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1、2023Sustainable Investment SurveySponsored by22023 SUSTAINABLE INVESTMENT SURVEYContentsHilary Wiek,CFA,CAIA Senior SAnikka Villegas Analyst,Fund Strategies&Sustainable IPitchBook Data,Inc.John Gabbert Founder,CEONizar Tarhuni Vice President,Institutional Research and EditorialDaniel Cook,CFA Head o
2、f Quantitative ResearchInstitutional Research GroupAnalysisDataTJ Mei Data PublishingReport designed by Sarah Schwab and Julia MidkiffPublished on July 5,20232023 survey by the numbers3About the survey4Trends over time6Geography9The allocator perspective12Asset managers:VC and non-VC15Contrasting vi
3、ews:ESG19Contrasting views:Impact23Challenges and measurement28Social and political landscape31The future of sustainable investing33Staying informed35Glossary and resources3732023 SUSTAINABLE INVESTMENT SURVEY2023 SURVEY BY THE NUMBERS2023 survey by the numbers814Completed at least one response27Day
4、s the survey was open 437:2731Ratio of respondents with an implemented sustainable investment program to those with none5/5Ratio of geographic regions represented to geographic regions provided$2,095Donated to World Central Kitchen1:In this report,we will include any responses collected,whether the
5、respondent completed the survey or not.Thus,some numbers will exceed 419,the number of completed surveys.419Completed the survey42023 SUSTAINABLE INVESTMENT SURVEYABOUT THE SURVEYAbout the survey10%All GP36%24%VC GP12%Other GP22%LPBoth32%Other2023 completed surveys by participant typeSource:PitchBoo
6、k Geography:Global Respondents:AllQuestions 2 and 2.5Since the release of our last Sustainable Investment Survey report in October 2022,we have been busy with our sustainable investment research efforts.Using our proprietary Impact fund data set utilizing the Global Impact Investing Networks(GIIN)IR
7、IS+taxonomy,we updated our reporting on fundraising trends in private Impact fund investing.2 As a follow-up to 2022s survey,we took some of the open-ended responses and wrote a report addressing the concerns and criticisms of ESG.In January,we published a piece on sustainable and digital infrastruc
8、ture in the private markets,noting that infrastructure has not only been expanding as an area of investment,but it is increasingly looking to contribute sustainable solutions to areas like climate change and socioeconomic equality.Finally,we have brought on an emerging technology analyst focused on
9、producing carbon&emissions tech and clean energy work for PitchBook clients.This years roughly 30-question survey asked global investors and the service providers who work with them to react to various topics related to sustainable investing,ESG risk factors,and Impact investing.419 individuals comp
10、leted the survey,although we recorded at least one answer from 814 individuals,providing us with even more data on a partial basis.This group of respondents represents the most balanced profile to date for this survey,showing that the interest in sustainable investment issues runs far and wide.We re
11、corded responses This group of respondents represents the most balanced profile to date for this survey,showing that the interest in sustainable investment issues run far and wide.2:For explanations and resources for the abbreviations and organizations mentioned in this report,we provided brown-tint
12、ed links to a glossary for reference.52023 SUSTAINABLE INVESTMENT SURVEYABOUT THE SURVEYfrom every global region and had significant numbers from each respondent type:LPs,GPs,Both,and Other.This last category self-identified as coming from consultancies,investment advisers,academia,business owners,f
13、amily offices,investment banks,placement agents,accounting firms,and more not covered by the GP or LP umbrella.Those who answered“Both”were steered to that response if they were LPs and in turn had LPs,so they were largely funds of funds(FoF)in some form.Once again,this year we asked GPs to identify
14、 whether they consider themselves to be venture capitalists(VCs),thereby allowing us to contrast how VCs were thinking about sustainable investment topics versus other respondents.193 of our GPs identified as VCs,109 of whom made it to the end of the survey,providing us a significant sample from whi
15、ch to report on VC thoughts and trends.We also reached a broad spectrum of organizations from small to mega:63%represented assets below$500 million,and 7%were at organizations with$25 billion or more under management or advisement.Only 5%of our GP universe were in the largest bracket,while our Other
16、 grouping was most likely to represent assets lower than$500 million,at 69%.We realize that the sustainable investment field is a confusing collection of terms understood in many different ways.To level set for this survey,we provided the following guidance as each respondent began:“We use sustainab
17、le investing as the umbrella overarching both Impact investment approaches(seeking to make both a financial profit and a positive social or environmental impact)and the incorporation of ESG(environmental,social&governance)risk factors into the investment process.We will ask about each aspect of sust
18、ainable investing in the survey,using each deliberately as defined here.”This language specification allowed us to identify more nuanced thoughts and practices across the sustainable investment landscape.We also updated questions to better capture the current environment and focus on where sentiment
19、s are strongest.In reaction to the rapid growth weve seen in our previous surveys of responses coming in negative on the topic,we added some response options that would allow for those feelings to be better captured.Finally,many questions left space for open-ended comments,some of which we have shar
20、ed to provide further insights into sentiments around sustainable investing topics.We were thrilled with the high response rate to our surveynot only because it bolstered our analysis,but also because we committed to donating$5 for every completed survey to World Central Kitchen(WCK).This organizati
21、on has done phenomenal work since its inception in 2010,providing meals to those affected by natural disasters and other emergencies throughout the world.In 2023 through May,WCK served meals to those in Syria and Turkey impacted by deadly earthquakes and to Ukrainians continuing to suffer from ongoi
22、ng conflict in their homeland.In addition,WCK has responded to 25 climate-related disasters worldwide since establishing its Climate Disaster Fund in 2021.We updated the questions to better capture the current environment and focus on where sentiments are strongest.62023 SUSTAINABLE INVESTMENT SURVE
23、YTRENDS OVER TIMETrends over timeIt can be difficult to track trends over time in surveys,especially when responses are anonymous,as it is unclear whether shifts are due to a different respondent pool or true societal shift in opinion.Thus,while we may interpret results as trends in sentiment around
24、 sustainable investing,we are aware that some of the moves from one year to the next may just be that we have attracted more people who want to have their negative views on sustainable investingrepresented.At the highest level,we have seen signs of both increased adoption of sustainable investing pr
25、actices and more people who have no sustainable investment program at all.Well go into some detail about why this may be and whether it is likely to change in the Social and political landscape and The future of sustainable investing sections,but here we will provide a few year-by-year trend charts
26、taken from this years survey and those of 2021 and 2022.From 2021 to today,the proportion of respondents that have integrated sustainable investment principles throughout their portfolio has increased,growing from 30%in 2021 to 37%in 2023.On the flip side,we show that more of our respondents have no
27、 plans to incorporate sustainability into their investment work,going from 9%in 2021 to 17%in 2023.Fewer people are even considering implementing sustainable investment practicesthey have either converted to full integration or have chosen to never do so.Those exploring in 2021 seem to have sorted t
28、hemselves into either adopters or those who will not be pursuing sustainable investment objectives.0%10%10%20%30%30%40%40%We have integrated sustainable investment principles throughout our portfolioWe have partially implemented sustainableprinciples in our investment portfolio(s)We are exploring wh
29、at sustainable investing means for our organizationWe have no plans to incorporate any sustainable investment work202%How would you characterize the stage of your sustainable investment implementation?Source:PitchBook Geography:Global Respondents:AllQuestion 4.572023 SUSTAINABLE INVESTMEN
30、T SURVEYTRENDS OVER TIMENext,we asked when our respondents began their sustainable investing initiatives,excluding the people who had said they had no plans in the prior question.Fewer are just getting started now than in 2021:In the current survey,only 15%began in the past year,while 20%were just s
31、tarting out in 2021.The groups that began two to five years ago or more than five years ago have been growing:Added together,those have gone from 53%of the population to 66%.We are nearing the point that if a firm or organization was going to integrate sustainable investment principles,it would have
32、 already started the journey and the program is becoming more seasoned.Our question that asks participants to indicate where they lie on the spectrum from“performance is the only important factor”to“sustainability is the only important factor”gives some indication of the polarization of sustainable
