Sustainable investing in the venture capital & private equity industry
Sustainable investment has become an increasingly important part of the operations of private equity and venture capital industry. The policies of sustainable investment are an integral part of the Finnish Venture Capitalist Association’s Code of Conduct rules and openness and transparency recommendations. All members are expected to publish their sustainability policies and to consider sustainability aspects in both their own operations and those of their portfolio companies.
Sustainable investment policies
Evaluating and managing the opportunities and risks of sustainable investment and corporate responsibility, i.e. environmental and social responsibility and good governance (ESG), has become part of daily business in private equity and venture capital funds and their portfolio companies. Evaluating the sustainability and corporate responsibility related opportunities and risks enables the identification of new sustainability-based business opportunities to increase the value of the portfolio companies.
Finnish Venture Capitalist Association considers the principles of sustainable investment and improving diversity in the industry an integral part in the operation of the private equity and venture capital industry. Therefore:
1. We have included the principles of sustainable investment as part of the association’s Code of Conduct, which the association’s actual members have committed to follow in their business. Corresponding changes have also been made to the association’s transparency and disclosure guidelines.
2. We have issued the actual members of the association a (non-binding) recommendation on how responsible investment and corporate responsibility of portfolio companies can be implemented in practice.
3. We also offer our members information and training on sustainable finance and corporate responsibility issues, and conduct research on the development of sustainable finance in the industry.
Sustainability and the assessment of its opportunities and risks are part of daily business in the private equity industry. To enable ESG value creation and support sustainability, investors and companies must have the necessary expertise and tools at their disposal. For this reason, the ESG working group of the Finnish Venture Capital Association (FVCA) has developed a toolkit to support ESG measurement.
Together with Inklusiivi, we have published a comprehensive information package that provides private equity investors with concrete steps to promote diversity, equity, and inclusion in their operations. The guidance offers support for developing internal operations, deal flow, and portfolio companies alike.
Read more about the Finnish Venture Capital Association’s ESG rules and recommendations, and also explore Invest Europe’s materials on responsible investing here.
Impact investing
Impact investing is a form of investing that combines financial returns with societal benefits. In impact investing, investments may be directed towards companies and/or activities whose products and services address societal or environmental issues. Impact investing can be seen as a tool for addressing social and environmental problems. The goal of impact investing is to identify solutions that tackle societal challenges.
Finnish Venture Capital Association, Sitra, and Deloitte conducted a study on impact investing in the spring of 2017. The aim of the study was to gain an understanding of the current state of impact investing and its future potential in the Finnish venture capital and private equity field.
Read more about the study: Opportunities for Impact Investing in the Venture Capital Industry (in Finnish)