At OpenOcean we believe that data has the potential to create a better world for everyone. But it is vital that the companies, technologies, and people charged with that mission are carefully selected and meaningfully equipped.
From inception, OpenOcean has invested in software companies that create responsible software solutions. Our experience has shown that the most successful startups are often the most diverse, as increased viewpoints and representation drive enhanced complex problem-solving and better meet growth demand.
We are now happy to share the results of our 5th annual ESG report with you to unpack the current ESG statistics of our portfolio companies and to establish transparently where and how we must continue to collectively push for greater progress. This year we achieved a 100% response rate and the survey was based on our internally developed ESG Starter Pack.
ESG maturity at an all-time high
When we first started systematizing ESG matters six years ago, we recognised the additional value that ESG brings to both our portfolio companies and to venture capital firms like ours. Our active integration of ESG into investments and processes has yielded positive progress, as well as good learnings and adjustments along the way.
Indeed, the findings of our most recent ESG report show that our portfolio companies are maturing at a good rate when it comes to ESG related matters. More and more companies have begun to construct ESG policies and started to implement adequate ESG processes into their operations. As a result, the average self-assessed ESG maturity is now at the highest it has ever been at 3 (on a scale of 1-5), marking a 25% increase from last year.
However, there is still room for improvement and obstacles to overcome. Finding time and resources for ESG implementation, as well as ensuring that ESG actions are relevant for everyone in the transition towards a more remote and global workforce, were two of the most common issues among the respondents. Additionally, the survey shows certain governance related factors posing challenges to our portfolio companies.
Strong Code of Conduct practices, stagnation in diversity metrics
Diversity metrics indicate that the state of diversity in our portfolio companies has remained largely unchanged for the past three years. However, the number of women on the boards of directors of our portfolio companies has increased by 43% from the previous year. Additionally, there has been a slight increase in the number of companies having a diversity, inclusion, and anti-discrimination policy in place. The metrics have been moving in the right direction but we still want to work with our portfolio companies to continue developing and improving these KPIs.
Other social responsibility metrics, on the other hand, show significant improvements across the portfolio. Companies are now focusing even more on ensuring good employee satisfaction and wellbeing, as indicated by the share of companies having a health and safety policy (91%) and a Code of Conduct and/or employee handbook (91%) in place.
Management aligned with ESG practices
This year over half of our portfolio companies (55%) have a member responsible for ESG matters in their management team. In the same vein, the number of companies with general training on ESG has increased by 23% from last year.
The results of this year's survey show promising signs that our portfolio companies are taking ESG matters seriously and are continuing to push for stronger ESG integrations. However, we recognize the fact that there is still room for improvement and we are actively working with and supporting our portfolio companies in their ongoing efforts to improve their ESG metrics.
Want to embark on your own ESG journey?
At OpenOcean we have created an ESG Starter Pack for Software Companies to help companies and investors navigate more smoothly in the world of ESG. In addition to software companies, we warmly welcome fellow early-stage VC investors to use the KPIs found in the Starter Pack as a starting point for reporting requirements set out by the new EU Sustainable Finance Disclosure Regulation (SFDR) Article 8, which most European VC companies are expected to adopt.
We hope that this framework can help investors consolidate annual reporting requirements and create a common language on the most relevant ESG KPIs for early-stage software startups.
We look forward to continuing discussions on this topic with you!