Background: During the fall of 2022, we conducted a strategic overview to set the stage for our coming sustainability work. Our goal was to create processes that drive impactful action by aligning internal processes and results with strategy and success. We knew that to achieve this, we needed to start by analysing relevant stakeholders, assessing strengths and risks and design our processes accordingly.

Framework: McKinsey 2022

The Why: Every organisation has a role to play in the sustainable transition. At Northzone, we want to ensure that we make the most out of our role because we want to be part of positive change because there are great opportunities in doing so and great risks if we don’t. Regulation is also quickly developing around us and our portfolio.

The opportunities available in the growing impact investing scene require us to better understand our comparative advantage in this space and where we should focus given our generalist approach and experience. What is investable for us? Where can we have the greatest additionality? We also see potential in better mitigating risks and improving our portfolio companies’ performance by developing our portfolio support to include more tailored tools for responsible scaling. Finally, the new SFDR regulation has encouraged us to look more into how we track impact and ESG in our portfolio.

We want to ensure that these do not become a tick-box exercise but instead something that is used to push the industry and ourselves further.

Method: Strategic overview based on the idea of double materiality assessing both:

• The impact perspective (also referred to as inside-out impact) is related to the significant impacts that Northzone can have on people and the environment
• The financial perspective (also referred to as outside-in impact) is related to the financial risks and opportunities that sustainability matters can have on Northzone

Findings: A more strategic approach to both impact & sustainable internal processes could benefit Northzone by strengthening our sourcing and investment process, our portfolio offering and our own culture.

Sustainability as a value driver

As a generalist venture fund, our greatest potential impact lies in how we invest our funds and in the way that we facilitate responsible scaling for our portfolio companies.

We should focus primarily on:

1. Identifying and investing in the winners of the sustainable transition where we have great additionality

2. Assessing net-impact of all investments in the investment process,

3. Facilitating responsible scaling in the entire portfolio and;

4. Using our role in the ecosystem to share perspectives and foster collaboration.