Tails Capital Ltd (“Talis Capital”) and the funds which it advises are on a mission to support an ambitious, mission-driven, and sustainable technology ecosystem in the UK, Europe and beyond.
This document (“the ESG and RI Policy”) sets out Talis Capital’s approach to investing responsibly and to the management of Environmental, Social and Governance (“ESG”) issues within our investment activities. We aim to set out the principles that the firm has implemented in order to meet our ESG goals and the principles to which we aspire.
This ESG and RI Policy covers all Talis Capital’s funds, existing portfolio companies and new investments. All Talis Capital staff are required to adhere to this ESG policy, however, the ESG Taskforce helps to provide staff with the training and resources to help them fulfil the firm’s ESG commitments. The Taskforce reports to the firm’s Executive Committee which has oversight on implementing this ESG policy. It includes Serena Taylor, ESG & Impact Officer, with whom overall responsibility lies and is supported by Matus Maar, Co-Founder & Managing Partner, Alexandra Radu, Finance Director and Cecilia Manduca, Associate.
Talis Capital’s Approach to ESG & Responsible Investing:
We firmly believe that entrepreneurs are best placed to solve the world’s most pressing problems and build solutions that will transform industries and society. Venture capital has a unique position to bring lasting change in the world and has a wide-reaching impact. To that end, we recognise the integral importance that ESG issues can have on the success of our investments and incorporate material ESG into our investment decision-making.
At Talis, ESG is not just a screening process nor a tick-box exercise. Our ESG taskforce and the broader employee base takes an active interest in how portfolio companies manage ESG issues and actively support them to strive for best practice. ESG is embedded across the investment cycle from investment screening to due diligence, ownership and exit.
What ESG means for us:
While a plethora of frameworks and definitions of ESG exist, most are not fit for purpose for the venture capital industry and working with early-stage technology startups. We use the definition of ESG developed by VentureESG, which defines ESG best practice across eight issue areas:
Considering the environmental impact from Scope 1 (directly caused by the company/VC, e.g. through facilities) and Scope 2 (indirectly caused, e.g. energy, electricity, waste) to Scope 3 (caused by upstream and downstream activities, e.g. business travel, transportation of the product, customers’ energy usage); targeting both measuring but most importantly reducing both the impact across all scopes (at fund and portfolio level).
- D & I: integrating diverse and inclusive practices across all areas of the business (e.g. diversity of the fund or the founding teams, inclusive hiring practices)
- Team and working environment: building a strong culture and being a conscientious employer (e.g. pay gap, parental leave, living wage)
- Supply chain: working towards an ethical and environmentally resilient supply chain (including a Supplier Code of Conduct embracing the UN’s Global Compact)
- Legal and regulatory: being on top of and aligned to the latest regulations and compliance standards (e.g. GDPR, UN Guiding Principles of Business and Human Rights, the eight core ILO conventions); the oversight of these issues should be ensured by the founding team and Board of Directors.
- Governance: having appropriate governance structures in place, according to the company’s stage (e.g. board structure, share structure); writing out a code of conduct (committing the company to high ethical standards).
- Responsible product design & AI: designing and building products with consideration of the ethical and human implications on the end-user and society.
- Data privacy and security: instilling a strong culture of trust, responsibility and best practice (e.g. with internal systems) around data.
Embedding ESG within our Investment Process:
As part of our screening process, Talis Capital’s investment teams identify whether any potential investments fall into our exclusion criteria. These investments are immediately rejected from our dealflow pipeline.
We exclude any investment that meet the following criteria:
- International Standards: any company or corporation which is listed on an EU or UN sanctions list or breaches any UN conventions and declarations on human rights.
- Illegal products, activities or materials deemed illegal under host country or regulation.
- Weapons: any company or organisation involved in all weapons production or munition.
- Gambling or casinos
- Tabacco and other addictive substances
- Any production of fossil fuels, including unconventional extraction of fossil fuel, such as oil sands and deep-sea drilling
We are committed to ensuring accessibility and diversity as core principles in the sourcing and pipeline management of our deals. Concretely, we have put in place steps to make our dealflow funnel easier to access:
- Open application process: to counteract the need for a ‘warm introduction’, we have installed a simple Typeform on our website for founders to send us their pitch. All applications are screened by a member of the investment team.
