Briefing - BVCA admin

often a key priority, not least because the investors in those funds
can be important public entities such as the World Bank. In many
developing markets in particular, established PE investors from
abroad can lead best practice in the area of sustainability. But with
companies also increasingly concerned with how they manage their
pension funds and financial assets, sustainability is also important for
PE/VC investors in established markets.
However, there also appears to be a growing realisation that
sustainability matters not just because of its potential direct
reputational impact, but also how that can then affect company
performance and ultimately fund returns. Fifty-four percent of
survey respondents agreed that sustainability management would
generate greater shareholder value over the long term, up nine
percentage points (ppts) from the 2009 survey (Chart 2). And 45%
of respondents said that sustainability management did impact on
their investment decisions, an increase of 7ppts from two years ago.
There are also signs that company managers themselves are taking
more of a lead in this area, with around half of respondents agreeing
that management teams are increasingly interested in sustainability
issues as a means to reduce risks and create additional value; fewer
than 20% of respondents disagreed.
Perhaps the biggest change in the past two years, however, has been
the widespread implementation of institutional measures to embed
sustainability into PE/VC processes. Fully 63% of those survey noted
that their firm already had a policy or set of principles setting out the
firm’s approach to sustainability issues in place, up from just 24% in
2009. And only a fifth of respondents had no plan to implement such
a policy in the future, down from 51% two years ago. Yet while GPs
genuinely do seem to be addressing these issues internally, much
ChArT 1 ChArT 2
% of respondents
70
60
50
40
30
20
10
0
Companies managing
sustainability are incurring
unnecessary costs
19
10
37
64
Agree Disagree Neither/don’t know
44
2011
26 2009
more remains to be done. Just 20% of GPs acknowledged regular
formal reporting or communication of their firm’s sustainability
activities internally, with 44% having no plans to implement any such
communication going forwards. While that is an improvement on
two years ago (when just 12% of GPs had internal reporting), it also
represents a missed opportunity. By ensuring that all staff are aware
of the high profile and importance of managing sustainability issues,
PE/VC firms can really take up the mantle of responsible investors
and lead best practice across the corporate sector as a whole.
While GPs do genuinely seem to be devoting more time to these
important issues – and 71% of respondents expected their firm to
do more to incorporate sustainability risks and opportunities into
investment strategies over the next two to three years – all too often
the good work that they already do is left unacknowledged. One of
our goals at the BVCA is to put private equity and venture capital
firmly in the economic mainstream, to make them a regular part of
business and industrial life.
Our members have numerous examples of long-term value creation
through sustainable engagement on issues such as energy efficiency,
focus on supply chains, and reducing waste and carbon impact. We
would like these to become more widespread, and to be used as
industry benchmarks, to help change the outdated perceptions
and fears around the industry. At their best, PE/VC managers and
their investee companies can be outstanding corporate citizens. By
continuing to concentrate and on these important long-term issues,
not only can GPs genuinely maximise the value of their investments,
they can also show the outside world that private equity and venture
capital genuinely seek to build better and sustainable businesses that
endure for the long term. n
% of respondents
60
50
40
30
20
10
0
45
54
Sustainability management
generates greater long-term
shareholder value
14
11
Agree Disagree Neither/don’t know
40
2011
35 2009
Autumn 2011 BVCA Briefing 27