ITPEnergised and Orbis Advisory released a Private Equity and Venture Capital Index for 2021 regarding ESG Transparency. In response to the recent COP26 Summit shining a spotlight on the increasing risks from climate change, the report states: “Financial organisations have a vital part to play in delivering this goal by using their central role to bring about systemic change and helping to mobilise capital to decarbonise the economy. With this comes risk as well as opportunity.”
Jonny Clark, the Managing Director of ITPEnergised, says, “It is encouraging to see more financial institutions, and their investors across a wide range of sectors, adopting increasingly robust ESG strategies and better transparency. For ESG to be successful though, it needs to be embedded, part of the organisational DNA.”
The report suggests that a strong ESG strategy would enable financial organizations to improve their financial performance while also managing risk and building resilience. It shares that, “There is no ‘one size fits all’ method to how an organisation approaches ESG. However, it is apparent that there is a lot of noise surrounding ESG, making it difficult to unpick and navigate. Internationally recognised ESG frameworks can be a helpful tool in identifying what is important but are not an absolute requirement.”
Rupert Clark-Lowes, Managing Director of Orbis Advisory, shares this sentiment and states: “Top performers confirm ESG is central to the long-term success of businesses and that looking at corporate and investment strategies is of paramount importance. Understanding risks and opportunities, responding to climate change and communicating with transparency to key stakeholders are just a few of the long list of actions which these stand-out firms have achieved.”
Among the extensive list of top performers detailed in the report is Vickers Ventures Partners, an international venture capital firm, focused on early stage and growth capital investments globally. The report states, “During the investment stage, corporate engagement aligns the firm’s ESG framework with Vickers’ ESG policy. Monitoring and reviewing during the post-investment stage allows them to track ESG performance. Vickers embeds ESG factors into its internal processes with current targets, actions and next steps, including diversity metrics, employee commitment to ESG, training and professional development and having its own Advisory Committee to resolve conflict in fund operations.”
Dr. Petros Farah, the Vice President at Vickers, shares that, “As early-stage investors, we invest in our companies through the time of their biggest uncertainties, which also means their periods of most significant change and growth. We believe that having an ESG framework in place helps guide our companies through this phase to achieve long-term, sustained growth.”
The Future of ESG Transparency
ESG is no longer just a ‘buzzword,’ but is considered a tool to develop long term business resilience and investment value creation. In comparison to 2020, the report shares, “more [PE firms] are now adopting and disclosing their responsible investment practices and ESG performance, and that ESG performance across all components, considered as part of the Index, has increased.” ESG performance is becoming normalized and PE firms who are not yet participating, or disclosing are at risk of falling behind the curve.