33、investing views.While there is still clustering in the middle,with the largest contingent in 2023 being the 19%who selected a six on the scale,the endpoints have both grown in magnitude.It appears that it is not only the anti-ESG individuals who are becoming moreentrenched.0%20%40%60%80%100%2-5 year
34、s agoMore than 5 years ago1-2 years agoLess than 1 year ago202120222023When did your organization start actively implementing sustainable investing initiatives?Source:PitchBook Geography:Global Respondents:AllQuestion 4.750%10%20%30%40%50%60%70%80%90%100%2021202220231Performance is the only importan
35、t factor23456789Sustainability is the only important factorPlease indicate how you prioritize sustainable investing versus top performance as you assess a potential investment opportunity.Source:PitchBook Geography:Global Respondents:AllQuestion 1182023 SUSTAINABLE INVESTMENT SURVEYTRENDS OVER TIMEN
36、oneLess than 25%25%to 50%50%to 75%Over 75%0%20%40%60%80%100%202320222021Approximately what percentage of your current or prospective LPs/clients are asking about or requiring that sustainability be part of the thinking when it comes to allocating their fund commitments?Source:PitchBook Geography:Glo
37、bal Respondents:GP,Both,OtherQuestion 16In terms of adoption,more allocators have been asking about sustainability as time has marched on.While in 2021,only 17%of asset managers said that 75%or more of LPs were asking them about sustainability,now,25%report such questions from so many current or pro
38、spective clients.There has been a small increase in the asset managers saying that none of their clients are asking about sustainable investing,but the majority are getting questionsand needing to have answersat least some of the time.This ties back to the question about whether respondents have imp
39、lemented a sustainable investment program or notpotential clients are asking for definite answers,even if that answer is no.Fewer every year are in the exploration phase.Allocators are gradually increasing the amount of their portfolios that employ sustainable 0%20%40%60%80%100%2023202220210%Less th
40、an 25%25%to 50%50%to 75%Over 75%Approximately what percentage of your current fund managers(all asset classes)have a sustainable investment approach incorporating ESG factors and/or measurable environmental or social impact?Source:PitchBook Geography:Global Respondents:LPs and BothQuestion 12.5inves
41、tment approacheseither ESG or Impact funds.While the largest percentage of respondents has continued to say that less than 25%of their portfolio has sustainable investment mandates,the percent who selected this option has gone from 34%to 27%,with the percentage of those saying that 25%to 50%of their
42、 portfolio has such mandates has been increasing as LPs place more mandates with managers aligned with their sustainable investment objectives.Only 15%of LP and Both respondents said they have no sustainable investment funds in their portfolio,so asset managers that feel they can skip out on integra
43、ting sustainable investing into their investment approach may be finding it more and more difficult to find a target audience for their product offerings.92023 SUSTAINABLE INVESTMENT SURVEYGEOGRAPHYGeography55%25%4%11%6%North AmericaEuropeCentral&South America,CaribbeanMiddle East&AfricaAsia-Pacific
44、LP:103GP:140Both:43 Other:151LP:35 GP:79Both:16 Other:65LP:9 GP:9Both:7 Other:20LP:24 GP:37Both:7 Other:20The geographical mix of respondents in 2023 was remarkably similar to that of 2022,with the most notable difference being the declining share of responses from North America,at only 55%versus 58
45、%in 2022,with Europe taking up those three percentage points for a somewhat more balanced respondent view.While there is a widely held belief that Europe has led the sustainability charge,half of the 26 respondents from Central&South America and the Caribbean(CSAC)said they have integrated sustainab
46、le investment principles throughout their portfoliohigher than Europe,at 42%;Source:PitchBook Geography:Global Respondents:AllQuestion 3LP:4GP:21Both:3 Other:1North America and Asia-Pacific,at 36%;and the Middle East,at 30%.While the CSAC may be well ahead of the others,it may just be that the low n
47、umber of respondents from that region that the survey attracted were more likely to be proponents.Leading the way in having no plans to incorporate any sustainable investment work was North America,at 24%,well ahead of the next-highest group,Europe,at 10%.This result is probably not surprising to mo
48、st,given the political posturing associated with sustainable investment principals that has ramped up in the past couple of years in the United States.Leading the way in having no plans to incorporate any sustainable investment work was North America,at 24%,well ahead of the next-highest group,Europ
49、e,at 10%.Where is your organizations primary base of operations?102023 SUSTAINABLE INVESTMENT SURVEYWe have integrated sustainable investment principles throughout our portfolio0%20%40%60%80%100%Asia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth AmericaWe have partially impleme
50、nted sustainable principles in our investment portfolio(s)We are exploring what sustainable investing means for our organizationWe have no plans to incorporate any sustainable investment workGEOGRAPHYHow would you characterize the stage of your sustainable investment implementation?Source:PitchBook
51、Geography:Global Respondents:AllQuestion 4.50%10%20%30%40%50%Asia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth AmericaLess than 1 year ago1-2 years ago2-5 years agoMore than 5 years agoWhen did your organization start actively implementing sustainable investing initiatives?Sou
52、rce:PitchBook Geography:Global Respondents:AllQuestion 4.75This is not to say that North America is a vast wasteland of investors uninterested in the space.37%of the respondents that have sustainable investment programs in North America began more than five years ago.This is ahead of Europes 27%and
53、lags only the 43%of respondents from CSAC.Those regions more likely to still be in the earlier phases of sustainable investment implementation are the Middle East&Africa and Asia-Pacific,which had 31%and 27%of respondents,respectively,that started their sustainable investment programs less than one
54、year ago.40%of European respondents began two to five years ago,which lines up perhaps not coincidentally with the introduction of the Sustainable Finance Disclosure Regulation(SFDR).This rule,aimed at reducing greenwashing when marketing to European allocators,was introduced in 2019,with the first
55、measures taking effect in March 2021.112023 SUSTAINABLE INVESTMENT SURVEYGEOGRAPHY0%20%40%60%80%100%Asia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth AmericaYesNo,but we have plans to create an approachNo,we currently have no plans to do this10%30%50%70%90%When you evaluate in
56、vestment managers,do you evaluate the fund managers implementation of an ESG risk-factor framework as part of your due diligenceprocess?Does your firm utilize an ESG risk-factor framework when making the decision to invest in a company?Source:PitchBook Geography:Global Respondents:LPs,Both,OtherQues
57、tion 5Source:PitchBook Geography:Global Respondents:GPsQuestion 9Europe seems to consider it more of a normal course of business to evaluate a fund managers ESG risk-factor framework when performing an evaluation of prospective partners:63%of European respondents probe their prospective GPs on their
58、 ESG approach,while only 21%had no plans to do so,with another 15%having plans to create an approach at some point.This compares with 48%of North American respondents who evaluate ESG as part of their investment manager diligence,while 37%have no intention of doing so.In fact,another 15%of North Ame
59、rican respondents have plans to incorporate ESG principles into their diligence of prospective partners,which would put those with an ESG approach well above half,flying in the face of perceptions that North America(but to be fair,potentially just the US)is solidly aligned against sustainable invest
60、ing.Asia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth AmericaYesNoOnly some of our investment teams do so0%20%40%60%80%100%10%30%50%70%90%Our GP respondents showed regional differences when it came to the question of whether they utilize an ESG risk-factor framework when decid
61、ing to invest in a company.While the sample size was small,at 29,83%of our Asia-Pacific respondents indicated that some or all of their investment teams do so.Europe was second,with 75%.While slightly more said yes,39%of North American GPs indicated they do not utilize ESG risk factors when making a
62、n investment selection,a high across the regions.Given that any fund manager hoping to land European investors must file SFDR disclosures,and that having an affirmative response to utilizing ESG is key for many European allocators,asset managers may find themselves asking if it is worth alienating a
63、n entire continent by ignoring material nonfinancial risks in their investment analysis.122023 SUSTAINABLE INVESTMENT SURVEYTHE ALLOCATOR PERSPECTIVEThe allocator perspectiveFor the purposes of this section,allocators are either traditional LPs or fit into our Both category,where they make allocatio
