Our ESG Policy

Introduction
At b2venture, we use the term ‘ESG’ to describe a comprehensive set of environmental, social and governance matters impacting both our fund and our portfolio. We put these concerns at the core of our operations.

Our approach to ESG

Our practices differentiate between sustainability and impact:
External Impact defines the way in which a business model or a product generates long-lasting change, whether positive or negative, for society and the environment.

• Operational Sustainability is about people, planet and profit and how we manage our internal resources and operational practices.
  
• External Impact defines the way in which a business model or a product generates long-lasting change, whether positive or negative, for society and the environment.

While operational sustainability refers to ESG practices within b2venture, external impact concerns the impact made through our investments into startups. In the following policy, we will henceforth differentiate between operational sustainability and external impact when describing how we operationalize respective measures. Looking at the term ESG itself, we are following a development with and by VentureESG which defines ESG across eight issue areas linked to E, S and G respectively.

• Environment: considering the environmental impact from Scope 1 (directly caused by the company/VC, e.g. through facilities) and Scope 2 (indirectly caused, e.g. energy, electricity, waste) to Scope 3 (caused by upstream and downstream activities, e.g. business travel, transportation of the product, customers’ energy usage); targeting both measuring but most importantly reducing the impact across all scopes (at fund and portfolio level).
  
• Social
  1. DEI (diversity, equity and inclusion): integrating diverse and inclusive practices across all areas of the business (e.g. diversity of the fund or the founding teams, inclusive hiring practices)
  2. Team and working environment: building a strong culture and being a conscientious employer (e.g. pay gap, parental leave, living wage)
  3. Responsible product design: designing and building products with consideration of the ethical and human implications on the end-user and society
  4. upply chain: working towards an ethical and environmentally resilient supply chain (including a Supplier Code of Conduct embracing the UN’s Global Compact)
• Governance
  1. Legal and regulatory: being on top of and aligned to the latest laws, regulations and compliance standards (e.g. GDPR (and equivalent), UN Guiding Principles of Business and Human Rights, the eight core ILO conventions); the oversight of these issues should be ensured by the founding team and Board of Directors.
  2. Governance: having appropriate governance structures in place, according to the company’s stage (e.g. board structure, share structure); writing out a code of conduct (committing the company to high ethical standards); adopting a whistle-blower policy.
  3. Data privacy and security: instilling a strong culture of trust, responsibility and best practice (e.g. with internal systems) around data.

Operational sustainability: internal ESG management
ESG does not only apply to how we invest and help our portfolio companies flourish and grow but it is also part and parcel of how we internally manage our firm and funds. We aim at applying the same ESG considerations and the same standards we measure our portfolio with to ourselves; being in a strong position when it comes to ESG ourselves not only makes our demands to portfolio companies more believable, it also strengthens our (economic and structural) position as a VC firm.

Environment
‍Being part of Leaders for Climate Action, we have been carbon-neutral since 2019 and continue to work on capturing, reducing and offsetting our carbon footprint. To further reduce our emissions, we have set up a clear travel (i.e. trains over planes, use video conferencing whenever possible).

‍Social
‍We acknowledge the benefits of workforce diversity and therefore promote equal opportunities regardless of background, gender, disability and ethnicity as well as by providing for a safe and inclusive work environment and culture.

We have thus developed a specific DEI policy, and put in place a Code of Conduct as well as a Zero Tolerance Policy that regulate how we handle harassment and discrimination as a firm.

‍Governance
‍With regards to governance, we have implemented several compliance and control structures. We ensure compliance with applicable laws and regulations throughout our businesses. b2venture reviews its regulatory status on a regular basis and adheres to the applicable regulation. Moreover, we have implemented strict Know-Your-Customer processes and thus ensure compliance with the Financial Markets Anti-Money Laundering Act (FM-GwG). We are committed to act according to high ethical standards to which we hold all our employees accountable.

External Impact: how we operationalize ESG in the investment process
Applying ESG principles is not only based on a comprehensive set of considerations specific to us as an investor and the startups we invest in; we also think through how ESG applies to the entire investment process from sourcing and screening to due diligence and portfolio management and exit.

Sourcing
We are committed to ensuring accessibility and diversity as core principles in the sourcing and pipeline management of our investments. We have put in place two mechanisms to make our funnel easier to access and to counteract any lack of diversity that early in the investment process:

Open application process
‍To counteract the need for ‘warm introduction’, we have installed a simple typeform on our website for founders to send us their pitch documentation. All applications are screened by at least one, ideally two members of the investment team.

Due Diligence
‍In the process of screening and conducting due diligence on potential investment targets, ESG considerations (across the above eight sub-categories) play an important role. We are keen to understand the attitude of the founders, their approach to building their companies and any consideration of adverse impacts they might foresee early in the process and have our investment decisions influenced by these factors. The information we collect will be duly documented in our investment memos. We are using two tools in particular at this stage to probe the startups and founding team’s thinking around ESG:

• For any new investment, we perform a dedicated ESG check as part of our  due diligence (comprehensive DD questions, see appendix):

• • Are there any obvious red flags (e.g. non-compliance, ESG risks) along the lines of our comprehensive DD checklist?
  • How could ESG considerations impact the viability of the business model
  • Goal: rigorous ESG assessment with relevant DD questions as part of every investment memo (in a separate section)
• We include a sustainability clause as part of every newly issued term sheet and investment agreement in case we act as lead or substantial co-lead investor. This ESG clause states that each portfolio company shall, within reasonable time following the signing, adopt and maintain an ESG policy. Such policies and measures shall be discussed with and reported to the board. ESG term sheet clause, which includes ESG commitments post-investment.
  ‍
• To guide founders through the process of building up ESG-related processes, we collected resources and best practices around ESG as part of our b2venture Startup Resources. These resources are crowdsourced from our portfolio companies and internal experience, and are publicly available.
  ‍
• To take an active involvement in our portfolio companies, we also strive for active board involvement, accepting board seats wherever possible. Our typical involvement includes providing guidance on the strategic directions of a company, monitoring the board performance, input upon the purpose and culture of the business.

ESG leadership
Our team consists of experienced professionals who are committed to and collectively responsible for our adherence to this ESG policy in all relevant investment decisions and monitoring procedures. Where additional expertise is needed, the team will employ external resources.
‍
Contact
‍Our contact persons for ESG-related issues are Johanna Junkermann and Anna Bosch.

The document was last updated on November 15, 2023.