VC-backed companies and sustainability: a slower but potentially profitable union

Several studies have nowadays been dedicated to innovative companies’ financing (particularly through venture capital) and to the integration of sustainability issues in corporate law. This paper sets out to analyse the interactions between these two topics, highlighting the potential benefits of integrating sustainability objectives early in business development. After a brief analysis of the drivers for integrating sustainability into investment activities in general, including in the light of the most recent pieces of legislation emerged in EU law, the paper explores the compatibility of venture capital fund investment objectives with the financing of innovative companies that include sustainability issues in their investment policies. It concludes by pointing out that this shift toward sustainability is, at least for now, primarily driven by private contracting rather than mandatory legislation. Thus, the paper examines the specific governance tools and contractual models used by venture capitalists, which appear particularly well-suited to enabling financed companies to assess and periodically monitor the integration of sustainability factors as part of their activities.