64、ns to funds and also have clients to serve.For some of the questions,we also include the folks who serve in an advisory capacity to LPs in our Other category,such as LP consultants.Out of our pure LP group,there has been a steady increase in the share of allocators not intending to do any sustainabl
65、e investment work.In 2021,11%of the group said this;in 2022,it jumped to 20%;and this year,it was up again to 23%.There were definite indications in the earlier days of this survey that it mainly attracted people positively inclined to sustainable investment practices,but as each year has passed,mor
66、e individuals who feel strongly that incorporating sustainable investment principles into their investment portfolio is not for them have taken the time to register their sentiments.One question asked individuals to show where they are on a spectrum of performance versus sustainability priorities wh
67、en assessing potential opportunities.The responses showed a marked increase in those who think performance is all that matters,mirroring the rise we have seen in those with no intentions of doing any sustainable investment work.That said,more than 75%of respondents feel that at least some amount of
68、thinking around sustainability is important when considering a potential investment.To presumably no ones surprise,given the news coming from various states with anti-ESG mandates,of the 46 allocators who said that performance is all that matters,35 were from North America.This was 28%of the North A
69、merican respondents to this question.Surprisingly,people working for organizations based primarily in Europe had seven individuals,18%of European respondents,with this view.We have often been told by European investors that considering sustainability in ones investment decisions is table stakes,the
70、only way to fulfill ones fiduciary duty.0%20%40%60%80%100%202320222021Performance2345678SustainabilityPlease indicate with the slider bar on the graphic how you prioritize sustainable investing versus top performance as you assess a potential investment opportunity.Source:PitchBook Geography:Global
71、Respondents:LPs and BothQuestion 11More than 75%of respondents feel that at least some amount of thinking around sustainability is important when considering a potential investment.132023 SUSTAINABLE INVESTMENT SURVEYTHE ALLOCATOR PERSPECTIVELooking across the performance to sustainability spectrum,
72、we note that GPs have the unenviable task of ensuring that they have a robust ESG approach for the investors that we heard from in a previous question currently evaluating such characteristics,but they must also avoid saying anything too strongly or publicly about their ESG practices to avoid being
73、blacklisted by the 23%of allocators who believe that performance is all that matters.In fact,in June 2023,BlackRocks Larry Fink said that the term ESG has become too loaded,but while he will avoid using it,the firms stance on E,S,and G issues will not alter.3 Potentially due to the politicization of
74、 ESG and sustainable investing in the past couple of years,several questions showed a retraction of support from this area by allocators versus the responses from 2022.More LPs said they had no exposure to sustainable investment products,more LPs said it is not at all important that GPs utilize an E
75、SG risk-factor framework,fewer LPs evaluate a fund managers implementation of an ESG risk-factor framework when performing due diligence,and so on.The climate of negative rhetoric has emboldened some to more forcefully register their feelings,but it may also be that some LPs have decided that adding
76、 on the complexity of evaluating sustainable investment practices to an investment due diligence practice was more bother than they felt it was worth.Despite the apparent drops in support outlined above,45%of our LP and Both respondents indicated that due to ESG concerns,they had declined to make or
77、 recommend an investment when screening for potential opportunities,and 25%had declined to make an investment after due diligence had progressed.17 people selected both options,so 61%of the allocator population chose one or more of these options.Asset managers need to be aware that there is a large
78、population of allocators willing to act on their sustainable investment preferences.In fact,51%of LPs said that they plan to increase their attention to ESG risk factors in the coming year,and another 18%will not be increasing because they have already fully implemented an ESG program.Yes,as part of
79、 pre-diligence screening for potential investmentsYes,after due diligence progressedNoYes,both pre-diligence and after due diligence36%16%9%39%Have you ever declined to make or recommend an investment due to ESGconcerns?Source:PitchBook Geography:Global Respondents:LPs and BothQuestion 9.53:“BlackRo
80、cks Fink Says Hes Stopped Using Weaponised Term ESG,”Reuters,Isla Binnie,June 26,2023.142023 SUSTAINABLE INVESTMENT SURVEYTHE ALLOCATOR PERSPECTIVEOnly 34%of allocator respondents(LPs and Both)said this year that more than half of their asset managers have some sort of a sustainable investment appro
81、ach,but 85%said they had at least some exposure to what they consider sustainable investment products.For those who have hired asset managers utilizing ESG factors and/or an Impact investment approach,in what parts of the portfolio are LPs utilizing these products?It is understandable that those who
82、 agreed to take a PitchBook survey would skew to private fund investors,so the fact that 73%of the LPs said that they have awarded mandates with an approach to sustainable investing through their PE and/or VC allocations could be expected.Public equity was the second-most-common place for exposure,u
83、p from 39%in 2022 to 51%in 2023.Hedge funds were least likely to be a focus for sustainable investing mandates.This aligns with industry chatter about how hard it is to find a good sustainable strategy in hedge funds,as so many are too short term in perspective or find it incompatible with their inv
84、estment approach.0%10%20%30%40%50%60%70%80%Public equityPublic fixed incomeHedge fundsPE and VCPrivate debtReal assetsReal estate202320222021In what parts of your total portfolio have you awarded mandates that utilize ESG factors and/or an Impact investment approach?Source:PitchBook Geography:Global
85、 Respondents:LPsQuestion 12152023 SUSTAINABLE INVESTMENT SURVEYASSET MANAGERS:VCS AND NON-VCSAsset managers:VCs and non-VCs 0%Asia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth AmericaVCsNon-VCs10%20%30%40%50%60%Where is your organizations primary base of operations?Source:Pitc
86、hBook Geography:Global Respondents:GPs and BothQuestion 3We can break out the VC perspective on a number of our questions throughout the survey,providing readers a view into where VCs are in relation to non-VC GPs as well as to other groupings.VCs were slightly more skewed to Europe than other GPs31
87、%of VC respondents versus 22%of other GPs hailing from that continent.Asia-Pacific was also represented more highly in the VC set than the non-VC grouping,with 14%of the VC managers coming from that region versus 10%of the non-VCs.Fleshing out the VC versus non-VC respondent groups a little further,
88、73%of VCs had assets under management under$500 million,while only 48%of non-VCs did.A full 10%of non-VCs had AUM above$25 billion,so one can assume a disparity in resources between the two groupings,which could have an impact on whether a firm was willing to layer in the added steps to incorporate
89、ESG or Impact investing into an investment process.Despite perceptions that VC lags other areas of the private markets when it comes to implementing sustainable investment practicesthe thought being that these early-stage companies need to be focused solely on getting a product to market and the ESG
90、 risks are few when operations are so limitedour survey shows that VC respondents and non-VC respondents were at similar stages.In fact,68%of VC respondents had either partially or fully integrated sustainable investment principles into their portfolios,while 69%of the other GP respondents had done
91、so.That said,of those with sustainable investing initiatives,non-VCs have gotten a head start:71%began their implementation two or more years ago,compared with 55%of VCs.Overall,only 31%of GPs began more than five years ago,so this is a space where many are still fairly early in their journey.162023
92、 SUSTAINABLE INVESTMENT SURVEYASSET MANAGERS:VCS AND NON-VCS0%10%20%30%40%50%60%70%80%90%100%VCsNon-VCsMore than 5 years ago2-5 years ago1-2 years agoLess than 1 year agoYes,as part of pre-diligence screening for potential investmentsYes,after due diligence progressedYes,both pre-and post-diligenceN
93、oVCsNon-VCs41%12%31%24%16%8%52%16%When did your organization start actively implementing sustainable investing initiatives?Have you ever declined to make or recommend an investment due to ESG concerns?Source:PitchBook Geography:Global Respondents:AllQuestion 4.75Source:PitchBook Geography:Global Res
94、pondents:AllQuestion 9.5This year,we were curious about when ESG comes into play for investors.It turns out that VCs are more likely to use ESG factors as a screening tool before initiating due diligence than non-VCs are68%of the former said they had,compared to 53%of the latter.That said,VCs have a
95、ctually been more likely to have declined an investment opportunity due to ESG risks at either stage of the due diligence process.44:Respondents were allowed to select either of the yes options or both,so the percentages will exceed 100 for question 9.5.172023 SUSTAINABLE INVESTMENT SURVEYASSET MANA
