From Ambitions to Action: SCG’s Collaboration with a Dutch Energy Transition VC Fund
Navigating sustainable investment can be challenging, especially for new VC firms. A Dutch energy transition VC fund partnered with Sustainable Capital Group (SCG) to develop a robust ESG strategy, sustainability policy, and impact compensation mechanisms. Discover how our approach helped them align with top European institutional investors’ standards and elevate their sustainable fundraising efforts!
About the Fund
The Fund is a Dutch venture capital firm that focuses on early-stage start-ups and scale-ups in the power, transport, and buildings sectors across Western Europe. Their mission is to accelerate the energy transition through strategic investments in innovative technologies and solutions.
The Challenge: Integrating Sustainability in Practice
The Fund manager, having set up the fund over the last five months, was new to the impact investing and measurement space. They sought SCG’s expertise to define the material risks to their sector, the relevant regulatory data points, and a concrete sustainability framework that not only fits their current investment process, but would also resonate with institutional investors.
How Sustainable Capital Group Stepped In
SCG’s approach was comprehensive and methodical, encompassing the following key steps:
- Defining Material Risks and aligning the Impact Thesis:
- SCG conducted detailed brainstorming discussions to identify material topics and develop the Fund’s Theory of Change.
- Leveraged globally recognized frameworks like IRIS+, SASB and the EU Taxonomy.
- Sustainability Integration Structure:
- Developed the Fund’s Sustainability policy on the basis of current processes.
- Assisted in the creation of an Impact-Linked Carried Interest mechanism to incentivize target setting at portfolio level and impact measurement at fund level.
- Designing the ESG Datasheet
- Developed a comprehensive ESG datasheet encompassing all sustainability metrics relevant to the fund’s pre- and post-investment assessment processes
- Utilising Leading Standards:
- Our advice considered leading sustainability frameworks such as SFDR, EU Taxonomy, IRIS+, and SASB.
Outcome: Establishing a Robust Sustainability Framework
Through our collaboration, the Fund successfully implemented a comprehensive sustainability framework. This included a detailed Sustainability Integration Policy, an ESG Data Sheet, and an Impact-Linked Carried Interest structure. These works have positioned the Fund to achieve its first successes in impact fundraising, aligning their operations with institutional investor expectations.
Conclusion
Through strategic guidance and collaboration, SCG helped the Fund transform its sustainability ambitions into actionable strategies. This has enabled the Fund to better navigate the sustainability risks and opportunities in the energy transition landscape and secure impactful investments, reinforcing their commitment to sustainability and innovation in the venture capital sector.
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