- Office hours: are held quarterly solely for founders from specific underrepresented groups to get one-on-one time with our investment team. We see it as our responsibility to level the playing field and provide founders from all backgrounds with opportunities that may or may not otherwise be harder for them to get.
3. Pre-Investment ESG Due Diligence:
Talis recognises that ESG risks must be identified pre-investment, therefore all new investments undergo ESG due diligence in parallel to commercial due diligence. Talis uses our Due Diligence Template to map stakeholders, map material ESG issues and identify the level of ESG risk and opportunity. Understanding ESG considerations help us to understand the viability of the business model and add value post-investment. When ESG risks are too great and cannot be rectified in a reasonable timeframe, no investment is made.
- We use SASB (https://www.sasb.org/standards/materiality-map/) as a guide to help us identify material issues for each sector area.
- The information we collect will be duly documented in our investment memorandum and plays an important role in our investment process.
- Where necessary our investment team will identify areas where greater ESG due diligence is needed and presents this to the fund’s Investment Committee.
4. Post-Investment Portfolio Support & Reporting:
Once we have committed to invest in a company, ESG considerations will further guide our portfolio management with a focus on both risk mitigation and value creation.
- FutureProof Programme: this programme is to help existing and new companies within our portfolio to implement ESG best practice, set goals for improvement and set out a plan of action. We help them map gaps in their strategy and identify areas where ESG can add value. Any company can tap into our network of consultants, resources and tools to execute along ESG issue areas. We mainly work with the portfolio across six ESG issue areas:
- Environmental Impact & Climate Change
- Sustainable Supply Chains
- Diversity & Inclusion
- Employee Safety, Health and Wellbeing
- Responsible Product Design & Data
- Governance & Ethical Business Standards
ESG Questionnaire: We have an annual ESG Questionnaire to help founders and Talis as a fund assess what is in place in terms of ESG strategies. It helps to identify gaps where we need to better support them and this data is also anonymised and aggregated to share with industry bodies, and in our ESG report.
ESG Events Programme & Resources: we aim to support our portfolio through regular events with experts, such as carbon measurement and D&I specialists. In addition, we have resources on our Knowledge Hub, which helps any founder get started on ESG.
In the case of exiting (via sale, M&A or IPO) we will consider possible ESG factors, too. Advising founders on the right time to exit and the right partners to work with are also important.
Operationalising ESG as a Fund:
We believe it’s important for us as a fund to take concrete action on ESG, aiming to apply the same ESG considerations and standards of how we measure our portfolio with ourselves.
- Climate action: We are committed to measuring our carbon footprint annually, offsetting what we can’t reduce and getting to Net Zero by 2030.
- Promoting Diversity and Inclusion: We are committed to hiring a diverse team and providing an inclusive working environment. We publish our internal D&I metrics, have been awarded Diversity VC standard are committed to blind recruiting and parental leave fit for the modern world. You can read our D&I policy here.
- Good Governance: At Talis we strive to have an organisational structure where everyone’s voice is heard. All members who sit on the investment team and our cornerstone limited partners form our Investment Committee and we encourage healthy debate, particularly from those in more junior roles. We have a 50/50 gender split in terms of total employees and aim for a 50/50 gender split at Investment Committee.
Talis Capital will issue an ESG report annually to highlight the performance of portfolio companies across the range of metrics measured. This report will also highlight the work of the ESG taskforce in helping companies to improve their ESG practices.
Our fund is part of the international VentureESG initiative, a group of over 150 VC funds between the US, Europe and Israel driving the industry towards more consideration of ESG principles. We aim to embody the ESG principles set out in this policy and help our portfolio to do the same. In addition, our ESG & Impact Officer sits on the Steering Committee of ESG_VC, an initiative that helps to standardise ESG reporting across the venture capital industry. We aim to work towards a global ESG ecosystem by sharing and encouraging our practices across the VC landscape.