96、GERS:VCS AND NON-VCSWhile the last question discussed the use of ESG when it comes to pre-investment analysis,post-investment,non-VCs more frequently apply an ESG framework to the management of their portfolio companies.39%of VCs do not do so,while only 25%of non-VCs have no program utilizing an ESG
97、 risk-factor framework in monitoring or managing their portfolio companies.Combined with the last question,this seems to indicate that some GPs believe that ESG is a useful framework for evaluating potential investments,but perhaps it is still too difficult to implement an ongoing program of measuri
98、ng and reporting ESG factors.In later sections,we discuss the ongoing challenge the industry is having with measuring,reporting,and benchmarking ESG data.When it came to the decision to develop a sustainable investment program,VCs were more likely than non-VCs(66%versus 58%)to cite a rationale of al
99、igning their organization mission or values with their investment practices.Generally,the selection of other motivations lined up fairly closely,though non-VCs were more likely(37%versus 30%)to utilize sustainable investment practices in order to identify opportunities to improve business risk manag
100、ement.The narrative here seems to be that startups are launching to do some good in the world,while non-VC asset managers have established businesses to run,and there may be more scope to improve these businesses by using the lens of ESG risk factors.Switching to current priorities,most GPs are plan
101、ning to increase their attention to ESG risk factors in the coming year,but 67%of VCs have such plans versus only 56%of non-VCs.Interestingly,this is a switch from 2022,when more non-VCs were planning to increase their attention to ESG risk factors.This year,the non-VC group was more likely to not b
102、e planning to integrate any sort of ESG factor assessments into their work,at 23%versus 18%.This was another reversal from 2022,when VCs were the ones least likely to have an ESG program.This may just be a function of who agreed to take the survey in 2023,but it could also be the result of recent ac
103、tivities of industry groups like VentureESG that have been actively working to make ESG more relevant to VC investors.The timing of this would make sense,as VentureESG was only founded in December 2020.YesNoOnly some of our investment teams do so54%25%22%16%39%45%VCsNon-VCsDoes your firm utilize an
104、ESG risk-factor framework when managing and monitoring portfolio companies?Source:PitchBook Geography:Global Respondents:GPsQuestion 10182023 SUSTAINABLE INVESTMENT SURVEYASSET MANAGERS:VCS AND NON-VCSQuestion 20 dealt with ranking,so the chart here shows where the top ranks were placed.In terms of
105、priorities,more VCs and non-VC GPs put environmental impacts as their top sustainable investing area of focus,though 31%of VCs made this their top rank versus only 24%of non-VCs.Of the choices provided,nearly one-quarter of both groups selected improving investment returns as their top priority for
106、utilizing sustainability in an investment context.Non-VCs were much more likely to be prioritizing governance issues and utilizing sustainable investment principles to mitigate risks in theirportfolio.0%5%10%15%20%25%30%35%Improving investmentreturns by applying ESGframework to investmentholdingsEnv
107、ironmental impactsSocial impactsGovernance issuesMitigating risksIdentifying opportunitiesto improve businessperformance through anESG frameworkVCsNon-VCsOn what areas are you most focused currently when it comes to sustainability in an investment context?Source:PitchBook Geography:Global Respondent
108、s:AllQuestion 20192023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:ESGContrasting views:ESG Only 23%of allocators,when evaluating a potential GP to partner with or recommend,believe that it is not at all important that GPs utilize an ESG risk-factor framework in their acquisition and management o
109、f portfolio companies.That indicates that the rest feel that it is at least somewhat important to their investment due diligence process.When asked if they actually evaluate a fund managers implementation of an ESG risk-factor framework,however,only 42%of LPs say they do so,while another 16%said the
110、y are working on implementing an approach.Perhaps this is an indication of LPs not putting their money where their mouths are,simply ticking the box in their diligence instead of diving in deep to evaluate the policies and practices of a fund manager and its portfolio companies.It may also be that L
111、Ps feel ill-equipped to evaluate something that so many in the industry are struggling to standardize,define,and measure.Different audiences had differing levels of implementation on this point,however.58%of the Other respondents,some of whom are performing diligence in an outsourced capacity for LP
112、s,said that they evaluate a GPs ESG approach before making a recommendation.0%10%20%30%40%50%60%AllLPsBothOtherYesNo,but we have plans to create an approachNo,we currently have no plans to do thisWhen you evaluate investment managers,do you evaluate the fund managers implementation of an ESG risk-fa
113、ctor framework as part of your due diligence process?Source:PitchBook Geography:Global Respondents:LPs,Both,OtherQuestion 5202023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:ESGSo,what are GPs doing?When asked if they utilize an ESG risk-factor framework when making the decision to invest in a co
114、mpany,51%said yes,while another 16%said only some of their investment teams do so.VCs were more likely to say no(34%versus 28%for non-VCs),an expected result considering that early-stage VCs,in particular,may not have as much to evaluate given the fledgling nature of their investment targets.Europea
115、n GPs were most likely to say yes57%of GPs from that region include ESG factors in their due diligence of potential portfolio companies.Another 18%of European GPs said that only some of their investment teams do so.To put a finer point on the usage of ESG in the investment process,we asked how many
116、GPs had declined to make an investment due to findings from the ESG diligence.We were also curious if GPs had just used ESG as more of a screening tool or if deeper diligence had uncovered an E,S,or G concern that led them to abandon the prospective investment.66%of GP respondents said that they had
117、 declined to make an investment in pre-diligence screening,while 28%said they had done so after diligence had progressed.As GPs could select one or both“yes”options,we can do the math for our readers:72%of GPs selected one or both options,with only 28%saying theyd never declined an investment based
118、on ESG concerns.One of the 45%6%21%28%Yes,as part of pre-diligence screening for potential investmentsYes,after due diligence had progressedYes,both pre-and post-diligenceNo0%10%20%30%40%50%60%70%80%90%100%AllNorth AmericaEuropeVCsNon-VCsYesNoOnly some of our investment teams do soHave you ever decl
119、ined to make or recommend an investment due to environmental,social,or governanceconcerns?Does your firm utilize an ESG risk-factor framework when making the decision to invest in a company?Source:PitchBook Geography:Global Respondents:GPsQuestion 9.5Source:PitchBook Geography:Global Respondents:GPs
120、Question 9key tenets of investing is that one way to improve investment returns is to avoid big losses.72%of our GP respondents seem to recognize this doctrine,having utilized an ESG framework to dodge potentially risky investments that could detract from overall fund performance.212023 SUSTAINABLE
121、INVESTMENT SURVEYCONTRASTING VIEWS:ESG0%10%20%30%40%50%60%70%80%90%100%GPsVCsNon-VCsNorth AmericaEuropeYesNoOnly some of our investment teams do soDoes your firm utilize an ESG risk-factor framework when managing and monitoring portfolio companies?Source:PitchBook Geography:Global Respondents:AllQue
122、stion 100%10%20%30%40%50%60%70%80%90%100%GPsVCsNon-VCsNorth AmericaEuropeYesNoOnly some of our investment teams do soDo you require portfolio companies to measure and report on their financially material ESG factors?Source:PitchBook Geography:Global Respondents:GPsQuestion 10.5What about after a com
123、pany has entered a GPs portfolio?There,the utilization of ESG principles has seen less adoption.Only 48%of GPs use an ESG risk-factor framework when managing and monitoring portfolio companies,with another 18%saying only some of their investment teams take this more proactive approach to addressing
124、issues around governance and employee treatment rather than simply excluding bad actors.Non-VCs were most likely to do so,with only 25%saying that they do not at all.European GPs are more likely than North Americans to use ESG post-investment,with 70%doing so in at least some of their portfolios.Per
125、haps surprisingly,this year,more of our GP respondents put requirements on their portfolio companies when it came to measuring and reporting on financially material ESG factors than said that they,the GPs,were using ESG to manage and monitor portfolio companies.Others may not see this as backward,as
126、 sometimes the first step is to measure,after which can come the monitoring and managing of risks.Overall,only 20%of GPs said they do not require portfolio companies to measure and report,with 44%saying that they do,and another 34%indicating that just some of their investment teams do so.In another
127、odd inversion,25%of European GPs said they do not require this of their portfolio companies,while 16%of North American GPs do not.With so many places where sustainability-oriented thinking can enter the investment process,there are plenty of areas of a GPs practices for allocators and their advisors
