Volution and ESG

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Building businesses for a bright future

Nina Foote 21 February 2022

At Volution, we believe that VC firms have a responsibility when investing in early-stage companies: to do so is to invest in the businesses of the future.

This is why, right from the outset, we integrated Environmental, Social and Governance measures into our own business and looked for companies to invest in that shared our ethos.

In the wake of the Pandemic and with the ambitious goals set by the UN at COP26, business leaders can no longer ignore the critical environmental and social issues of our day. We all need to commit to building back better.

As an emerging fund, backing businesses ready to scale, we want to ensure that we start with strong foundations, and that our portfolio companies weave ESG into the fabric of their DNA from early on. While there are challenges in doing so now, it is easier to instil a culture of ESG while a business is young, before scaling internationally.

The good news is, taking steps to do so not only makes sense for people and planet — but also for talent, reputation, and the bottom line.

Recent research from Robert Half showed that two out of five employees were ready to leave their jobs if the company was not doing enough in terms of ESG, and a new report by our portfolio company Signal AI showed that 92% of business leaders believe that ESG issues will impact reputation in the next 12 months. This report also illustrated the direct correlation between Microsoft’s environmental reputation and its share price. As GlobalData has confirmed, having an effective ESG strategy is no longer a nice-to-have for a business in the 21st Century, it is a must have.

As we start our ESG journey, our approach at Volution is first to ensure that the business policies and practises that we have in place are aligned with ESG, and second, to work with our founders and CEOs to drive ESG initiatives within Volution’s portfolio companies.

While we need to look at performance across the board in terms of Environmental, Social and Governance issues, in most cases, the greatest challenge for the tech companies that we invest in is their carbon footprint — driven largely by server usage.

This is why we have pioneered the concept of Carbon Carry.

With this initiative, Volution both rewards the CEOs and founders who drive ESG within their businesses and commits a share of our profits toward carbon offsetting and removal.

We have spoken to our portfolio, and the founders and CEOs are on board with this initiative. In fact, many of them are already taking strides along their ESG journey. Habito is a great example: an established B Corp, they are also signatories of the Better Business Act and working with Tech Zero to reach net zero emissions by 2050. We all have to start somewhere — and making a commitment and a plan to change for good is a solid first step.

With limited resources and a relentless focus on delivering results, tackling ESG is a challenge for early-stage companies, (including Volution). There is a lot to take on board and a lot to do; it is a journey that takes hard work and commitment.

But at Volution we are not going it alone — there is a growing community of VCs who are taking on the challenge. We’re working with ESG_VC and Venture ESG, two groups who are working tirelessly to drive the change that we all want to see. Organisations such as PRI are also beginning to adapt to address responsible investment at this critical stage of financing.

With ESG as a focus for Volution, we aim to develop our business and support our portfolio to drive exceptional, responsible, and sustainable growth together.

Together we will build businesses fit for a bright future.

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Don’t hold back! There are four steps that all Venture firms and start-ups or scale-ups can take today to begin their ESG journey:

1) Make a top-level business commitment to driving ESG

2) Make somebody responsibility for ESG (a dedicated resource, or senior team member)

3) Find the community to support you (e.g., sign up to ESG_VC / VentureESG — or find an investor who will support your ESG ambitions)

4) Make a plan with SMART goals for the first 12 months

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