Sustainability Principles
At Oxford Science Enterprises (OSE), our mission is to build companies solving the world’s toughest challenges. As a long-term investor, we consider sustainability as fundamental to both OSE and our portfolio companies’ long-term success. We recognise that sustainability must be integrated into (i) our own operations and (ii) our investment and portfolio management process. This policy details OSE’s commitment to sustainability, considering both the positive environmental and social impact that OSE and our portfolio can have, as well our integration of environmental, social, and governance (ESG) issues.
We aim to approach sustainability in a tailored, supportive manner, aligned with each portfolio company’s specific objectives. Our sustainability strategy is guided by three overarching principles:
- Proportionality: Sustainability is a journey. We work with our portfolio companies to incorporate sustainability from day one. We take a long-term view, considering the stage of the business, and emphasising progress over perfection.
- Materiality: Sustainability practices must be tailored to each company’s industry and business model. We invest across three sectors: Life Sciences, Health Tech, and Deep Tech; while there are portfolio-wide focus areas, on topics such as climate and diversity, we work with companies to ensure their sustainability efforts focus on material issues that are most meaningful to their business.
- Collaboration & Support: Sustainability progress cannot be achieved alone. Sustainability practices, frameworks, and expectations are constantly evolving, and collaboration is essential. We actively engage with stakeholders across the ecosystem – from shareholders and co-investors, to portfolio companies and industry initiatives – to ensure we can learn from each other and provide support on best practice.
(i) Internal Operations
To effectively promote and embed sustainability within the investment process, we must lead by example and ensure our internal operations are also 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.
- Committee: At the company level, we have developed an ESG committee, which consists of representatives from the senior management team, the investment committee, as well as key central functions – including human resources, property, investor relations, finance, and company secretary.
- Reporting: We value transparency and accountability and have as such identified metrics for our ESG performance, which we will report annually:
- Scope 1, 2, and 3 emissions (tCO2e)
- Women+ representation within
- Management (%)
- Overall Team (%)
- Board (%)
- Ethnic minority representation within
- Management (%)
- Overall Team (%)
- Board (%)
- Employee satisfaction (%)
- Board attendance per Board member (%)
We aim to integrate ESG throughout our own operations though the following commitments:
Environment
- Emissions Reduction – We measure and report 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 electric vehicle 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 aim to reduce office waste and maintain a high recycling rate.
- Task Force on Climate-related Financial Disclosures (TCFD) – We voluntarily report against the TCFD, and detail our approach to climate governance, strategy, risk management, and metrics and targets.
Social
- Diversity and Inclusion (D&I) – D&I is a key focus at Oxford Science Enterprises; we promote a diverse, inclusive company culture through an internal D&I working group, D&I measurement and reporting, including assessing our gender pay gap, company-wide training, and an inclusive office environment.
- Related policies: Equal Opportunities Policy; Diversity & Inclusion 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 2,500 new jobs to date. We have invested in wet lab space, start-up office space, and initiatives to encourage and support innovation including 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 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: IT & 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: Code of Conduct; Anti-Corruption and Bribery Policy; Anti-facilitation of tax evasion policy; Whistleblowing Policy
(ii) Approach to Responsible Investment
OSE fundamentally believes that transformational companies will ultimately drive world-class returns. Accordingly, we aim to balance sustainability and return when considering investments and integrate impact and ESG into all stages of the investment process.
Pre-investment, the following categories are integrated into Investment Memos and the Investment Committee:
- Impact Assessment – We assess the potential impact that that company’s product or service may have on the environment and/or society, considering:
- Challenge: what challenge the company is solving and why;
- Solution: how the company addresses this challenge, addressing the company’s technology, business model, and applications;
- Impact: what outcomes and impact will be achieved, including what metrics can be used to demonstrate this impact;
- Who: the stakeholders that are or will experience this outcome;
- How much: how significant the impact will be, assessing scale, depth, and duration;
- Contribution: how this company and OSE’s investment contributes to this outcome;
- Risk and Unintended Consequences: assessing the impact risks highlighted by the Impact Management Project, including unexpected impact risk.
- 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
- ESG Due Diligence – We identify whether the company has any material ESG risks, including – but not limited to – addressing the following topics, recommended by the VentureESG initiative:
- Management Mindset: assessing the company management’s mindset around ESG and impact, with a particular emphasis on D&I;
- Regulatory Landscape: the relevant sustainability-related legislation that the company is or may be in scope for in the future;
- Material ESG Issues: identifying industry-specific material issues, considering mitigating factors;
- Track record: highlighting any key takeaways from previous ESG survey results, including ambition and progress, alongside whether the company has any ESG red flags more broadly;
- Climate: assessing the company’s climate risks and opportunities.
Following the decision to invest:
- Term Sheets – We include ESG related clauses in term sheets and, for all new investments and those where we lead or co-lead, require company management to:
- Adopt an environmental (including climate) policy in the first year of investment, including measuring its carbon footprint.
- Adopt a diversity & inclusion strategy in the first year of investment, including measuring gender and ethnic diversity within the team and management.
- Moreover, companies will need to consider how they can implement best practice as it relates to ESG in the business, and discuss and report these practices to the Board.
- ESG & Impact Workshop – Following term sheets, we 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 Committee, this workshop facilitates deeper discussion into potential positive and negative impacts the company may have, any ESG risks and opportunities the company may be exposed to, and the appropriate next steps to mitigate risks and promote opportunities. We work with the company to identify what sustainability topics should be prioritised, measured, and reported, and ultimately aim to identify how OSE can support the company on its sustainability journey.
- Portfolio Governance: To further embed strong corporate governance in portfolio companies, we have developed a good governance guidance note and checklist for portfolio companies, defining critical areas that OSE expects portfolio companies to address appropriately, including treasury and financial controls. We offer all new portfolio companies a workshop on good governance, setting expectations from the point of spinout.
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 measure and monitor our portfolio companies’ ESG performance on an annual basis. We use the Novata platform and align with the ESG_VC framework.
- Engagement – The data reported by companies are 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.