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SETTING UP
YOUR FIRST
 ESG FRAMEWORK

  • 00PROCESS SUMMARY

PROCESS SUMMARY

How you set up your framework depends broadly on:

  • your corporate objectives;
  • your operations;
  • your level of control; and
  • how much time you and your team have put into thinking about ESG and
  • how ESG relates to your business.

 
This summary forms part of our overall Sustainable Future Goals work at Balderton.

If you are considering building your own ESG framework, it can be quite daunting to think about where to begin. However, we believe an actionable and pragmatic framework can be created, even if you're not a large company with a team dedicated to ESG topics.

Below are the seven steps we took, at a very high level, to building our framework.  The steps are, of course, very generalised. But we hope they could be used as a starting point both for company founders and other venture capital firms who want to set up a plan that respects real world time and resource constraints.

We welcome feedback! If you have comments and questions, please contact Colin Hanna and/or Magda Lukaszewicz on our team.

1: SET UP AN INTERNAL WORKING GROUP

We suggest a small core cross-functional group. Too few will concentrate too much work in too few people, and may miss valuable perspectives. Too many may slow things down. 

At Balderton, we established a cross-functional working group of five people from finance, legal, marketing and the investment team, with leadership from Bernard Liautaud, Balderton’s Managing Partner.

We regularly shared our progress and asked for input from the broader team, but also from founders and other leaders in our portfolio as well as from our community of Limited Partners (LPs).

2: DEFINE YOUR APPROACH — RISK VERSUS IMPACT?

A risk approach

A risk driven approach is one focusing on avoiding behaviour with negative ESG consequences.

An impact approach

An impact driven approach is one where a company shifts to proactively engaging in behaviour that has positive ESG consequences.

At Balderton Capital, our framework has elements from both, but is generally more impact driven. 

Read about different investing approaches:

  • Pitchbook: What are the differences between SRI, ESG and impact investing?
  • Medium: The difference between ESG and impact investing and why it matters

3: CHOOSE THE RIGHT FRAMEWORK MODEL

If you choose an impact driven framework, we recommend looking at established frameworks, such as:

 
See the section “in search of a framework” in our published framework for the background on how we reached our framework.

We chose to build our ESG framework as the Balderton 10 Sustainable Future Goals, and then we incorporated very specific policies and OKRs within that framework.

4: DEFINE YOUR FORMAT: POLICY OR OKRs?

You might choose a policy format for your framework, which is better suited to risk-driven frameworks.

Or, you might choose an OKR format, which is better suited to impact-driven frameworks.

At Balderton, we prefer the OKR approach. It gives us the opportunity to have clear, measurable, action points on each goal, against which we can judge ourselves. You can review the objectives we have set for ourselves against each goal in our framework here. 

5: IMPLEMENT

When it comes to implementation, defining clear ownership of each goal is key. At Balderton, our OKRs span the entire organisation, so the entire organisation is effectively involved from their own functional perspective.

However, each specific key result ultimately has an owner that is responsible for moving the initiative forward.  

6: HOLD YOURSELF ACCOUNTABLE

Report on your progress and failures externally if possible, or share these internally with your full team. 

Our core working group meets quarterly to review progress. We will also be reporting on progress through our annual SFG audit as we are committed to sharing what we learn, not only with our portfolio companies but with the wider venture community, in the hope that we might all help each other to do better.

7: REVISE YOUR STRATEGY AND GOALS

Environmental, sustainability or governance work is never static. Frameworks or policies should have living goals that are improved and refined as you go. 

It is a journey on which you should be continually aiming higher as you progress. 

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