg.com, or fill in this form!