GPs and ESG data: the state of play
We have some insight into how GPs are thinking about ESG, courtesy of affiliate title Private Funds CFO and MUFG Investor Services. The 2021 Private Funds Leaders Survey garnered insights from 95 senior execs at GPs – 63 percent were based in North America. Here are some of the key findings:
- Around three-quarters of firms (73 percent) are gathering ESG data directly from portfolio companies; 24 percent are combining some direct data collection with some external data provision.
- For 65 percent of firms, ESG data gathering is a fully manual process; 32 percent of respondents take advantage of some sort of automation.
- The most commonly tracked ESG data point is diversity, tracked by 75 percent of GPs. Only 36 percent of firms are tracking carbon footprint.
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New Private Markets subscribers can read the ESG-centric findings here.
Spanish fund investor Arcano Partners has raised more than €200 million for its Arcano Impact Private Equity Fund, the firm said on Monday. AIPEF, which has a target size of €300 million, has already done 10 deals, including primary fund commitments and direct co-investments. Further details include:
- Primarily focused on the US and Europe.
- Has a mandate to invest in secondaries.
- Investments support “companies contributing to achieve the Sustainable Development Goals (SDGs), particularly through impact themes such as energy transition, promotion of health and wellbeing, sustainable agriculture and high-quality education”.
Advent’s S&P tie up
Private equity stalwart Advent International has adopted S&P Global’s ESG framework, becoming the first private equity firm to do so. Advent and its participating portfolio companies will use S&P Global’s Corporate Sustainability Assessment to identify ESG risks, the two firms said in a statement. The CSA sends participating companies a questionnaire and maintains a database to provide industry-specific benchmarks derived from its client companies’ ESG performance.
Last month Advent signed the UN-backed Principles for Responsible Investment. The firm also uses the SASB materiality sector index to identify ESG risks and opportunities when it assumes control of a portfolio company, the firm said in its annual ESG report last year.
ESG-linked carry: it’s coming
Read Snehal Shah’s report from last week’s Impact Investor Forum on the challenges and opportunities of linking a GP’s carried interest to ESG performance. Law firm Kirkland & Ellis is currently working out ways of doing this with some clients, partner Amala Ejikeme, said. We’ve reported on a couple of examples in recent weeks – funds from EV Private Equity and Capza – and placement firm Campbell Lutyens told us it is seeing more cases. Said Ejikeme: “It’s a real challenge and something that we should all watch this space for.”
Shaking up Japan’s VC scene
Four female executives have launched a venture capital firm with the aim of leading the “ESG in VC” movement in Japan. Said co-founder Kathy Matsui in a LinkedIn post: “We’re thrilled to announce our launch of Japan’s first ESG-focused global venture capital fund, ‘MPower Partners’!
“We believe ESG integration is imperative for start-ups to drive scalable and sustainable growth, and with our experience in diversity, governance and sustainability, we aim to lead the #ESGinVC movement in Japan. As daughters of entrepreneurs ourselves, we’re excited to embark on our own entrepreneurial journey.”
According to a Bloomberg report: “The new fund will aim to invest two thirds of its capital in growth to late-stage start-ups in Japan, she added, with the other third in early-stage start-ups overseas.”