In 2022, Mundi Ventures embarked on a journey towards advancing our sustainability practice by inaugurating a new ESG investment policy and publishing our first sustainability report. This report served as a catalyst for an array of conversations with our portfolio companies and investor partners, as we sought to deepen our commitment to sustainable investing. Download our full sustainability report here.
The bedrock of Mundi Ventures’ investment strategy has always been purpose-driven, with a focus on investments that generate positive social impact. As our newly launched Insurtech 2 fund reaches €500M in assets under management, we recognized the need to formalize our sustainability efforts by establishing a framework to measure, improve, and communicate our progress to all stakeholders.
“ESG makes financial sense, but more importantly, it is just the right thing to do.”
The process of creating the sustainability report commenced with open and candid discussions among our team members, aimed at defining our stance on sustainable investment. We explored various questions, such as:
Why is ESG important to us? Is it for ourselves, our investors, regulators, or our portfolio companies? Do we prioritize ESG concerns only when an investment poses reputational or litigation risks? Should we engage in value-based screening?
How much should ESG considerations weigh in the Investment Committee? And to what extent would it limit our investable universe?
These and many other questions guided our discussions and helped shape our approach to sustainable investing.
We are proud to have portfolio companies that are actively addressing the UN’s Sustainable Development Goals
While we are not an impact fund, we seek out purpose-driven entrepreneurs who share our vision of creating positive social impact. We are attentive to our founders’ diverse experiences, which have led them to launch purpose-driven businesses. We aspire to serve as their guides, supporting their efforts to co-create positive impact. When a founder’s purpose aligns with the UN SDGs, we collaborate with them to measure impact by using sub-categories of the SDGs.
60% of our portfolio startups submitted data for our first annual ESG data collection
Over 60% of our portfolio companies responded positively to our ESG data collection request, submitting both quantitative and qualitative data. We are proud that the majority of our portfolio companies provided data that we could compare, despite the challenge of selecting appropriate ESG metrics. We wanted to ensure that our portfolio companies could maintain their focus on their immediate strategic priorities while simultaneously meeting the minimum ESG standards that would enable future sustainable growth.
After numerous discussions with our team members, senior advisors, and a portfolio company, Clarity AI (a New York-based sustainability technology platform that leverages machine learning to provide environmental and social insights to investors), we identified ten key performance indicators (KPIs) that companies in our portfolio must report. These KPIs were chosen based on requirements from industry standards such as ILPA EDCI, SpainCAP, and ESG_VC.
Collaborating with Clarity AI to draw actionable insights from the ESG data
One of the challenges with ESG investment in the private market is the lack of comparable data to make actionable insights from the data collected. We collaborated with Clarity AI to find a comparable universe by dissecting the industry by using GICS code and modifying the metrics into the intensity data such as CO2 emission per revenue or per employee. We currently have 12 industries in our portfolio and ran separate analyses for each industry. We would like to share an example of our sample analysis for application software below.
From the chart, we identified “Scope 3 emission”, “% of female management”, and “gender pay gap” to be the top 3 challenges for our tech startups. We started to provide individual feedback to portfolio companies based on the analysis and benchmark data to tailor to the specific situation of each company.
31% of companies measured Scope 3 CO2-e emission
31% of our portfolio companies measured Scope 3 CO2-e emissions. The average emission rate for Scope 1, 2, and 3 in total was 8.7 tonnes/employee among the 11 companies that reported such emissions. Although it may seem like a simple question, comparing apples to apples is challenging because emission levels vary based on a company’s business model, geographic coverage, and stage of growth. Nonetheless, we worked with Clarity AI to benchmark our portfolio companies’ CO2 emissions intensity (by revenue) against Clarity AI’s data for each industry, using the GICS code. Our score of 61 out of 100 indicates that we performed slightly better than the industry average.
The average attrition rate was 13.9%, significantly lower than the tech industry’s average
We are delighted to report that our portfolio companies have been successful in maintaining a contented and loyal workforce, even amidst the ongoing exodus of tech talent in the industry. Our latest data reveals an average attrition rate of 13.9%, which is markedly lower than the 20% which was projected by Gartner in 2022. Furthermore, we discovered that 2 out of every 3 companies in our portfolio had conducted employee satisfaction surveys in the past two years, demonstrating their commitment to gauging and addressing the concerns of their workforce.
What’s next?
We believe that “what gets measured gets done”. As we wrap up our first-ever sustainability report, we extend our heartfelt gratitude to all the startups and partners who participated in this process. Your engagement has been invaluable in providing us with a better understanding of our ESG performance and helping us improve upon it.
Looking ahead, we’re excited to build on this momentum and integrate ESG considerations even more deeply into our decision-making processes. In Q2 of 2023, we’ll commence disclosing Principle Adverse Impact (PAI) indicators under the Sustainable Finance Disclosure Regulation (SFDR). Throughout this process, we’ll continue to engage with our stakeholders and seek your input as we develop and implement new sustainability initiatives.
We recognize that tackling grand challenges like climate change, widening inequality, and biodiversity loss requires the collective efforts of all parties. That’s why we’d love to continue this journey with our startups, LP partners, and fellow VC/PE players. Let’s keep in touch, exchange ideas, and collaborate on events and initiatives. We’re excited to work together to achieve our sustainability goals!
For questions, comments, and exciting ideas, get in touch with us at — yoko@mundiventures.com
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