Today, I read this article from the Stanford Social Innovation Review, which claims that venture capital has lagged behind on the adoption of ESG practices. It made me so angry!
I work at Tenacious Ventures. We are an impact-driven venture firm.
We don’t shout this from the rooftops, on our website, or in the press. And why should we? We believe impact should be the norm, not the exception. As a firm, we’re doing everything the article says and more when it comes to ESG and impact.
Everything that is, except for standing up to be counted.
We are a small firm with big aspirations, and when it comes to impact, we firmly believe it starts with us. We strive daily to be the change we want to see in the world, but we are also humble and sometimes forget to share what we are doing when it comes to ESG and impact.
We are an impact venturing firm with an investment thesis at the intersection of digitally native agriculture and climate solutions.
We seek to generate both financial returns and positive, measurable environmental and social impact aligned with our investment mandate. We invest in companies that create pathways to shift toward a carbon-neutral and climate change-resilient food and agriculture system.
We’ve embedded the core characteristics of impact investing within our investment process in the following ways:
Impact screen — Every investment opportunity that comes to us is assessed for impact alignment from the very first time our investment team talks about them. We screen for mandate fit by evaluating if the investment opportunity will contribute to a shift toward a carbon-neutral and climate change-resilient food and agriculture system on the impact themes of:
When companies fail the above screen, they don’t proceed to the next round of investment due diligence. While ESG has a negative screen for “do no harm”, at Tenacious, we believe this isn’t good enough. We must actively do good.
Complying investment assessment — Before any investment decision goes to our Investment Committee, we quantify and qualify the impact potential of the investment opportunity. For our first fund, this is through the lens of emissions reduction. We assess if the investment opportunity will result in emissions of CO2-e being substantially lower than the current average of the most relevant baseline for the activity being undertaken.
Impact measurement and reporting — Our investment term sheets include diversity and inclusion clauses alongside reporting requirements for impact metrics. We work with each company we invest in to define the appropriate metrics, which they then report quarterly. We then aggregate and report on impact across the portfolio to our investors.
Our team of seven comprises a fifty-fifty gender split at the general partner level, plus one female partner, three principles (two female, one male), and one associate (female). We are proud that our founders are as diverse as we are in gender, orientation, age, background, socioeconomic status, and ability. 60% of our portfolio companies have female founders/co-founders.
We also just finished our first ‘community of practice’ cohort for agri-corporates focused on emissions reduction. As a result of the content, I’ve taken on making us carbon neutral using science-based targets by the end of 2022.
I’m proud of the work we’ve done. This isn’t to say that we couldn’t do better, as a firm and an industry. But change requires awareness and change champions.
So I’m writing this, a public commitment to stand up and be counted. To be vocal and unequivocal about our approach to ESG and impact. It is, after all, who we are and what we do. And hopefully, this inspires other firms, in and out of VC, to do the same.
As the saying goes: “Be the change you want to see in the world.”
Both images “Core Characteristics of Impact Investing” and “ESG, SRI & Impact Investing: What’s the Difference?” have been adapted from material made available by the Global Impact Investing Network (The GIIN)
Tenacious Ventures Management Pty Ltd (CAR 001275760), Tenacious Ventures Management Partnership, LP (CAR 001298484), Tenacious Ventures Fund II Management Partnership, LP (CAR 001298483), and Tenacious Ventures Fund II Staple Co Pty Ltd (CAR 001298487) are Corporate Authorised Representatives of Sandford Capital Pty Ltd (ABN 82 600 590 887), Australian Financial Services Licence No 461981, and are authorised to provide advisory and dealing in connection with investments to wholesale clients only.