ESG Policy

We genuinely care about Environmental, Social and Governance considerations and believe that, in the long run, integrating ESG into our investment process will reduce risks and enhance returns.

The purpose of this policy is to articulate our ideas and approach to implementing Environmental, Social and Governance (ESG) considerations in our investment process and our operations. In essence, we believe that by fully integrating ESG at each stage of our investment process, we can better manage risks and identify opportunities to enhance sustainable, long term returns in the early stage companies in which we invest. We consider ESG issues to be:

  • Environmental: How a company safeguards the environment, including sustainability, waste, energy use, conservation and climate impact. 
  • Social: How a company manages relationships with and protects key stakeholders. This includes employees, suppliers, customers and the communities in which it operates. 
  • Governance: How a company’s leadership is composed and how it operates to ensure accurate and transparent reporting, accountability and shareholder rights.

For a more detailed overview of example E, S and G issues in venture capital, see appendix 1.

Positive ESG initiatives are a natural fit for our investment capability, which is framed around tackling big, global challenges.

We believe that venture capital investing plays a vital role in creating the next generation of industries that can be engines of job creation and economic growth. Deep technology startups in particular, which have novel science or engineering innovation at their core, may help solve some of the greatest challenges facing humanity. This is why we have framed our investment capability around six big, global challenges that align well with opportunities for positive ESG initiatives:

Decarbonise the Planet Bridge the Gap to Space
Feed 10b People Supercharge Industrial Productivity
Reach Humanity Healthcare Enable the Next Intelligence Leap

We signed the UNPRI as part of our commitment to responsible investing. We are joining forces with a global community seeking a more sustainable financial system.

As a signatory to the United Nations Principles for Responsible Investment (UNPRI), we commit to:

Principle 1

We will incorporate ESG issues into investment analysis and decision-making processes

Principle 2

We will be active owners and incorporate ESG issues into our ownership policies and practices

Principle 3

We will seek appropriate disclosure on ESG issues by the entities in which we invest

Principle 4

We will promote acceptance and implementation of the principles within the investment industry

Principle 5

We will work together to enhance our effectiveness in implementing the Principles

Principle 6

We will each report on our activities and progress towards implementing the Principles

Table 1- ESG is incorporated at every step 

Screening / early
We maintain and update an exclusions list of industries that we won't invest in. Early engagement filters out these exclusions.
Due diligence We assign each of our portfolio companies an internal ESG rating before we invest, as outlined below.

Risk layering is a focus, an investment is less likely to go if ahead if more than one E, S or G category is medium iS or high risk.
Committee (IC)
 IC memos include:

Internal ESG ratings and a descriptive commentary about key considerations.

Modern Slavery considerations

An identification of key impact metrics and relevant Sustainable Development Goals.

We are often the 'lead' investor when we initially invest in a company, which means that we set out the detailed terms of our investment in a Terms Sheet that includes ESG provisions.

We monitor ESG considerations for our portfolio companies on an ongoing basis in our informal conversations with founders as well as our formal discussions as directors and observers on the boards.

We also make a formal request for ESG data from our portfolio companies every 6 months. 

Reporting Each semi annual report includes several case studies, demonstrating key E. S and G issues and the initiatives undertaken in the period.

We are early, active investors with influence, albeit minority ownership.

Our initial investments are predominantly at early stages (preseed and seed). We are an active owner and aim to help build the companies in which we invest. Our time horizon is long (10+ years) and we generally have board seats (director or observer) and reasonably large, albeit minority, ownership stakes. This gives us the opportunity to engage early and help establish positive culture, values and behaviours in relation to ESG, that can be more challenging to introduce and ingrain in a company once it is more mature.

We integrate ESG into each step of our investment process, seeking to adjust for the maturity of the investee company, and encourage capacity-building over time.

ESG is embedded into each step of our investment process, from the earliest conversations with founders, to more formal due diligence, investment committee memos and transaction documentation, then ongoing monitoring and reporting. See table 1 above.

We recognise that ESG initiatives ought to be ‘age appropriate’, reflecting the stage and available resources of our portfolio companies. We generally encourage our companies to start incorporating ESG considerations early, even in a small way, and seek to continuously improve. We are currently developing a toolkit to help our companies navigate their ESG journey as they grow and mature.

We share best practice ESG initiatives in group forums with our portfolio companies. Recent topics have included B-Corp certification and Life Cycle Assessment analysis, where these can be meaningful to attract customers, talent and other coinvestors in some of our portfolio companies.

Internal ESG ratings provide a snapshot of ESG risks and opportunities across the portfolio.

We assign each of our portfolio companies an internal ESG rating before we invest and update it throughout the term of our investment. Internal ratings are outlined overleaf:


Opportunities for positive E, S or G outcomes - we’re generally looking for exceptional / ‘above and beyond’ opportunities to qualify for ESG+ status

Low ESG risk

Negligible E, S or G risks identified 

Medium ESG risk

Potential E, S or G issues identified, to be addressed and mitigated by Main Sequence’s ongoing influence with the portfolio company and/or in the transaction documents at the time of investing

High ESG risk

Meaningful E, S or G issues identified which mean an investment will likely be avoided since it is difficult to mitigate the risk through engagement

ESG issues are often ‘grey’ areas.

ESG issues aren’t always black and white, often they can be deeply complex and multi-faceted ‘grey’ areas. When we encounter these ‘grey areas’ we tend to find that what matters most is the spirit in which the leadership of a portfolio company comes to the table. 

For this reason, we spend a lot of time with the founders of prospective portfolio companies prior to investing so that we can understand their motivations and ensure we are aligned on certain key ESG issues.

Every member of our investment team is responsible for ESG integration.

We believe ESG integration is strongest when all members of our investment team are responsible for assessing, discussing and incorporating ESG into our investment process.

Our semi-annual ESG Implementation Statement helps us track ESG progress in our portfolio over time.

We track ESG progress in each reporting period, with the goal of continuously improving our engagement with portfolio companies over time.

Holding up the mirror - how we integrate ESG ourselves

We apply the key principles of our approach to ESG across our investment portfolio to our own business activities, with a goal to continuously improve. Below is a brief overview of our current approach:

Environment: As we are located on CSIRO sites, we participate in CSIRO environmental impact reduction for office based activities, which are integrated into CSIRO’s internal ESG monitoring and reporting.  We are committed to reducing unnecessary travel, and offsetting our flight emissions to reduce climate impact. 

Social: We measure engagement and satisfaction of our portfolio companies. Our diversity profile has been improving in recent years, in line with our diversity and inclusion plan.  We measure and track team sentiment regularly and the whole team participates in 360 degree feedback semi-annually. Data protection and privacy are paramount to us and we have a robust privacy policy and regularly review our cybersecurity requirements. Team members give their time and knowledge to the innovation ecosystem through a range of different engagements within the community.  We take modern slavery and social impact into account when procuring goods and services for Main Sequence.

Governance: Our Board, and the boards of related companies that serve as trustees and general partners, are diverse and AICD trained. We are externally audited for financial and operational performance annually. We have a clear company constitution. Our investment decision making is clearly governed by our Investment and Advisory Committees. Executive compensation is subject to market review. Risk management and business continuity plans are in place and regularly reviewed. We are members of the Australian Technology Council and the Australian Investment Council. We have robust provisions for escalation of issues / whistleblowing.

Appendix 1 - Example ESG issues for consideration in Venture Capital

Source: Technical Guide for Limited Partners: Responsible Investment in Private Equity, PRI, 2020.