Venture Capital Case Study: Molten Ventures

Molten Ventures embraces ESG integration, positioning the company at the forefront of ESG for the VC industry. Its approach is underpinned by a recognition of strong links between ESG, return on investment, and development of best-in-class technology, as well as a vision of the future that is “sustainable, fair and accessible to all”.

The business and its portfolio companies are held accountable to high ESG standards which are outlined in its ESG Policy. However, Molten Ventures understands that there is a long road ahead to fully embed ESG and there is a need for continuous improvement to rise to new challenges.

Responsible Investment

By embracing sustainable practices and standards, Molten Ventures recognises that its portfolio companies have the power to change the world in a positive way. For this reason, Molten Ventures requires founders and management teams to commit to embracing a set of target ESG standards in their business activities, covering a range of ESG issues including carbon, diversity and inclusion, and business ethics. Molten Ventures aims to encourage sustainable growth during and beyond the investment lifetime, thereby enhancing the competitive advantage and reputation of its portfolio companies.

ESG is embedded within the investment process, from pre-investment to ownership and exit. Pre-investment, there are three stages of ESG evaluation:

• Certain sectors are excluded from direct investment at the outset in line with the company’s Exclusion Policy.

• Eligible investments are then assessed for ESG opportunities, risks, compliance, performance, and commitments, using a risk scoring system.

• Where low scores are obtained, enhanced screening is conducted to flag material risks. Any issues identified will be raised with the Investment Committee and Legal Counsel for a decision to be made on whether the risk is acceptable and how it should be managed.

During the ownership phase, Molten Ventures collaborates with its portfolio companies to improve their ESG standards, engaging primarily through the means of one-to-one interactions, ESG-focused events, networking opportunities and training. Molten Ventures maps each company against the UN SDGs and then works with the management team to formulate proportionate and company specific ESG metrics and strategies for ongoing monitoring.

Progress made during the lifetime of an investment will be captured at exit and distilled into a coherent narrative.

In-house ESG

Molten Ventures leads by example by also embracing good ESG practices within its own operations. The cornerstones of its internal ESG approach are reducing and offsetting greenhouse gas emissions, embracing diversity and inclusion, and maintaining high levels of governance and ethical integrity. Molten Ventures is a UN PRI signatory and reports portfolio company ESG data to the PRI annually and has committed to making disclosures against the TCFD framework.