128、 to ask about in their diligence process,as an affirmative answer to one practice may not indicate that another has also been adopted.222023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:ESGIn 2022,we added a question to attempt to tease out how our respondents place themselves among the different
129、philosophies of ESG,framing the question in alignment to a piece we published in early 2022,ESG,Impact,and Greenwashing in PE and VC.We asked respondents to share how they prioritize investment opportunities already performing well across ESG issue areas(for example,creating a“clean”portfolio)versus
130、 opportunities that are performing more poorly,but where making ESG-related improvements will be a priority of the investment strategy.In our report,we made it clear that both approaches can be perfectly valid applications of an ESG framework,despite some industry participants hurling greenwashing a
131、ccusations at proponents at the opposite end of the continuum.Looking at the mean values of each of the respondent types,none went above 5,so there was a slight skew to“clean”portfolios,but none of the means went below 4,either,so the tilt 123456789EuropeNon-VCsGPsVCsOtherNorth America2022Both2023LP
132、sCleanNeeds improvementWhen constructing or selecting investments to fill a portfolio that utilizes an ESG framework,how do you prioritize companies or portfolios already performing well across ESG issues(1=a“clean”portfolio)versus companies or portfolios with ESG issues that will be addressed as pa
133、rt of the investment strategy(9=a“needs improvement”portfolio)?Source:PitchBook Geography:Global Respondents:AllQuestion 11.5was not strong.Non-VC GPs were weighted the most to clean portfolios,with a mean of 4.00,while the Both respondent type was closest to unskewed,at 4.92.North America tilted mo
134、re to“needs improvement”portfolios,while Europeans were more likely to seek out clean investments.GPs tended to skew clean,while LPs were more open to a“needs improvement”application of ESG.Interestingly,a decent number of respondents were found all along the spectrum,indicating that many different
135、approaches are coexisting.In fact,very few think that only clean portfolios matter or that portfolios seeking to make improvements through ESG are the only proper application of ESG principles.The fact that there is so much nuance to the application of ESG is typically lacking in the popular press,w
136、hich tends to portray ESG as one monolithic thing.Our respondents clearly show this is not the case.The fact that there is so much nuance to the application of ESG is typically lacking in the popular press,which tends to portray ESG as one monolithic thing.Our respondents clearly show this is not th
137、e case.232023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:IMPACTContrasting views:ImpactYes,all of ourstrategies areImpactYes,but not all of our strategiesare ImpactNo,but we aredeveloping an Impact strategyNo0%10%20%30%40%NoNo,but we aredeveloping an Impact strategyYes,but not all of our strateg
138、iesare ImpactYes,all of ourstrategies areImpactSource:PitchBook Geography:Global Respondents:GPs and BothQuestion 6Source:PitchBook Geography:Global Respondents:LPs,Both,OtherQuestion 7Does your organization offer Impact investment strategies to external parties?Does your organization recommend or m
139、ake allocations to private market Impact investment strategies?Impact investing,which we explicitly defined at the beginning of the survey as investing with the dual goals of achieving financial returns and positive social or environmental results,seems to be remarkably popular across both allocator
140、s and fund managers.Of respondents managing investment products,63%said they offered Impact strategies to external parties,with another 13%indicating that they are developing an Impact strategy.Among allocators,56%have recommended or made allocations to Impact investment strategies,with another 13%d
141、eveloping an approach to doing so.Many may believe that Impact investing is a niche approach,but the numbers in this survey indicate that many are hoping to both make money and do some good with their investment assets.Many investors are doing Impact investing,but how mature is the space?Asking only
142、 those who said they offer Impact investment strategies,33%of fund managers have been doing so for more than five years,with another 31%that are two to five years into their Impact investment journey.This has implications for LPs looking for products with some sort of track record:Our data shows tha
143、t emerging managers capture a larger proportion of Impact fundraising than in the broader private market ecosystem,largely because so few Impact managers launched their first fund more than five years ago.The allocator respondents have been at it for longer overall than the asset managers,with 41%of
144、 allocators having made their first allocation to or recommendation of an Impact strategy more than five years ago.31%of allocators and their242023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:IMPACTSource:PitchBook Geography:Global Respondents:GPs and Both who do ImpactQuestion 6.5Source:PitchBoo
145、k Geography:Global Respondents:LPs,Both,and Other who do ImpactQuestion 7.5When did your firm first offer Impact investment strategies to external parties?When did your organization make its first investment in(or recommendation of)an Impact investment strategy?0%5%10%15%20%25%30%35%40%45%More than
146、5 years ago2-5 years ago1-2 years agoLess than 1 year ago0%5%10%15%20%25%30%35%40%45%advisors got into Impact investing two to five years ago.It appears that there are few new entrants to the space,meaning that those that are likely to do Impact have already started their journey.Only 13%of asset ma
147、nagers and allocators have plans to launch a strategy or allocate to one in the future.When it comes to offering Impact strategies,North America has the lead on Europe.62%of North American asset manager respondents offered Impact strategies either exclusively or as one type of offering among others
148、from the fund manager.In fact,45%offered Impact strategies exclusively.Of those running Impact funds,43%got their start more than five years ago.In Europe,33%of GP and Both respondents offered Impact strategies exclusively,with another 26%offering an Impact strategy as well as other non-impact offer
149、ings.Only 20%of these fund managers began more than five years ago,with the larger share,35%,launching two to five years ago.In terms of pipeline,20%of European respondents are developing an Impact strategy compared with only 7%from North America,so more Impact fund offerings will likely come online
150、 in the future,particularly from Europe.In contrast to the fund managers offering Impact strategies,a smaller percentage of LPs have put all or some of their portfolio into Impact strategies.51%of North American allocators or their advisors recommend or allocate to Impact strategies versus the 62%of
151、 North American fund managers offering such strategies.As Impact funds are on average much smaller than the overall fund universe offerings,more offerings may make sense in order to serve the demand of LPs for these strategies.5 North American allocators have also been at it longer:Of the respondent
152、s that said they have invested in or recommended Impact strategies,51%said they first did so more than five years agoa much higher percentage than the other regions.In Europe,the percentages of those respondents offering Impact strategies and those allocating 5:For more data on Impact funds versus t
153、he broader private capital universe,please reference our Impact Investing Update.252023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:IMPACT0%10%20%30%40%50%60%70%80%90%100%Asia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth AmericaYes,and all of our investments are in Impact s
154、trategiesYes,but not all of our investments are in Impact strategiesNo,but we are developing an approach to Impact investingNoDoes your organization recommend or make allocations to private market Impact investment strategies?Source:PitchBook Geography:Global Respondents:LPs,Both,OtherQuestion 7to o
155、r recommending them were the same,at 59%.European allocators have been at it for less time than those in North America,with only 27%of Europeans having allocated to their first Impact strategy more than five years ago.Tying the survey questions in with work PitchBook has been doing to tag Impact fun
156、ds with the GIINs IRIS+categories of Impact that they are seeking to affect,we asked respondents to indicate which of the 17 categories of Impact were important to them and allowed respondents to select more than one area of focus,if applicable.The top picks across all types of respondents were ener
157、gy(62%)and climate(60%),both areas with a fair number of funds available for investment as well as significant investment opportunities that can absorb large sums of capital.All other areas were selected by at least 15%fewer respondents,with the third-place area of Impact being agriculture,chosen by
158、 44%of respondents.Some of the more esoteric areas of Impact investing,such as air,land,and oceans&coastal zones,were selected least frequently by respondents.Real estate was another category selected by few respondents,only 25%,which seems surprising,given that green buildings and affordable qualit
