Our Brick to Responsible Investment in Technology

As growth investors in technology, we want to contribute at our level to the emergence of sustainability best practices. To do so, we decided, along with our partner Sycomore AM, to outline our vision of Responsible Tech by co-writing an Investment Charter, covering three elements: Tech for Good, Good in Tech and Improvement Enablers.

The Dual Face of Tech

Just like every other tool, Tech has the duality to do both “Good” and “Harm”. It is a solution enabler and also a part of the problem.

To give a couple of examples:

• Environmental impact: it is often said that Tech only contributes to 4% of greenhouse gas emissions, and that areas for improvement are limited. But we need to look at the bigger picture, as on the one hand, Tech environmental footprint is significantly increased by the production of IT devices (metal extraction, water and energy consumption…) while, on the other hand, it helps solve some of our environmental concerns by decreasing the environmental footprint of traditional industries (e.g. electric vehicle vs gasoline-powered car, Direct Air Capture process, renewal energy…).
• Employment: The development of robotisation takes jobs away, but Tech ultimately also helps employment thanks to talent platforms (such as Welcome to The Jungle), for instance, which improve matching between workers and jobs and increase employability by providing access to virtual training,
• Society: Tech promotes inclusion and communication while it also generates addiction and depression (e.g. FOMO effect).

Embodying our approach as responsible investors in Tech

As growth investors, we think it is important to promote the implementation of best practices as early on as possible so that this duality balances towards the “Do Good” side.

This is why we decided to draft a common charter to support the emergence of a responsible Tech. The objective of this Charter is to provide a framework for selecting the sector’s most worthy companies, to contribute to the emergence of best practices, and to encourage investments in companies that have chosen to act responsibly in terms of the technology they offer and use.

This charter is open-source, as our first brick to the emergence of best practices.

Providing a framework: the three pillars of Responsible Tech

This Charter on Responsible Tech is a framework which addresses 3 pillars:

• The business model: We focus on identifying and analyzing the company’s mission. At a development phase where most entrepreneurs focus on growth and profitability, it is interesting to understand the company’s intention and contribution to stakeholders.
• The business practices: A simple example to illustrate the importance of this analysis: a company with a responsible mission, such as a wind turbine manufacturer, becomes controversial if human rights are not respected in the supply chain.
• Continuous Improvement: The capacity and willingness to tend towards a higher level of responsibility.

Indeed, we want to contribute to the design of the future economy as we invest in tomorrow’s Tech Titans which are today experiencing strong growth, are still at a human size and therefore very agile.

Source: Extract from the Responsible Investing in Technology charter, co-written by Sycomore and Gaia

Writing a charter is good, using it is better. Application of the charter in real life:

This approach has become systematic. We have used this charter to structure our ESG due diligence for each of our investments and we have shared it with our entrepreneurs.

Several businesses have high potential, but we strive to always analyse them through our responsible investor prism, as high promising businesses come with their share of risks.

For some of the companies we were targeting or we have invested in, ESG initiatives were in progress and management was eager to do more.

The Charter framework structured our discussions on the mission/purpose behind each company’s offering in order to have a global understanding of the outcomes and risks.

As companies we were discussing with addressed some ESG issues, we systematically set an inventory of their responsible practices and suggested to structure their initiatives by using the framework offered by the UN’s Sustainable Development Objectives (SDGs). Finally, as our preliminary contribution, a number of actions have been suggested, based on our screening of listed players’ best practices.

We are at the beginning of our investment journey and we are well aware that our contribution is a fraction of what is needed to design a more responsible ecosystem. But we also believe that, brick by brick, by sharing best practices and behaviors and by being inspired by others’ initiatives, we will collectively build a more responsible Tech ecosystem.