In Venture Capital, ESG has not left the Discourse Yet
Half of private equity managers still don’t use any standards related to environmental and social governance and corporate governance when monitoring the performance of their investment companies – they don’t lead startups to do so .
This was demonstrated by an emerging study by VC Fellows – a group of private equity analysts – which conducted interviews with 37 private equity managers working in Brazil. (The study will be officially published next month).
When it comes to analyzing new investments, the situation is similar: about 40% of managers do not integrate any environmental or social and governance aspects.
A large portion of managers who don’t use ESG (over 70%) said they didn’t because they “don’t know how to get this topic into the real box.”
Part of the challenge in the initial phase of companies is associated, which reduces the chances of standards, because these companies still have little data to evaluate them.
“On the other hand, it also opens a lot of doors, because investors at this stage have the opportunity to steer companies towards good practices,” said Evlin Nia, president of ESG at EVCF.
Another challenge is the lack of standardization of metrics, giving way to so green washing, as well as the fact that some managers are still unclear about the ESG concept.
According to Evelyn, many managers still confuse environmental, social, institutional and influence governance, which eventually drifts away from the day-to-day issue of the operation.
“Sometimes the boxes believe that they are not in the influence box and therefore you do not need to consider environmental, social and administrative responsibility.”