159、y housing are both themes within that category requiring significant capital.It is possible that respondents are not intimately familiar with the IRIS+framework and didnt realize that certain activities counted within various categories of the framework,or that we did not attract many real estate in
160、vestors to this survey.0%10%20%30%40%50%60%70%80%90%100%Asia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth AmericaMore than 5 years ago2-5 years ago1-2 years agoLess than 1 year agoWhen did your organization make its first investment in(or recommendation of)an Impact investment
161、 strategy?Source:PitchBook Geography:Global Respondents:LPs,Both,OtherQuestion 7.5262023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:IMPACTWhich categories of Impact investing are a focus for your organization?Source:PitchBook Geography:Global Respondents:AllQuestion 8.5By respondent type,the top
162、 three selections were identicalagriculture,climate,and energythough with different weightings and orders.In addition,the respondents in the Both type called out financial services as much as they did agriculture,and the Other respondents had diversity&inclusion tied for third.Looking more closely a
163、t the GPs,VCs selected waste as their third-highest area of interest in contrast with non-VCs,who chose agriculture.Asia-Pacific may have heavily influenced the VC responses,as they,too,had waste as their third-most-selected Impact area.31%Financial services60%Climate44%Agriculture62%Energy37%Health
164、35%Water37%Waste39%Diversity&inclusion35%Infrastructure31%Pollution23%Land20%Oceans&coastal zones30%Employment30%Biodiversity&ecosystems28%Education25%Real estate23%AirUnderstandably,some regions have different concerns than the highly developed regions of North America and Europe.CSAC had a list le
165、ast like the other respondents:They had agriculture in first place,followed by financial services and education.The Middle East&Africa respondents did call out agriculture and energy,but their top choice was health.While we cannot ascribe motivations to these responses,there is probably a mix of rat
166、ionale ranging from the perceived social and environmental problems that need to be addressed and the categories that may provide the potential for profits based on their financial merits.272023 SUSTAINABLE INVESTMENT SURVEYCONTRASTING VIEWS:IMPACT14%39%46%We use a standard framework created externa
167、l to our organizationWe use a custom frameworkWhile we do seek financial and social or environmental returns,we do not measure the Impact results at this time10%32%59%15%40%46%AllLPsGPs26%34%20%13%7%Extremely importantVery importantModerately importantSlightly importantNot at all importantIf you do
168、any Impact investment work,how do you measure impact?How important is it that an asset manager(GP)measures social and/or environmental impact in their management of portfolio companies when you are deciding to commit to or recommend a fund?Source:PitchBook Geography:Global Respondents:AllQuestion 8S
169、ource:PitchBook Geography:Global Respondents:LP,Both,Other with Impact programQuestion 14One of our research pieces in 2022 identified two philosophies of Impact that practitioners espouse:One feels that measuring outcomes is the only valid approach,while the other feels that being in the areas wher
170、e Impact is happening is good enough.We asked one question this year to try to tease out where our respondents were on this continuum.Reflecting the difficulty of measuring outcomes,particularly given our strong response rate from VCs,46%of all respondents who indicated that they do Impact investing
171、 said that while they do seek financial and social or environmental returns,they do not measure the Impact results at this time.59%of LP respondents were in this camp,with 46%of GPs not measuring their Impact efforts.Being one step removed from portfolio companies,LPs are often at the mercy of what
172、the GPs will report to them.While they can try to mandate that their GPs align in their reporting,every GP is getting similar requests from its other LPs to align with other frameworks.Thus,it is unsurprising that less than half of LPs investing in Impact are measuring that impact,as it can be a dau
173、nting task for them.We were able to examine the extent to which GPs are aligned with what Impact investors wish of them by asking allocators and their advisors:When it comes to deciding whether to commit to or recommend a fund,how important is it that asset managers measure social and/or environment
174、al impact when managing portfolio companies?20%of LPs who have an Impact investing program said this was only slightly or not at all important,so if 46%of GPs with Impact strategies are not measuring the impact of their investments,there appears to be a camp of LPs who will find that approach accept
175、able.That said,slightly more than half of LPs would prefer that their managers measure impact.26%said that this was extremely important,while the most common answer,at 34%,was that this was very important.Slightly more than half of LPs would prefer that their managers measure Impact.282023 SUSTAINAB
176、LE INVESTMENT SURVEYCHALLENGES AND MEASUREMENTChallenges and measurementWhat do you perceive as the top three challenges for sustainable investing?0%10%10%20%20%30%30%40%40%CostDifficulty collecting data on ESG factors from portfolio companiesDifficulty identifying the ESG factors to collect from po
177、rtfolio companiesUnderstanding of sustainable investing varies widely across investorsUnclear how to define and measure Impact outcomesThe investable opportunities are too fewCreating product that will attract enough investorsDifficulty finding LPs/GPs with the same sustainable investment goalsLack
178、of incentive for fund managers to shift existing approachDifficulty convincing GPs to provide sustainable investment reportingReporting burden is too highPerceptions of or concerns about sustainable investing having a negative impact on returnsConcerns about fiduciary responsibility in regard to inc
179、orporating sustainable investment practicesDifficulty benchmarking whether ESG goals have been effective due to lack of market dataRegulators being unclear oroverly burdensomeGPsLPsBothOtherSource:PitchBook Geography:Global Respondents:AllQuestion 23As weve done every year,we asked our respondents t
180、o opine on the challenges facing sustainable investing,with each person allowed three selections.Some areas,like cost to implement,have not been seen as significant barriers by most(only 19%this year made it one of their three choices),but data-related challenges and the effect they have on measurem
181、ent have been a frequent refrain.Across all respondents,the top challenge selected this year was that it is unclear how to define and measure Impact outcomes.New to second place this year,reflecting the politicization of ESG,was the challenge that there are perceptions of or concerns about sustainab
182、le investing having a negative impact on returns.This year,36%of respondents selected this in their top three,versus just 27%in 2022.We saw this concern from those who feel negatively toward sustainable investing concepts in quotes like,“Go woke,go broke.”It is difficult to understand how monitoring
183、 and trying to mitigate the risks that might harm your investments could cause one to go broke,but the perception is present and concerning to proponents of sustainable investing.The second-most-selected challenge from the previous two years dipped to third this year:difficulty benchmarking whether
184、ESG goals have been effective due to a lack of market data.So,in our top three were data issues,measurement issues,and perception issues.Across all respondents,the top challenge selected this year was that it is unclear how to define and measure Impact outcomes.292023 SUSTAINABLE INVESTMENT SURVEYCH
185、ALLENGES AND MEASUREMENTNearly every region except Europe had performance perceptions and difficulty benchmarking ESG in their top three areas of concern.What do you perceive as the top three challenges for sustainable investing?Source:PitchBook Geography:Global Respondents:AllQuestion 2310%20%20%30
186、%30%40%50%40%50%CostDifficulty collecting data on ESG factors from portfolio companiesDifficulty identifying the ESG factors to collect from portfolio companiesUnderstanding of sustainable investing varies widely across investorsUnclear how to define and measure Impact outcomesThe investable opportu
187、nities are too fewCreating product that will attract enough investorsDifficulty finding LPs/GPs with the same sustainable investment goalsLack of incentive for fund managers to shift existing approachDifficulty convincing GPs to provide sustainable investment reportingReporting burden is too highPer
188、ceptions of or concerns about sustainable investing having a negative impact on returnsConcerns about fiduciary responsibility in regard to incorporating sustainable investment practicesDifficulty benchmarking whether ESG goals have been effective due to lack of market dataRegulators being unclear o
189、r overly burdensomeAsia-PacificCentral&South America,CaribbeanEuropeMiddle East&AfricaNorth America10%0%Different regions felt somewhat differently about the challenges that face sustainable investing.Nearly every region except Europe had performance perceptions and difficulty benchmarking ESG in th
190、eir top three areas of concern,but the other challenges in each regions top list varied.For Asia-Pacific,North America,and Europe,respondents were concerned about how unclear definitions and the measurement of Impact outcomes can be.Rounding out Europes top three were difficulty collecting data on E
