Our Commitment to ESG & DEI

Updated February 2023

At Norwest, we aim to incorporate environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) considerations into our decision-making and portfolio services. ESG is a framework for considering relevant focus areas that contribute to financial performance and sustainable growth. DEI is one of the highly relevant focus areas we identified to focus on internally and with our portfolio companies. We believe optimizing ESG and DEI performance can drive value creation, while ignoring ESG and DEI performance exposes a company to material risks. This has been reflected in how we do business for decades.

We take pride in helping our companies enhance their value and long-term sustainability. We recognize the value of strong ESG and DEI consideration in our internal operations as a firm and aim to hold ourselves to the same standard as our portfolio companies.

Our Approach

Our ESG and DEI policy defines our approach to considering ESG value creation opportunities and risks, and our focus on DEI efforts.

We aim to consider relevant ESG issues in our due diligence and in engaging with portfolio investments. DEI is one of the ESG issues we are focused on as a firm, and for our portfolio companies.

This policy is intended to help us:

  • Consider risks and opportunities internally, when making decisions, and in engaging with portfolio companies
  • Encourage the building of diverse and inclusive teams, internally and within portfolio companies
  • Establish a path for an ESG approach that deepens over time

How We Define ESG and DEI

Norwest follows a definition of ESG adapted from the Venture ESG initiative.

Environment: Performance related to environmental risks and impacts, including the below categories.

  • Environmental footprint: understanding, measuring, managing and reducing environmental impacts (e.g. greenhouse gas emissions, water use, waste, deforestation, ecological destruction, chemical runoff)
  • Climate-related risks: understanding and addressing risks related to the physical impacts of climate change and risks related to the transition to a low-carbon economy

Social: Impacts on and relationship with stakeholders, including the below categories.

  • Team and working environment: building a strong culture and being a conscientious employer (including addressing pay gap, parental leave, living wage)
  • Responsible product design: designing and building products with consideration of the ethical and human implications on the end-user and society
  • Supply chain: working towards an ethical and environmentally resilient supply chain (including a Supplier Code of Conduct embracing the UN’s Global Compact)

Governance: Performance related to fair, accountable, and transparent corporate practices, including the below categories.

  • Legal and regulatory: being aligned to and compliant with the latest regulations and compliance standards (including GDPR, UN Guiding Principles of Business and Human Rights, the eight core International Labor Organization conventions); ensuring oversight of these issues by firm leadership
  • Governance infrastructure: having appropriate governance structures in place, according to the company’s stage; drafting a code of conduct (committing the company to high ethical standards); adopting appropriate policies such as a whistle-blower policy and anti-harassment policy
  • Data privacy and security: instilling a strong culture of trust, responsibility and best practice (including with internal systems) regarding data

Our commitment to the concepts of diversity, inclusion and equity, are consistent, though the acronyms may change over time.

Diversity: Presence of a variety of perspectives, backgrounds and experiences within the organization.

  • Founding team is committed to hiring and leveraging a diverse employee base which will lead to innovative ideation and problem solving

Equity: Access to opportunities; acknowledging that barriers exist for some in our society

  • Product or service is available to all humans with the hope of solving a major global problem for all humans
  • Ensuring that environmental degradation/land use is not disproportionately concentrated in or around underserved or indigenous communities, particularly those of color

Inclusion: Leveraging the talents and skills of every employee.

  • Integrating diverse and inclusive practices across all areas of the business (e.g. diversity of the fund or the founding teams, inclusive hiring practices)
  • Creating a culture of psychological safety where every employee feels empowered to bring their best ideas to the table

Integrating ESG at Norwest

We seek to take a responsible approach to investment. We aim to recognize the potential impact of portfolio companies on the environment, workers, communities and society, as well as the potential impacts of ESG issues on the companies the firm invests in.

Building on Norwest’s values and firm culture, and representing a formalization of our long-running commitment to responsible investing, we are currently focusing on three areas related to ESG.

1: Risk Screening & Due Diligence

We aim to screen companies and exclude from investment any company that we are reasonably able to determine to be in direct and knowing violation of UN Global Compact Principles, and inquire about ESG risks and opportunities during the due diligence process. Our risk screening and due diligence process will enable us to flag risks, make better investment decisions, and indicate what forms of ESG portfolio services may be most valuable to the investee over time. We will also inquire during the due diligence process whether the target is willing to engage on ESG topics.

2: Investment

We hope companies we invest in will share our commitment to ESG integration. We will seek to include an ESG clause in term sheets that expresses our mutual intent to improve the company’s ESG performance over time.

3: Portfolio Management

A central focus of our approach includes engaging with and educating our portfolio companies on ESG and DEI topics, and relevant risks and opportunities. Once invested in, we will aim to support our companies in developing best practices related to ESG and DEI performance.

  • We will work closely with those portfolio companies that are willing to educate about best practices
  • Companies that are unwilling or unable to educate will still receive encouragement to see the value in ESG performance management, and resources to mitigate ESG risks that Norwest identifies in due diligence

Our Focus on DEI

At Norwest, an intentional commitment to diversity, equity, and inclusion is foundational to our team’s work. This belief is core to how we have operated for decades. Some of our DEI initiatives include:

  • DEI focused educational fireside chats with industry leaders
  • Resources & frameworks entrepreneurs can leverage for their organizations
  • Investing in underrepresented funds like Serena Ventures and Chingona Ventures
  • Events focused on building a diverse board pipeline for our portfolio companies

Scope of Policy

Norwest and its affiliated investment funds will make reasonable efforts to encourage all portfolio companies to consider relevant ESG and DEI-related principles. In certain investments, factors such as our ownership stake or influence may affect our ability to assess, set or monitor ESG and DEI-related performance goals.

We and our affiliated investment funds will also apply the policy to our internal operations, based on the belief that effective ESG and DEI management begins with diverse and inclusive governance and team environments.

Policy Implementation Governance

Norwest has developed an “ESG and DEI Steering Committee” composed of internal team members representing key functions at the firm, and ESG/DEI advisors. The Steering Committee is responsible for the implementation of this policy.

Our investment team, with the assistance of the Steering Committee, is responsible for ensuring the consideration of ESG issues is integrated into investment decisions and management (in collaboration with the legal team), and for ensuring we implement initiatives related to our focus on DEI.

The Steering Committee is responsible for the following: 

  1. Facilitating the implementation of this policy
  2. Maintaining and updating this policy
  3. Providing training to employees of the firm and interested portfolio companies to ensure continued relevance and education
  4. Helping to develop ESG strategies at interested portfolio companies

This policy has been approved by the Managing General Partners and will be reviewed and updated annually.