Heal Capital - ESG Policy


At Heal Capital, we define 'ESG' as a framework targeting environmental, social, and governance factors that impact both our fund and our portfolio companies. ESG principles are deeply integrated into how we invest, operate, and support the next generation of digital health innovation.

Our ESG strategy is primarily focused on SDG 3 - Good Health and Well-being, which aligns closely with our mission to build a future-proof, accessible, and inclusive healthcare landscape. In addition, we incorporate and consider the impact of our investments on four complementary United Nations Sustainable Development Goals: SDG 5 (Gender Equality), SDG 9 (Industry, Innovation and Infrastructure), SDG 10 (Reduced Inequalities), SDG 11 (Sustainable Cities and Communities).

As an SFDR Article 8 fund, Heal Capital II commits to promoting environmental and social characteristics throughout our investment approach. We ensure that at least 30% of our investments qualify as sustainable within the meaning of Article 2(17) SFDR, with a strong focus on generating positive social outcomes in healthcare. We regularly assess and evolve our ESG framework to meet regulatory requirements and to ensure meaningful, long-term impact.

 

How we approach ESG

While numerous frameworks and definitions of ESG exist, many are not well-suited for application in venture capital or for collaborating with early-stage technology startups. Therefore, we adhere to a definition of ESG developed in collaboration with VentureESG, which organizes ESG into ten issue areas, each linked to environmental, social, and governance dimensions.

  1. Environment: considering the environmental impact from

    a. Scope 1 (directly caused by the company/VC, e.g. through facilities) and

    b. Scope 2 (indirectly caused, e.g. energy, electricity, waste) to

    c. Scope 3 (caused by upstream and downstream activities, e.g. business travel, transportation of the product, customers’ energy usage); targeting both measuring but most importantly reducing the impact across all scopes (at fund and portfolio level).

  2. Social:

    a. DEI: integrating diverse and inclusive practices across all areas of the business (e.g. diversity of the fund or the founding teams, inclusive hiring practices)

    b. Team and working environment: building a strong culture and being a conscientious employer (e.g. pay gap, parental leave, living wage)

    c. Responsible product design: designing and building products with consideration of the ethical and human implications on the end-user and society

    d. Supply chain: working towards an ethical and environmentally resilient supply chain (including a Supplier Code of Conduct embracing the UN’s Global Compact)

  3. Governance

    a. Legal and regulatory: being on top of and aligned to the latest laws, regulations and compliance standards (e.g. GDPR (and equivalent), UN Guiding Principles of Business and Human Rights, the eight core ILO conventions); the oversight of these issues should be ensured by the founding team and Board of Directors.

    b. Governance: having appropriate governance structures in place, according to the company’s stage (e.g. board structure, share structure); writing out a code of conduct (committing the company to high ethical standards); adopting a whistle-blower policy.

    c. Data privacy and security: instilling a strong culture of trust, responsibility and best practice (e.g. with internal systems) around data.

Our governance standards are aligned with globally recognized frameworks such as the UN Global Compact, OECD Guidelines for Multinational Enterprises, and the eight core conventions of the International Labour Organization (ILO).

How we integrate ESG in the investment process

Applying ESG principles is not only based on a comprehensive set of considerations specific to us as an investor and the startups we invest in; we also think through how ESG applies to the entire investment process from sourcing and screening to due diligence and portfolio management and exit.

1. Exclusion list:

As a specialized HealthTech fund, we focus exclusively on opportunities within our defined scope, which means there are numerous business models and sectors that fall outside our investment criteria. Furthermore, we exclude companies which are directly or indirectly engaged in or derive a substantial part of their revenue from the following industries:

·   Production and distribution of arms, ammunition and military equipment (excluding so-called dual-use goods);

·   Pornography and the so-called sex industry;

·   Manufacture and distribution of tobacco products;

·   Extraction of critical raw materials (CRM);

·   Production of agricultural products and livestock;

·   Production and distribution of genetically modified organisms (GMO);

·   Gambling, in particular the operation of internet gambling or online casinos;

·   Manufacture of nuclear energy or essential components for the manufacture of nuclear energy;

·   Extraction of natural gas or crude oil by fracking and production of crude oil from tar sands;

·   Production and/or distribution of coal and other extraction of petroleum or coal

We will also exclude companies who / whose:

· business activity consists of an illegal economic activity (i.e., any production, trade or other activity, which is illegal under the laws or regulations applicable to the Fund or the relevant company or entity), including without limitation, human cloning for reproduction purposes; or

·  act in serious violation of the UN Global Compact (without a positive perspective), which has the following objectives, among others:

o   Protection of international human rights;

o   No complicity in human rights abuses;

o   Uphold freedom of associaton and the right to collective bargaining;

o   Elimination of forced labor, of child labor and of discrimination in respect of employment and occupation;

o   Precautionary principle in dealing with environmental problems;

o   Promote greater environmental awareness;

o   Development and diffusion of environmentally friendly technologies;

o   Advocacy against all forms of corruption.