191、SG factors from portfolio companies and a concern shared with the Middle East&Africa that the understanding of sustainable investing varies widely across investors,thus making it difficult to compare results and evaluate progress.CSAC indicated that a top challenge is the difficulty finding LPs or G
192、Ps with the same sustainable investment goals,something that can significantly impact the ability to raise a fund.With the advent of SFDR reporting in Europe in the past few years,it is interesting to see that 29%of European respondents indicated that regulators being unclear or overly burdensome wa
193、s a top challenge for them.6 In contrast,only 19%of North American respondents named regulation as a top-three concern,despite recent announcements from the US Securities and Exchange Commission(SEC)regarding ESG disclosures and enforcement actions it has been taking against those exaggerating their
194、 claims to offer ESGstrategies.6:For more on the difficulties that asset managers are having complying with SFDR regulations,please see our recorded webinar on this topic from early 2023.302023 SUSTAINABLE INVESTMENT SURVEYCHALLENGES AND MEASUREMENT0%10%20%30%40%50%60%70%80%90%100%AllLPsGPsEuropeNor
195、th AmericaWe use a standard framework created external to our organizationWe use a custom frameworkWhile we do seek financial and social or environmental returns,we do not measure the Impact results at this time30%58%13%Utilize a standardCustom methodologyPortfolio companies do not measure or report
196、 on financially material ESG risk factorsIf you do any Impact investment work,how do you measure impact?Do your portfolio companies utilize a standard or custom framework to measure and report on their financially material ESG risk factors?Source:PitchBook Geography:Global Respondents:AllQuestion 8S
197、ource:PitchBook Geography:Global Respondents:GPsQuestion 10.75Expecting to see concerns around measurement and data again,we asked about how our respondents are handling measurement issues.Is progress being made toward convergence?Unfortunately,the march toward universal standards is still progressi
198、ng slowly.When it comes to Impact investors,only 14%of respondents use a standard framework,39%use a custom framework,and 46%dont measure at all.When it comes to ESG measurement,30%of asset managers who require their portfolio companies to measure and report ESG risk factors said that their portfoli
199、o companies are using a standard and 58%are using a custom methodology.The good news behind these numbers is that many of the custom framework respondents are building their bespoke reporting from standard frameworks.Many mentioned the UN SDGs,the Impact Management Projects five dimensions,and the G
200、IINs IRIS+and Impact Measurement and Management frameworks.But there were 12 frameworks named multiple times by respondents using standards.The UN SDGs received the most callouts,at nine;the GIIN got seven;and SASB and the Impact Management Project got five.This is not terribly promising when it com
201、es to convergence,which is desired by many but practiced by too few.In both questions asking for open-ended responses indicating which standards respondents were using,standards were named that conflated ESG and Impact.For example,SASB,which is clearly an ESG framework,was called out as an Impact me
202、asurement tool,and the GIINs IRIS+,which is an Impact framework,was called out in the ESG standards question.This highlights just some of the confusion still surrounding sustainable investing,even bypractitioners.312023 SUSTAINABLE INVESTMENT SURVEYSOCIAL AND POLITICAL LANDSCAPEBy Anikka Villegas So
203、cial and political landscapeHow have current economic and geopolitical events impacted your focus on sustainable investing?0%10%20%30%40%50%60%70%80%90%100%GPLPBothOtherIncreasedStayed the sameDecreasedSource:PitchBook Geography:Global Respondents:All Question 27While some of the attributes of susta
204、inable investing that draw in or deter investors are fairly constant,there are also external factors that make ESG and Impact investing more or less attractive to some.In order to drill down into which of those factors are influencing our respondents focus on sustainable investing,we have asked in e
205、ach survey how the current economic and geopolitical events have influenced that focus.We have also asked about respondents perceptions of how their peers and partners are reacting to macroeconomic events.This year,32%of the respondents indicated that they have increased their focus on sustainable i
206、nvesting,56%stated that their focus has not changed,and 12%said that it has decreased.The percentage of“focus decreased”responses is up from 2022s 9%,with those in the Both and LP categories driving that change.While only 8%of GPs reported that they decreased their focus on sustainable investing,20%
207、of all respondents thought that GPs were doing so.Respondents also perceived LPs to be decreasing their focus more than LPs reported doing so,with 23%saying that they thought LPs were pulling away from sustainable investing compared with 17%of LPs expressing that view of themselves.Awareness of the
208、polarization around sustainable investing is likely largely responsible for the differences in perception and reality,as there was also a gap where more respondents thought other groups increased their focus than they actually did,too.In fact,“increased”was the most selected option across categories
209、 in the perception question,while“stayed the same”was the most selected option for the self-reported question.It is reasonable that respondents,aware of the public discourse around sustainable investing,would expect changes to be occurring in other organizations,even if they are not taking place wit
210、hin their own.Evidence of the divisiveness and politicization around sustainable investing,and particularly ESG,abounded in the open-ended responses to the survey,including those to question 27.We have been tracking the counts of respondents that are highly negative in the open-ended responses each
211、year:In our 2020 survey,there was only one such individual.In our 2021 survey,that number increased to five,and in 2022,it shot up to approximately 50.This year,despite our total number of respondents decreasing,the number of those who were highly negative on sustainable investing came in above 60.W
212、hile some of these responses did not offer any substantive critique,with such comments as“ESG is a Ponzi scheme,”or“ESG is sooooo sic 2021,”others were a mix of valid concern and vitriol.In our analysis,we attempted to make use of charitable interpretations in order to better capture the breadth of
213、legitimate concerns that exist around ESG and Impactinvesting.77:For a fuller discourse on this subject using the open-ended responses to the 2022 survey,please enjoy Concerns About and Criticisms of ESG.322023 SUSTAINABLE INVESTMENT SURVEYSOCIAL AND POLITICAL LANDSCAPE0%20%40%60%AllocatorsAsset man
214、agersConsultants and other serviceprovidersIncreasedStayed the sameDecreasedHow do you think current economic and geopolitical events impacted industry participants focus on sustainable investing?Source:PitchBook Geography:Global Respondents:AllQuestion 28In the open-ended responses to Q27,a few key
215、 themes emerged.The respondents who decreased their focus on sustainable investing typically fell into one of two camps,with approximately 25 respondents of various kinds between the two.In the first camp were the respondents who were not anti-ESG or anti-Impact but believed that sustainability was
216、a distraction from more important aspects of investing or the operation of a business.Given the economic landscape of 2022 and 2023,many cited the need to focus on investment fundamentals and financial performance above all else.In the second camp were respondents who believed that sustainable inves
217、ting efforts were misinformed,ineffective,or harmful.They expressed a desire for more quantitatively driven research on sustainable investings efficacy in improving social and environmental outcomes and its impact on financial performance.Notably,only one of these 25 responses came from Europe,with
218、the rest coming from North America,the Middle East&Africa,and Asia-Pacific.Environmental factors were cited most often as the reason for an increased focus on sustainable investing this year.Approximately 50 respondents stated that climate or energy-transition-related investment opportunities were r
219、esponsible for the increase.A relatively even mix of GPs,LPs,and other respondents,largely from North America,highlighted various motivations within this theme.The energy crisis in Europe and the demand for clean energy were cited frequently,as was the broad threat of climate change.The desire to ta
220、ke advantage of government policy and spending were also often mentioned in the same breath as climate-related opportunities,with the US Inflation Reduction Act and Bipartisan Infrastructure Law as well as the EUs Green Deal Industrial Plan called out by name.Sociopolitical factors continued to draw
221、 focus to sustainable investing.At least 25 respondents,predominantly North American GPs,tied their motivations to sociopolitical themes.Among them,food security,healthcare,and diversity,equity&inclusion(DEI),were prevalent.Additionally,political risks such as“the devolution of democracy in the US a
