| Stretch! Embedding sustainability in the investment process.

Lead! Setting the right example. |


Chapter 06

Focus! How to work with your portfolio companies.

As we all know, startups are very time and resource constrained and have to prioritize heavily. Therefore, we have developed a lean approach on how you can work with your portfolio companies on sustainability with the biggest possible impact.

The goal is to embed sustainability and thereby long-term thinking early on in the startup’s DNA to pave their way for later success. We believe this may be the biggest lever for venture capitalists to contribute to sustainable development.

In A Nutshell

In our corresponding Startup Playbook, we have mapped out a more detailed and comprehensive approach for startups. However, here are the most important steps in a nutshell. To get started with your portfolio companies, we recommend a workshop to enable startups to

  • identify the material sustainability issues for the startup, meaning the biggest sustainability opportunities and risks,
  • prioritize key issues they are able to focus on in the next 1-3 years,
  • set SMART (Specific, Measurable, Achievable, Reasonable, Time Bound) ambitions and objectives for these key issues as well as KPIs to track the progress,
  • derive an action plan to make this progress within a specific timeframe, and
  • implement minimum standards required for those topics that might constitute risks to the startup.

Ideally, the startup is then capable of finalizing its own sustainability strategy in one or two internal workshops.

Further frameworks as a guidance

The ROSE Framework

The ROSE (Return on Society and Environment) Framework by START Global is based on ESG criteria and measures the ESG performance of startups. The goal is to provide a framework for investors to recognize the sustainability and impact of their investments, and for startups to capture their effort and commitment.

Conscious Scaling Framework

Atomico introduced the “Conscious Scaling” framework in early 2020. It proposes workshops to discuss risks associated with a business model or technology’s impact on society, the environment, and all stakeholders. It is a great starting point to raise awareness about the risks associated with environmental and social topics. 

Next, agree on and set up an accountability and reporting framework…

  • …to integrate sustainability aspects into the startup’s management system,
  • …with clear responsibilities for collecting, tracking, and measuring the progress as well as for achieving the objectives,
  • …with regular reporting cycles for board meetings, and
  • …which the startup can possibly also use for external communication. 

For the detailed approach for startups, please read the following chapters in the Startup Handbook:

Case Study: Fazua

In the summer of 2020, Fazua set out to work on a holistic vision and strategy for its startup.
Together with SYSTEMIQ and UVC Partners, they developed their systems map (Read more in Chapter 3) and identified their material issues, as well as opportunities and threats to their business. Then they derived their objectives and action plan for the next five years.

Here you can find Fazua’s sustainability strategy

Always being one step ahead of our competitors. Doing our best to become the most environmentally-friendly drive system for e-bikes.
– Fazua’s vision

Key takeaways

  • Identify and prioritize sustainability topics that are material to the business of the portfolio company and how they are a business opportunity or a risk to them.
  • Align on an ambition level and formulate sustainability-related targets as well as the activities and processes to reach them.
  • Set up sustainability KPIs to track and assess the portfolio company and put sustainability topics on the agenda in all board meetings.