   2. Sourcing:

We are dedicated to embedding accessibility and diversity as fundamental principles in the sourcing and management of our deal pipeline. To achieve this, we have implemented concrete mechanisms and steps to enhance accessibility and address any diversity gaps early in the investment process:

· Open application process: to counteract the need for ‘warm introduction’, we have installed a simple typeform on our website for founders to send us their pitch documentation. All applications are screened by at least one member of the investment team.

· Clear investment scope and fast responses: We communicate our investment scope transparently on our website using clear and accessible language. For applications that align with our scope, we strive to provide timely and thoughtful responses.

 

   3. Due diligence / qualitative assessment of investments:

ESG considerations are an important part of our process when screening and conducting due diligence on potential investment targets. We aim to understand the founders’ attitudes, their approach to building their companies, and their early identification of potential adverse impacts. These insights will influence our investment decisions. The information gathered is thoroughly documented in our investment memos and plays a relevant role in guiding our process. At this stage, we use the following tools to assess the startups and founders perspectives on ESG:

·  Early contact: ESG screening checklist (three quick questions):

o   Is the company directly or indirectly engaged in industries from our exclusion list or operating in illegal activity?

o   Is the founding team’s vision for their business congruent with our ESG principles and acting according to the UN global compact?

o   Have the founders considered potential adverse impacts of their business?

·  Due Diligence Stage: ESG due diligence checklist

o   Are there any obvious red flags (e.g. non-compliance, ESG risks) along the lines of our DD checklist?

o   How could ESG considerations impact the viability of the business model?

o   Goal: ESG (risk) assessment with relevant DD questions as part of every investment memo

o   Consulting external sector-specific experts if required, e.g. around data security or other regulatory issues

·  ESG term sheet clause and side letter agreement

·  ESG commitments post-investment: we will ask the founder team to commit to ESG policies and procedures post-investment with yearly milestone and reporting, depending on the stage of the company

Additionally, we consider the UN Principles for Responsible Investment (UN PRI) standards as key guidelines when making investment decisions.

 

   4. Post-investment portfolio management

Once we have committed to invest in a company, ESG considerations will further guide our portfolio management with a focus on both risk mitigation and value creation. We continue our comprehensive approach to ESG across the eight core areas guiding our portfolio on their journey.

· On-boarding briefing: based on the due diligence checklist, our kick-off briefing for every new portfolio company includes an ESG framework exercise to identify their blind spots and company priorities based on stage / sector / region (from both a risk and strategic value perspective).
The outcome of this initial workshop is to agree on 5-10 reporting metrics (e.g. DEI of growing team, carbon footprint from Scope 1 to 3) covering the eight ESG areas and set goals for improvements.

· Regular reporting and milestones: regular ESG-focused reporting and if relevant milestone meetings will be conducted every 12 months (or at a point of a significant product pivot / business model change) and will ensure progress. For evaluation, the agreed upon KPIs / milestones will be reviewed and adapted (if necessary).

 

   5. Follow-on funding:

We believe that making ESG part of our financial decision making is key so receiving follow-on funding at our fund is not only based on commercial milestones (e.g. around revenue numbers) but also ESG targets. Decisions will be taken on a case-by-case and the portfolio company will be involved along the process.

 

   6. Exit:

In the case of exiting (via sale, M&A or IPO) we will consider possible ESG factors, too. Advising founders on the right time to exit and the right partners to work with are important. Similarly, making sure that the exit process (e.g. IPO documents) is prepared with ESG principles in mind is crucial to us also to avoid earlier ESG-related problems.

How we operationalize ESG in our VC firm

ESG does not only apply to how we invest and help our portfolio companies flourish and grow but it is also part and parcel of how we internally manage our fund. We aim at applying the same ESG considerations and the same standards we measure our portfolio with to ourselves. We are committed to identifying and managing any conflicts of interest related to ESG, whether in investment selection, stewardship, or reporting, and resolve them through internal governance protocols. Being in a strong position when it comes to ESG ourselves not only makes our demands to portfolio companies more believable, but it also strengthens our (economic and structural) position as a VC firm.

 

· ESG responsibility: while every member of our investment team is concerned with and thinks along lines of ESG when making decisions and supporting portfolio companies, we have assigned the overall responsibility for ESG to Cecilia von Oldershausen (Senior Manager Finance & Operations). Our approach to ESG will be discussed regularly in our partner meetings (at least once a year).

· Hiring and working environment: we are committed to hiring a diverse team and providing an inclusive working environment.

· Good governance: all our decision making in both the management and the investment committee is committed to good governance principles.

 

 

ESG ecosystem

As a signatory of the UN Principles for Responsible Investment (UN PRI), Heal Capital is committed to all six principles including ESG integration, ownership engagement, transparency, and industry advocacy.

Furthermore, Heal Capital is part of the international VentureESG initiative and community, a group of over 200 VC funds between the US, Europe and Israel driving the industry towards more consideration of ESG principles. We intend to further contribute to this development by both embodying the ESG principles set out in this policy in our fund and helping our portfolio to do the same. We aim to work towards a global ESG ecosystem by sharing and encouraging our practices across the VC landscape.

Last Updated: 24/06/2025