At Volta Ventures (Volta Management NV/SA and Volta Management II NV/SA) (“we”), Volta Ventures Arkiv CommV and Volta Ventures II CommV (“our funds”), we are aware of our responsibilities towards society, including those relating to environmental, social and governance (“ESG”) matters. The transition to a low-carbon, more sustainable, resource-efficient and circular economy will affect all operators of the economy, including the portfolio entities that we invest in. While our funds do not promote any environmental or social characteristics, as per article 8 of Regulation (EU) no. 2019/2088 (SFDR), and our funds do not have sustainable investments as their purpose according to article 9 of the SFDR, we believe that sustainability factors should not be entirely overlooked for making good investments.
What ESG means for us:
While a plethora of frameworks and definitions of ESG exist, most are not fit for usage in venture capital and for working with early stage technology startups. We are hence following a definition of ESG developed with and by VentureESG which defines ESG across various issue areas linked to E, S and G respectively:
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, customer’s energy usage);
Targeting both the measurement but most importantly the reduction of the impact across all scopes (at a fund and portfolio level).
a) DEI: integrating diverse and inclusive practices across all areas of the business (e.g. diversity of the fund or of the founding teams, inclusive hiring practices)
b) Team and working environment: building a strong culture and being a conscientious employer (e.g. pay gap, parental leave, living wage)
a) 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.
b) Governance: having appropriate governance structures in place, according to the company’s stage (e.g. board structure, share structure). This both on a Fund governance level and on a portfolio company level. At Fund level, we ensure governance through the Investment Committee, the Advisory Committee to the Investment Committee and the Shareholder Advisory Board. On the portfolio company level, we strive to take up a board seat and instill good governance principles in line with the maturity of the venture.
c) Data privacy and security: instilling a strong culture of trust, responsibility and best practice (e.g. with internal systems) around data.
As explained above, given the focus of our fund, the Environmental pillar is not of relevance, thereby we will focus on the Social and Governance aspects.
How we operationalize ESG in the investment process:
1. Sustainability Risks - SFDR Article 6
Volta Ventures has integrated sustainability risks into its discretionary investment decision-making process. Sustainability risk forms part of Volta Venture’s overall risk management processes, and is one of many risks which may, depending on the specific investment opportunity, be relevant to our fund’s determination of risk.
“Sustainability risk” is defined in the EU’s Sustainable Finance Disclosure Regulation (2019/2088) as an environmental, social or governance event or condition which, if it occurs, could cause an actual or potential material negative impact on the value of an investment.
Examples of sustainability risks that may pose a material negative impact on investment value include:
a. Environmental sustainability risks, such as climate change, carbon emissions, air pollution, rising sea levels, or occurrences like wildfires.
b. Social sustainability risks, encompassing human rights violations, human trafficking, child labor, or gender discrimination.
c. Governance sustainability risks, which may involve infringement or curtailment of shareholder rights, health and safety concerns for the workforce, or inadequate safeguards for personal data and IT security.
There are certain business models and sectors we do not invest in:
a. An illegal economic activity (i.e. any production, trade or other activity which is illegal under the laws or regulations applicable to the Funds or the relevant company or entity, including without limitation human cloning for reproduction purposes
b. The financing of the production of, or trade in, weapons or ammunition of any kind;
c. The production of or trade in tobacco or distilled alcoholic beverages and related products
d. Gambling and related products, and casinos or equivalent enterprises
e. Any entity that manifestly does not respect human rights or the diversity in society (i.e. the unique differences of each individual)
f. the research, development or technical applications relating to electronic data programs or solutions which:
i. aim specifically at supporting any activity referred to under items (a) through (d) above ; internet gambling and online casinos; or pornography
ii. which are intended to enable to illegally enter into electronic data networks or download electronic data
We are committed to ensuring accessibility and diversity as core principles in the sourcing and pipeline management of our deals. Concretely, we have put in place three mechanisms and steps to make our funnel easier to access and to counteract any lack of diversity that early in the investment process:
a. Open application process: to counteract the need for “warm introduction”, we have made it possible for startups to get in touch with us by submitting their name, email address and message they would like to convey to us through our official website.
b. Partnerships / ambassador / mentorship program through our connection with startup accelerators and incubators in the Benelux.
c. Usage of accessible language: On our website as well as in all (written) communication, we are careful to use accessible language (e.g. gender inclusive).
