About this Policy
At Main Sequence, our commitment to Environmental, Social, and Governance (ESG) principles is foundational to our strategic approach to responsible investment and stewardship. Our Responsible Investment Policy, ESG Policy, and Stewardship Policy are designed to be read alongside each other, establishing a comprehensive framework that guides our investment decisions, operational strategies, and engagement with portfolio companies. This unified approach ensures the integration of ESG considerations at every stage, supporting our mission to drive innovation, foster sustainable growth, and deliver long-term value to our stakeholders and the broader community.
Introduction
Main Sequence’s mission is to address the world’s biggest challenges by supporting and investing in deep technology ventures. We recognise our responsibility to consider not only financial returns for our investors but also environmental, social and governance factors in our investment decisions. For us, responsible investment is a foundational principle that underpins every decision and shapes our impact on the world.
Our Principles
Responsible investment is at the core of Main Sequence’s ethos, guiding our approach to investment decisions and company building. Our responsible investment framework is built on the following principles:
Environmental Responsibility: We evaluate how companies safeguard the environment, including sustainability, waste management, energy efficiency, air and water pollution and climate impact. Incorporating ESG issues into our investment analysis and decision-making process ensures that we prioritise investments that demonstrate a strong commitment to environmental stewardship.
Social Impact: We assess how companies manage relationships with key stakeholders, including employees, customers and the communities in which they operate. Our investment decisions take into account how companies address social issues such as diversity in leadership, equal opportunities, labour standards and community engagement.
Governance Standards: We scrutinise a company’s leadership composition and operational practices to ensure transparency, accountability and shareholder rights. We seek out companies with strong governance structures, effective risk management systems and a commitment to ethical business conduct.
Our Commitment
As part of the implementation of our Responsible Investment Policy, we are committed to the following:
- United Nations Principles for Responsible Investment
As a signatory to the United Nations Principles for Responsible Investment (UNPRI), we commit to prioritising transparency, accountability, and collaboration with stakeholders to promote responsible investment practices. This commitment is evident in various aspects of our investment approach, from integrating ESG considerations into our due diligence and decision-making processes to incorporating ESG issues into ownership policies and practices, as well as monitoring and reporting on ESG initiatives. Through these measures, we aim to uphold our responsibility to invest in a sustainable and ethical manner, aligning with the principles outlined by UNPRI. - Sustainable Development Goals
We actively integrate the Sustainable Development Goals (SDGs) into our investment decision-making processes. These ambitious goals, established by the United Nations in 2015, aim to transform the world by 2030 by addressing social and economic development issues such as poverty, hunger, health, education, global warming, gender equality, water, sanitation, energy, urbanisation, environment, and social justice. - Peer benchmarking on ESG initiatives (ESG_VC)
At Main Sequence, we are dedicated to advancing responsible investment practices not only within our own portfolio but also across the broader venture capital (VC) ecosystem. We are actively collaborating with other VC funds in Australia to establish a shared framework, ESG_VC, for evaluating ESG performance. This collaborative effort aims to provide a unified approach to ESG assessment, simplifying reporting for portfolio companies and benchmarking best practices in ESG initiatives within the industry. - Negative Screening of practices incompatible with ESG
We do not invest in companies associated with the development, production, maintenance, trade, or stockpiling of controversial weapons, the production of illegal narcotics or drugs, or the production or sale of tobacco and tobacco products. Further, we do not invest in companies or technology that is unlawful or unethical, against the Australian national interest, or adverse to MSV or CSIRO’s reputation. - Governance framework
We have implemented a robust governance framework that underpins our day-to-day operations. Our Investment Committee includes external members, and ESG is evaluated as part of each investment decision. Our approach to conflicts of interest aims to identify, mitigate and manage conflicts of interest. Our responsible investment approach is underscored by the integration of ESG considerations at every stage of our investment process. We advocate for 'age-appropriate' ESG strategies tailored to the stage and resources of our portfolio companies and actively encourage early adoption of ESG practices. We apply the key principles of our approach to ESG across our investment portfolio to our own business activities, with a commitment to continuous improvement.
In addition, we integrate measures to address modern slavery risks throughout our investment process and business operations. This includes conducting due diligence on potential investments to assess modern slavery risks within the supply chain and company operations. Post-investment, our focus on modern slavery persists, and we take an active governance approach, influencing the management of modern slavery risks continuously. Similarly, we hold ourselves to high standards, ensuring that modern slavery risks are addressed within our own business activities. Through continuous improvement efforts, we strive to contribute to the eradication of modern slavery and uphold ethical investing principles.
Organisational Responsibility
Our commitment to responsible investing begins with our leadership and permeates throughout Main Sequence and our portfolio companies. Here's how responsibility is distributed:
- Board: Plays a critical governance and oversight role, including ensuring that our strategic initiatives align with our core values and ESG commitments. The Board approves all major policies and oversees their implementation, regularly reviewing performance and compliance to adapt strategies as needed.
- Leadership Team: Holds ultimate responsibility for shaping our investment approach, including practices related to ESG.
- Investment Committee: Tasked with approving any decision to invest in companies, ensuring alignment with our ESG principles.
- Investment Team: Responsible for integrating ESG considerations into investment decisions and company business plans, as well as monitoring performance over time.
- Operations Team: Facilitates the integration of ESG considerations into day-to-day operations, ensuring compliance with responsible investment practices across Main Sequence and its portfolio companies.
- ESG Working Group: Comprised of selected individuals within our team, this group convenes regularly to address emerging ESG issues and enhance our responsible investment approach and policy.
- Portfolio Companies: Expected to uphold the principles of responsible business conduct, including transparency and accountability. They are encouraged to work collaboratively with the Main Sequence team to advance responsible business practices and address ESG challenges.
Reporting and Transparency
At Main Sequence, transparency and accountability are paramount. We are dedicated to providing investors and stakeholders with semiannual updates on our responsible investment efforts, encompassing investment performance, ESG performance and case studies. Through regular reporting, we aim to foster trust, enhance accountability, and drive positive change in the investment landscape.
Review and Continuous Improvement
Main Sequence reviews this Responsible Investment Policy every year in line with our strategic review process, and any updates are approved by our Board. The policy is updated as necessary to reflect evolving ESG considerations, industry best practices, changes in the legal and regulatory environment, and stakeholder feedback.
