Promoting ESG
to Accelerate
Corporate Value

JIC signed the Principles for Responsible Investment (PRI), and has been promoting initiatives related to ESG and its key issue, DE&I. JIC’s Fund Management office interviewed with Masafumi Kawai, Partner/Chief Sustainability Officer; Miki Yoshida, Senior Portfolio & Partnership Manager; and Ayako Miyahara, Portfolio & Partnership Manager, who are responsible for management and investment incorporating ESG and considering DE&I at Genesia Ventures, Inc., a seed VC firm in which JIC makes an LP investment.

Our goal is more than promoting ESG itself

Masafumi Kawai, Partner/Chief Sustainability Officer Our interest in sustainability, including climate tech as an investment theme led us to begin looking at ESG management and ESG investment. Our vision of “A society that creates wealth and opportunities for all ” is close to the philosophy behind ESG. We started with signing the PRI and formulating an ESG investment policy, and prepared a long-term roadmap to ensure that our efforts would be effective and beneficial to entrepreneurs at the beginning. In addition, we developed the overall framework for ESG initiatives and steps for their implementation including integrating ESG principles into the investment consideration process, communication with entrepreneurs post-investment, designing specific support measures for ESG management, setting KPIs for assessing and evaluating ESG efforts to visualize their positive impacts and report them.

Ayako Miyahara, Portfolio Partnership Manager

Genesia Ventures ESG Report 2023, based on a survey of close to 100 Japanese startups we invested in helps understand and visualize how they see and work on ESG management. We published the report to encourage the sharing of knowledge among startups and to disseminate information that can be helpful to startups to complement essential ESG initiatives. Our goal is more than promoting ESG itself. Genesia Ventures’ approach to ESG is based on the belief that human capital management and strengthening governance will lead to the promotion of businesses and the establishment of sustainable management system in startups, which in turn will enhance their corporate value. We hope that our ESG Report will give direction for accelerating this process.

Kawai To incorporate ESG into our investment consideration process, we also prepared our own ESG checklist. We evaluate some forty environment, social, and governance-related items, and identify critical issues. The purpose of the ESG Checklist is not to make investment decisions based on whether or not a startup is ESG compliant, but rather to analyze risks and opportunities and clarify policies for future action. We work with management to improve and strengthen the key issues identified on the ESG checklist over two to three years, and the time when we need to look back at the key items we set at the time of investment has come. We will evaluate the achievement, and status to determine whether we should further develop our initiatives or change course so that we can continue to improve our ESG management.

Miyahara For investee startups, we provide ESG Solutions as a service to supplement their resources for ESG-related initiatives. For example, we retain an external expert for consulting on internal harassment and mental health issues, as well as offer a whistleblower hotline for fraud and embezzlement. All companies, regardless of size, need to have such systems to meet the legal and regulatory requirements. The entire team is committed to strengthen each initiative by being aware of these trends. We organize activities to support ESG promotion s such as holding regular study sessions and sharing guidelines in a systematic way. We would like to move forward on knowledge sharing with employees at startups other than representatives by encouraging people from diverse backgrounds, including women to participate in study sessions and other activities.

Kawai We are adding ESG Solutions services, but actually we have limits we cover their cost. In addition, it is not easy to secure sufficient resources to promote ESG initiatives, so it would be important to systematize the whole activity for efficient implementation. For that, we’ have developed a framework such as ESG Solutions and have been leveraging external resources. In practice, reporting as a PRI signatory may take time, but we believe the positive impacts are more significant since these processes have enabled us to evaluate non-financial information more broadly and precisely when considering investments and to provide a wide range of support for post-investment value enhancement. It would be helpful to strengthen and improve our ESG initiatives if JIC could share  the best practices as well as  other VCs and overseas startups’ initiatives learned through making investments in various asset classes overseas.

Miki Yoshida, Senior Portfolio Partnership Manager We expect JIC to raise the level of the industry as a whole in a broad range of investment activities.

To promote ESG initiatives, sharing objectives and moving forward one step at a time will be needed

Yoshida Fostering a mutual understanding within the company is also important. To embrace the individuality of members and working in the same direction, including ESG promotion, we took careful process to build consensus on fundamental values such as vision, mission, and action guidelines (Genesia Principles), and take the time to ensure that every member understands / behaves on them. We also share with our investees the importance of developing a vision and mission. Verbalizing the core values of the company may prevent mismatches and help hire members who share the values.

