ESG Policy

Last reviewed: December 2022

Sustainability Principles

As a long-term investor, Oxford Science Enterprises (OSE) considers environmental, social, and governance (ESG) issues as fundamental to successfully building transformational businesses. We recognise that ESG criteria must be integrated into our own operations, our investment process, and across our portfolio. The problems we help address affect people in life-changing ways: their health; their security; the availability of food; and survival of the planet. We strive to act in a way that we'll be proud of in years to come: diverse, inclusive, and sustainable. This policy details OSE’s commitment to ESG integration.

Our Impact

OSE was founded in 2015 with a big ambition: to bring Oxford’s best ideas to the world and solve our greatest challenges at unprecedented speed. To ensure Oxford’s science delivers a positive real-world impact, we focus on four key goals:

  • Enabling people to lead longer, healthier lives
  • Protecting the future of our planet
  • Feeding the world and keeping us safe
  • Accelerating the pace of positive change

To monitor our progress, we measure quarterly:

  • Number of portfolio companies focused on the goal
  • Amount invested by Oxford Science Enterprises (£m)
  • Amount invested by external investors (£m)
  • Total valuation of portfolio companies (£m)

We also collate sector-specific case studies, which illustrate where our portfolio companies have had significant impact on any of the above goals.

ESG IN PRACTICE

Internal Operations

To effectively promote and embed sustainability within the investment process, our internal operations must also be carried out in a responsible manner.

Governance: We have appointed Jim Wilkinson, CFO and Board Member, to lead ESG at the Board level, and ensure that ESG integration or performance, at either the company or portfolio level, is an agenda item for all board meetings.

Task Force: At the company level, we have developed an ESG task
force, which consists of representatives from the senior management team, the investment committee, as well as key central functions – including human resources, property, investor relations, accounting, and company secretary.

Reporting: We value transparency and accountability and have as such identified key performance indicators for our ESG performance, which we will report annually:

  • Scope 1 emissions (tCO2e)
  • Scope 2 emissions (tCO2e)
  • Women+ representation within
    • Management (%)
    • Overall Team (%)
    • Board (%)
  • Ethnic minority representation within
    • Management (%)
    • Overall Team (%)
    • Board (%)
  • Employee satisfaction (%)
  • Employee volunteering (# of hours)
  • Board independence (%)
  • Board attendance per board member (%)

Initiatives: We are signatories of the Investing in Women Code and the Zero Carbon Oxford Partnership.

We aim to integrate ESG throughout our own operations though the following commitments:

Environment

Emissions Reduction: We have started measuring and reporting our Scope 1, 2, and 3 emissions and we continue to implement energy efficiency measures throughout the building to drive improved performance.

Sustainable Transport: Given our focus on investing in Oxford, business travel is limited. We promote public transport and consider alternatives to travel, such as video conferencing, before agreeing to travel. We offer a bike to work scheme and we limit plane travel where possible; flights will not be taken to destinations within England, and the Eurostar will be taken to destinations served by the Eurostar.

Waste Reduction: We are focused on reducing office waste and maintaining a high recycling rate.

Task Force on Climate-related Financial Disclosures (TCFD): We aim to report against the TCFD, and detail our approach to climate governance, strategy, risk management, and metrics and targets. We commit to full TCFD alignment in our 2022 reporting.

Social

Inclusion and Diversity (I&D): I&D is a key focus at Oxford Science Enterprises; we promote a diverse, inclusive company culture through an internal I&D working group, I&D measurement and reporting, assessing our gender pay gap, company-wide training, and an inclusive office environment.

  • Related policy: Equal Opportunities Policy

Employment Quality: We are a values-driven organisation, we are:

  • Ambitious: We aim high. We want to do impossible things.
  • Rigorous: We base decisions on data and science.
  • Humble: We respect the expertise of others. We listen and learn.
  • Kind: We think about we, not me.

We aim to foster a dynamic culture where our team can thrive and grow. We provide opportunities for career progression and training, initiatives and programs relating to mental health and wellbeing, and a generous parental leave policy, including a return-to-work initiative.

  • Related policies: Anti-Harassment and Bullying Policy; Flexible Working Policy; Values and Behaviours

Reward: All employees are incentivised with an annual bonus and pension plan. Employees are eligible for health care benefits, which includes a private healthcare scheme, gym membership, a life insurance policy, and income protection insurance.

