Chapter 02 - Venture Capital

What do we mean when we talk about “Sustainability in Venture Capital”?
Generally, we are speaking about all aspects that help to secure any company’s long-term (“sustainable”) success, balancing economic, social, and environmental aspects.

The origins of “Sustainable Development”

The term “Sustainable Development” was coined in 1987 by the Brundtland Commission, established by the United Nations. It laid out that “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

The United Nations Global Compact, the world’s largest corporate sustainability initiative, further developed the definition of corporate sustainability, saying

Corporate sustainability is a company’s delivery of long-term value in financial, environmental, social, and ethical terms.

This means corporate sustainability starts with a company’s value system and a principles-based approach to doing business.

It means operating in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labor, environment, and anti-corruption.

Integrating the Ten Principles of the UN Global Compact into strategies and procedures help companies to operate in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labor, environment, and anti-corruption.

Sustainability in Venture Capital

So, if the inherent objective of sustainability is to contribute to business results, mitigate risk, and enhance reputation – what does this mean for VCs?

For venture capitalists, this translates into considering and integrating not only financial aspects, but also environmental and social aspects into all activities and processes, including

the Investment Strategy,
the Fundraising Process and LP Management,
Investment Process,
Portfolio Management, and
your own operations.

The focus of this Playbook

The focus is on commercial investors seeking to integrate sustainability, from excluding certain industries to sustainability-themed investing. What this Playbook doesn’t cover is the whole topic around “impact investing” – this would be an entire playbook in itself.

However, throughout the Playbook, we provide links and tips for further reading on impact investing as well.

Key takeaways

Sustainability means securing any company’s long-term (“sustainable”) success by balancing economic, social, and environmental aspects.
Sustainability in venture capital means integrating environmental and social considerations – alongside financial aspects – into all activities and processes.