Miyahara At the weekly company-wide meetings, we discuss each other about activities of individuals and teams related to our action guidelines, which helps build a mutual understanding and clarify the  goals. Sometimes presenting what we would like to challenge from the action guidelines’ viewpoint can be useful to gain an understanding.

Kawai Initially, there were some differences in understanding among members, and I believe that, to promote ESG initiatives, sharing objectives and moving forward one step at a time will be needed. It also seems to get used to and being more ESG conscious through  reviewing ESG checklists and preparing investment committee materials containing important items. One of our investment themes is climate tech, which is an important ESG theme. It will be important that we incorporate ESG into our investment activities that are core business as VC.

Lack of diversity in investors can be resulted in failing to recognize issues

Yoshida While startups are identifying the challenges in the society and are trying to resolve them and create new value, the lack of diversity in investors can be resulted in failing to recognize issues. That is why Genesia Ventures considers the lack of diversity in the startup ecosystem to be a major issue and is developing and promoting specific measures to address it. For example, we organize workshops on unconscious bias that help be aware of tendency to make judgements unconsciously, so that they can make a fair investment decision by determining the value of a business from a more neutral perspective. To diversify the locations of domestic investees, we are enhancing access beyond the Kanto region to develop  opportunities to meet with entrepreneurs who have a background in academia and startups that leverage the strengths of each region. In addition, we have been discussing on gender diversity in speakers of events that we host or at which our members speak . However, the goal is not gender diversity itself. We firmly believe that by collaborating with people of various backgrounds and attributes, we can achieve outstanding results in our investments, events and other activities.

Miyahara: I used to work for  a financial institution before joining the VC and although I was interested, there was little information available about work environment at a VC or startup. I happened to learn how people work at Genesia Ventures, and started my career in the VC world. Based on my experience, I am sure that there is definitely a need of communication to inform people from various backgrounds, not just women of the flexible work style at VCs and startups. Leveraging its capital and ability to send messages, JIC can help attract people who are interested in VCs and startups by forming a pool of human resources and distributing information, which must help improve the mobility of human resources. We would be happy to collaborate with you on this initiative.

Yoshida To promote the participation of women, it is essential to have both support at workplace and mutual understanding and compromise. While business dinners or long meetings over weekends may help deepen relationships between capitalists and entrepreneurs , we tend to think not having  these kinds of meetings would be good for people who are raising children, considering women’s participation, But it may be possible to maintain balance between work and family without having to give up the challenges of work if company can offer flexible options, such as subsidizing babysitters,. Not one person’s patience but relying on outside support to handle some child-rearing duties instead could create an environment in which family members can sustainably support each other to move forward in their career. The ideal balance between work and life depends on a person. Genesia Ventures allows employees whose childcare leave exceeds a certain period of time to work on a project basis if they so desire. This kind of flexible system is also needed.

Miyahara Having flexible work options allows employees to help each other without having to interrupt their careers for life events such as childcare or caregiving, which would be psychologically beneficial. We still have a long way to go in terms of raising awareness and creating this type of system, but we hope we can have a positive impact on the industry as a whole.

Comments from JIC Fund Management Office

Yoshie Suzuki, Managing Director, Head of Fund Management and ESG Promotion Officer Genesia Ventures was one of the first Japanese VC firms to address ESG issues, and was a signatory to the PRI before JIC. We very much appreciate this opportunity to introduce their initiatives and communication about ESG and DE&I, which are outstanding. Through the interview, we learned how each initiative aligns with the vision and mission of Genesia Ventures, and also what was  expectations for JIC. We will continue our efforts to sustainably enhance the value of our investee companies and the economy and society as a whole.

Yoko Ogawa This interview helped me understand more deeply about how wonderful Genesia Ventures’ ESG and DE&I initiatives were. Learning about the specific measures they are taking to promote ESG within the firm and to provide support to their investee startups that lack resources was particularly informative is extremely helpful not only to our company, but also to many VCs and startups. We look forward to continuing to learn more about various initiatives in the future.

Sho Biro We are very grateful for the opportunity to talk about Genesia Ventures’ approach to ESG promotion and its initiatives. I learned more specifically about their impressive approach for ESG including the idea that ESG will lead to enhancing corporate value and incorporating ESG factors into the investment process. Constructive ideas such as the creation of rules from the user's perspective are extremely helpful for us to promote . I look forward to continuing to work together to promote initiatives that lead to sustainable value enhancement for society as a whole.