4. Due diligence / qualitative assessment of investments:
In the process of screening and conducting due diligence on potential investment targets, ESG considerations can play a 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 investment process.
5.No consideration of sustainability adverse impacts
We are aware that our investment decisions, as well as our portfolio entities’ activities may have an impact on sustainability factors.
However, for the purpose of article 4 of the SFDR, we do not consider the adverse impacts of our investment decisions on sustainability factors due to the fact that we are a small organization with limited resources and personnel and thus are not capable of determining precisely what the adverse impacts of our investment decisions would be based on the different criteria set forth in the SFDR and the legislation implementing the SFDR. Additionally, we invest in small and medium sized entities / start-ups that, as the name suggests, have just started their business pursuits. Thereby, due to their size and limited resources, they are not capable of providing the information required to determine precisely the adverse impacts of our investment decisions in accordance with the SFDR and the legislation implementing the SFDR. Finally, our investment scope is limited to a sector and geographic area that entails limited adverse impacts on sustainability.
We do not intend to consider adverse impacts of investment decisions on sustainability factors in the future in accordance with article 4 of the SFDR for the aforementioned reasons.
6. Post - investment portfolio support
Once we have committed to invest in a company, ESG considerations will further guide our portfolio management with a focus on both risk mitigation and value creation. We continue our comprehensive approach to ESG across the eight core areas supporting our portfolio actively in their journey.
Volta strives for and in most cases holds a seat on the Board of Directors of the companies investing in and taking an active and guiding role in developing good governance practices including but not limited to ESG related topics. We strive to complement this with entrepreneurial and managerial coaching and mentoring of the founding and managing teams we are backing.
We strive to stimulate innovation at the ventures we On a portfolio level, this includes having interactions at board level or as a shareholder with the management, which cultivate the right culture, ensures resource allocation and ongoing training, fosters collaboration and drives the companies to stay attuned to both internal and external feedback.
7. Integration of sustainability risks into remuneration policies
As a sub-threshold manager of alternative investment funds, we do not have an obligation to have a formal remuneration policy in accordance with article 40 and following of the Belgian law of 19 April 2014 on alternative entities for collective investments and their managers. Consequently, sustainability risks are not integrated in our remuneration policy.
How we operationalize ESG in our VC firm
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 fund. We aim at applying the same ESG considerations and the same standards we measure our portfolio with to ourselves.
1. ESG responsibility
While every member of our (investment) team is concerned with and thinks along lines of ESG when making decisions and supporting our portfolio companies, we have assigned the overall responsibility for ESG to Koen De Waele. Our approach to ESG will be discussed regularly in our partner meetings (at least once a year).
2. Good Governance
All our decision making in both the advisory/ oversight board and the investment committee is committed to good governance principles. Next to the Investment Committee, an advisory committee to the Investment Committee is set up and furthermore a Shareholder Advisory Board is held at regular occasions in line with the Internal Regulations.
3. Stimulating Innovation
We focus our investment strategy around innovation and innovative ventures. In that respect, we strive for staying attuned to innovation in the market at large in order to support the portfolio companies to drive innovation.
4. Human Resources considerations
- Diversity and Inclusion Policy (SDG 5, 10): we promote a diverse and inclusive workplace, ensuring equal opportunities for all employees and do not tolerate discrimination, bias, and harassment.
- Work-Life Balance Policy (SDG 3, 8): we support flexible work arrangements to promote employee well-being and encourage a healthy work-life balance through initiatives like telecommuting and flexible schedules.
- Employee Well-being and Mental Health (SDG 3): we foster a supportive work environment that prioritizes employee well-being.
- Training and Development (SDG 4, 8): we invest in continuous learning opportunities for employees to enhance their skills and support professional development aligned with both personal growth and organizational needs.
We stimulate our portfolio companies and employees to abide by the same principles.
Our fund is part of the international Venture ESG initiative and community, a group of over 150 VC funds between the US, Europe and Israel driving the industry towards more consideration of ESG principles. We intend to further contribute to this development by both embodying the ESG principles set out in this policy in our fund and helping our portfolio to do the same. We aim to work towards a global ESG ecosystem by sharing and encouraging out practices across the VC landscape.