Climate Action in VC: How we became a “Leaders for Climate Action” Flagship Supporter

Doing our part for the planet is a core aspect of “The Power of And” — combining our focus on delivering financial returns with social impact — as we outlined in our “Year in Review” (link). A central aspect of this is our commitment to combating climate change through our actions at Earlybird and beyond.

We adapted our investment strategy, integrated sustainability requirements into our investment process, and reduced emissions on a firm level. In 2020, we want to continue driving our engagement and make a positive contribution through three main channels: walking the talk ourselves, spreading the word, and putting our money where our mouth is.

Spread the word

For lasting mitigation of man-made climate impact, we don’t need only a few perfect compliers, activists and net-zero emitters. We need as many imperfect, climate-conscious people, firms and governments as possible. In the grand scheme of things, beyond the few tonnes of emissions we can shave off ourselves, the true climate impact Earlybird can have is by leveraging our large network. As one of the leading European VCs with 50+ portfolio companies, we have the opportunity to affect not just the Earlybirds sitting in Munich, Berlin and Istanbul, but the thousands of portfolio employees and customers across the world — while also helping in redefining what sustainability in entrepreneurship means. This is why we at Earlybird will implement the Leaders for Climate Action Sustainability Clause pushing both ourselves and our portfolios to be more climate-conscious. Earlybird and other leading German venture capital funds like Project A, Holtzbrinck Ventures, Cherry Ventures and Picus Capital have joined forces to include this clause in our term sheets and shareholder agreements.

All start-ups we henceforth invest in will have to analyse their carbon footprint, implement measures to reduce it, reduce waste and energy inefficiencies, while promoting more sustainable practices in their employees’ professional and personal lives. This is not just your everyday CSR appendix, this is a legally binding component of our investments which will be tracked on a board level and has already been integrated.

Our partners Fabian and Ferry Heilemann co-founded “Leaders for Climate Action” (check it out here), a movement of over 200 tech CEOs with the goal of implementing change on a personal and company level, as well as to call on political decision-makers to set a clear course for effective climate action in Germany. Nine of our existing portfolio companies have already joined LFCA, with more to come as we continue to remind them of the importance of driving climate action bottom-up as well.

Putting your money where your mouth is

The “Power of And” of course also shapes Earlybird as an investor. Beyond ClimateTech’s societal impact, we see strong financial opportunities in this space too. As a result, we have established a ClimateTech practice group which focuses on sourcing and analysing deals in seven technologies and sectors — with renewable energy technologies, new materials and smart transportation contributing the majority of companies we are following more closely. We have thus far analysed a three-digit deal quantity in this space and look forward to expanding our network. If you would like to learn more about how we strive and struggle to make a positive impact on the world around us, please see our post on the topic.

Walking the talk

Before changing the world, we also wanted to change ourselves. The first step was, of course, to see where Earlybird’s own emissions come from and how we can effectively take measures to minimise our own climate impact. Working together with ClimatePartners, we analysed that we emitted 179.9 tonnes of CO2 in 2018 in our Munich and Berlin offices, driven primarily by our business travels to board meetings, on-sites, conferences, and inter-office travel.

In 2019, to counteract this on a company level, we implemented various levers to reduce our carbon footprint:

• Switch to 100% renewable electricity
• Limit use of Heating and A/C
• Invested in high-end video-con equipment
• Reduce domestic flights (take the train)
• Batch meetings to reduce # of trips
• Reduce printing and use recycled paper
• Use regional suppliers (office/catering)

These measures allowed us to save an estimated 25–40t (15–25% of our 2018 level) of our CO2 emissions in 2019.

Don’t get us wrong — we aren’t role models nor did we hit net-zero emissions ourselves, but by doing what we can, where we can, and as soon as we can, we are trying our best to do our part. This meant offsetting the 179.9t of CO2 emitted across our Munich and Berlin offices by investing in hydropower to preserve the habitat of Mountain Gorillas in the Virunga National Park in the Democratic Republic of the Congo (you can soon track our progress, certified by ClimatePartner on our homepage).