Community Development: We aim to foster innovation and growth within the Oxford Community and our portfolio companies have created over 2,000 new jobs to date. We have invested in wet lab space, start-up office space, and initiatives to encourage and support innovation including Enterprise Labs, IDEA, and the StEP Program. In addition, to help fund further research, we gift back to the founding Departments 2% (pre-money valuation) of our stake in each successful business. Under certain conditions, if the Department wishes to sell part of its stake for liquidity purposes, we offer to buy back 25% of the 2% stake at each successful fund raise.

Human and Labour Rights: Our working conditions are in accordance with the Modern Slavery Act 2015, and we aim to ensure they exceed international labour standards. This includes no forced labour, no child labour, respecting the right of freedom of association, and ensuring suppliers meet or exceed these standards.

  • Related policy: Modern Slavery Policy

Health and Safety: We are committed to promoting and protecting our employees’ health, safety, and welfare, and observe the Health & Safety at Work Act 1974.

  • Related policy: Health and Safety Policy

Governance

Corporate Governance: We measure and report on board independence, composition, meeting frequency, and attendance. Board Committees include the Audit Committee as well as the Remuneration Committee.

Data protection and cybersecurity: We have initiatives in place to protect against cybersecurity risks and are compliant with General Data Protection Regulation (GDPR) obligations.

  • Related policies: Cybersecurity Policy; Data Protection Policy; Employee Privacy Policy

Tax Transparency: We comply with and follow the spirit and the letter of all relevant tax laws and regulations. We take a transparent and open approach to tax reporting, and a low risk approach to tax planning.

  • Related policy: Tax Transparency Policy

Code of Conduct: We have a zero-tolerance approach to bribery and corruption, a zero-tolerance approach to tax evasion, and provide employees access to a whistleblowing hotline.

  • Related policies: Anti-Corruption and Bribery Policy; Anti-facilitation of tax evasion policy; Whistle-blowing Policy

Investment Process

OSE fundamentally believes that transformational businesses will ultimately drive world-class returns. Accordingly, we aim to balance sustainability and return when considering investments and are in the process of integrating impact and ESG into all stages of the investment process: pre-investment, portfolio management, and upon exit.

Pre-investment, the following categories will be integrated into Investment Memos and the Investment Committee:

Impact Alignment: We will determine whether and how the proposed investment aligns with one of the four goals, listed below, and assess the potential positive impact the company will have.

  • Enabling people to lead longer, healthier lives
  • Protecting the future of our planet
  • Feeding the world and keeping us safe
  • Accelerating the pace of positive change

Negative Screening: We prohibit investment in companies with direct involvement in the following sectors/types of businesses:

  • Firearms
  • Tobacco
  • Alcohol
  • Gambling
  • Adult Entertainment
  • Fossil Fuels

Due Diligence: We will identify whether the company has any material ESG risks, including – but not limited to – addressing the following topics, recommended by the VentureESG initiative:

  • Assessing the company management’s mindset around ESG and impact, with a particular emphasis on I&D;
  • Whether the company adheres to, or is prepared to adhere to, relevant legislation and regulation;
  • Whether the company management has assessed any potential material ESG risks or negative impacts the business may have, and identifying what these issues are;
  • Whether the company has any ESG red flags more broadly;
  • Assessing the company’s climate risks and opportunities.

Following the decision to invest:

Term Sheets: We will include ESG related clauses in term sheets and, for all new investments and those where we lead or co-lead, require company management to design and implement diversity and inclusion plan within the first year of investment, followed by regular reporting on the progress of the plan.

ESG & Impact Workshop: Following term sheets, we will host an ESG & Impact Workshop for material, new investments. Attended by company management/Founder(s), the investment lead(s), and a member of the ESG Task Force, this workshop will facilitate deeper discussion into potential positive and negative impacts the company may have, any identified ESG risks. We hope to support the company in its sustainability journey, and so this time will also be used to identify next steps we and the company can take to promote the potential positive impacts and mitigate the potential negative impacts.

Once the company is within our portfolio:

We commit to supporting and engaging with the companies on their ESG performance and progress.

Data Collection: We aim to measure and monitor our portfolio companies’ ESG performance on an annual basis. In 2022 we began collecting data, using the ESG_VC survey, from our late-stage companies (Series B on).

Engagement: The data reported by companies will be used to identify any risk factors or issues and will be addressed with company management by the relevant investment lead. We will leverage our board seat positions to ensure ESG is discussed, and progression is tracked, during portfolio company board meetings.

Upon exit:

We aim to ensure that the business has progressed in its internal ESG performance and has the processes in place to effectively measure and manage this going forwards. In the case of a sale or acquisition, we also intend to consider impact and ESG factors.