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German Venture Capital Firms Introduce Sustainability Clause

Germany’s and Europe’s leading venture capital firms commit themselves and their portfolio companies to sustainability and make a significant contribution to climate protection. This measure should act as an example for other start-up ecosystems and industries.

More than 20 leading venture capital firms have joined forces to develop a sustainability clause, which will commit all newly financed companies to take part in more climate protection initiatives going forward. The partners include European VC heavyweights like Picus Capital, Project A, Northzone, Holtzbrinck Ventures, Global Founders Capital and Cherry Ventures (see below the full list).

The Sustainability Clause was developed in cooperation with the Leaders for Climate Action (LFCA) initiative. ‘As investors, we bear a great responsibility and must live up to it. Young companies play a major role in shaping our common future in the age of digitization. A sustainable orientation from the very beginning provides a decisive influence on our joint chance to get the climate crisis under control,’ Martin Weber, Partner at HV Holtzbrinck Ventures.

‘Startups get a lot of attention because of their innovative power and are perceived as beacons. We want to use this radiance together for sustainability in business. New structures are created with every startup and we use this opportunity to firmly anchor sustainability from day one’ Alexander Samwer, Founding Partner of Picus Capital.

The Sustainability Clause will be integrated into the future set of rules and regulations between investors and their portfolio companies (i.e. term sheets and shareholder agreements). The clause requires companies to measure their CO2 emissions, to implement reduction measures such as adjusting travel policies (favouring rail to air travel) or to switch to a green electricity provider. In addition, compensation measures, i.e. the financing of climate projects, are to be evaluated using the strictest international certification standards (Gold Standard or similar) and included in budget planning. In addition, the clause also includes the sensitization of employees, partners, suppliers and customers to climate protection.

The first contracts including the Sustainability Clause were concluded in December 2019 for both Earlybird and Holtzbrinck Ventures portfolios. ‘Many new generation entrepreneurs are very sensitive to the CO2 footprint of their companies and want to make a positive contribution to solving the climate crisis within the scope of their economic and technological possibilities. We are reinforcing this momentum through this clause with LFCA helping our portfolio companies implement it,’ explains Fabian Heilemann, Partner at Earlybird and co-leader at LFCA.

Jan Christoph Gras, co-founder of LFCA, considers the digital sector the industry of the future, leading the way towards further commitments to climate protection: ‘If anyone can show that rapid, green transformation is possible, it’s the young companies. Our goal is to trigger a domino effect that will reach other industries and especially other startup ecosystems around the world - We need Climate Action, now!’

Next Finance January 2020



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