222、nd the rise of fascist tendencies in the MAGA crowd,”the Russia-Ukraine conflict,and“geopolitical uncertainty,such as nationalizing lithium mines in Chile”were mentioned numerous times.These risk-focused responses may indicate part of what is drawing investors to ESG,as ESG due diligence is often em
223、ployed to better understand and mitigate the risks of sourcing materials from or operating in different geographies.Less prolificbut still noteworthysentiments included that it has become difficult to attract business or capital without increasing ones focus on ESG and that sustainable investing can
224、 improve returns,thus making it a good fit for the current economic environment.Ultimately,the open-ended responses exemplified the lack of agreement on the fundamental costs and benefits of sustainable investing,with some believing that it harms profitability and fails to achieve its goals and othe
225、rs holding that it improves returns and is necessary to further progress on social and environmental issues.332023 SUSTAINABLE INVESTMENT SURVEYTHE FUTURE OF SUSTAINABLE INVESTINGThe future of sustainable investingWhile it is impossible to predict the future,the responses to this question indicate w
226、here efforts will likely be focused on improvingor battlingESG and Impact investing.The aspirations and motivations of private market participants and stakeholders will influence the direction of sustainable investing overall,and the responses to this question broadly fit into a few different vision
227、s for the future.The first is one in which there is convergence around one standard ESG and Impact framework and set of metrics,likely through regulation,with tools that are accessible to reduce the burden of compliance and increase the accuracy of reporting.More than 110 respondentsby far the large
228、st cluster for this questionof various types and across geographies indicated that this was their desired outcome.One put it succinctly:“Industry convergence on framework and metrics;not too burdensome;achievable and measurable and visible improvement in metrics.All market participants using same st
229、andard for benchmarking against peers.”Respondents specifically noted the need for distinct,universal definitions distinguishing between ESG and Impact investing,with another simply saying,“Clear definition of what sustainable investing means”and for standardized and comparable metrics,with data to
230、be used for benchmarking.At present,regulations such as the EUs Sustainable Finance Disclosure Regulation and the as yet unpublished UK Sustainability Disclosure Requirements are moving the needle on convergence and disclosure,but vague definitions resulting from an attempt to be both inclusive and
231、decisive have plagued those attempting to comply.However,progress is being made on this front via additional guidance provided by regulators.Industry groups are also working together for solutionsone being the ESG Convergence Project,which has brought GPs and LPs together to agree on just a few ESG
232、data points and their definitions to get the ball rolling on measuring and benchmarking metrics common to most companies.A related objective,and one surfaced by approximately 25 respondents,was that greenwashing be extinguished and better sustainability-related outcomes achieved by sustainable inves
233、tors.Some thought this should be executed through regulation,with one respondent stating that“Elimination of greenwashing via stronger regulatory penalties for misleading claims about sustainability and stronger,more broadly accepted measures for impact achieved to support accountability”was their p
234、reference.“This should reduce investor uncertainty about the authenticity of sustainable-labelled products,”they said.Others thought that LPs and companies should lead the charge through“a more rigorous approach to portfolio management,with ESG mandates flowing from limited partnership agreements al
235、l the way down to quarterly business reviewstied to exec comp sic.”There were also respondents who were adamant that investors should not market or brand around their sustainability-related activities,purportedly engaging in“sometimes ludicrous“Creation of better measures to assess whether an invest
236、ment has succeeded.It is easy to calculate profit or loss by totaling dollar amounts.How to measure success or failure in sustainable investing is less clear.”LP,North AmericaBy Anikka Villegas In five years time,what do you hope will have changed when it comes to sustainable investing?342023 SUSTAI
237、NABLE INVESTMENT SURVEYTHE FUTURE OF SUSTAINABLE INVESTINGexercises to gain Brownie points in public”so that sustainable investing will be“less abused as a marketing tool.”An increase in criticisms like these has coincided with the rise of“green-hushing,”which occurs when firms“soften,under-report,o
238、r directly keep silent about their achievements”in sustainability,which comes with its own adverse effects.8Another widely desired outcome is that sustainable investing becomes the generally accepted and adopted norm.A diverse set of respondents supported this aim,with GPs,LPs,and other types from a
239、cross the globe well-represented among the approximately 80 individuals with this view.In particular,many wanted sustainable investing to“normalize into just investing,”becoming a“mainstream focus at all levels,”rather than a category or asset class.Further,some hoped that it would come to be viewed
240、 as“part and parcel of optimizing investment performance.”Respondents also wished to see ESG“depoliticized,”with several requesting that sustainable investing stop being seen as a political issue.In stark contrast to that vision of the future,another segment of respondents said that they would like
241、to see decreased usage or even eradication of sustainable investing.Approximately 30 respondents,almost entirely from North America,serving as GPs,LPs,or other roles in the private market ecosystem,expressed this view.Although a smaller constituency,this group was particularly impassioned,stating th
242、at they hope“ESG dies,”that it will disappear along with other“woke”topics,and that“it will be recognized as a scam.”A more moderate faction of this group expressed that they did not believe sustainable investing should be a requirement,that legislators should“let the market work and not impose regu
243、lations.”8:“Green-Hushing Wont Solve Your Problem With Sustainability Communication,”Forbes,Lars Voedisch,March 27,2023.“We will have gotten beyond the current politicalization of ESG in the US and sustainable investing will be seen as a preferred option to mitigate risk and deliver a competitive re
244、turn.”LP,North AmericaUntil there is more information about and understanding of both sustainable investings benefits and costs,these groups will likely remain in vehement opposition.Over 40 respondents highlighted the need for more research and education around ESG and Impact investing,with North A
245、merican GPs and LPs at the helm of this demand.Respondents wanted“better quantitative frameworks for understanding risk/return/sustainability trade-offs,”“use cases demonstrating that investing in sustainability can outperform all other investments,”and“to demonstrate whether sustainable investing c
246、riteria have delivered long-term value to shareholders and customers.”Still,even among supporters of sustainable investing,there is profuse disagreement on the best course of action for market participants.Approximately 20 respondents envisioned a favorable future as one in which there would be incr
247、eased focus on one particular aspect of sustainable investingyet that area of focus varied depending on who you asked.One respondent hoped for more“focus on environment,”and another wished for“less focus on environment and more focus on social and good governance.”Some wished for“greater emphasis on
248、 positive impact,not just negative screening,”while others hoped that the world would“adopt a do no harm ESG philosophy.”There are clearly deep chasms between not only proponents and opponents,but within those segments,which will be difficult to bridge in the coming years.Additional research,educati
249、on,and compromise will be necessary building blocks in doing so and will hopefully be accompanied by the boons of convergence and reduced greenwashing.352023 SUSTAINABLE INVESTMENT SURVEYSTAYING INFORMEDStaying informedInvestment industry publications/newsletters/podcastsWebinars and/or conferencesS
250、ustainable investing organizations and networksWhite papers and/or case studiesSocial media such as LinkedIn or TwitterProfessional investing organizationsRegulatorsAsset managersMainstream media such as television,newspapers,or magazinesOutside consultantsHow do you stay abreast of developments in
251、ESG and sustainable investing?Source:PitchBook Geography:Global Respondents:AllQuestion 29What exactly it means to do sustainable investing is still in flux.As the last few sections have described,what exactly it means to do sustainable investing is still in flux,and there is a strong appetite for e
252、xplanatory and data-driven research that will help people to better understand the space.We asked respondents where they seek information to stay abreast of developments in the space.They were allowed to select more than one source of information and were invited to provide specific sources so that
253、we might pass along potential resources to the readers looking to learn more.Europeans had four source types that received votes from more than half of their respondents:webinars and conferences,white papers and case studies,sustainable investing organizations,and investment industry publications/ne
254、wsletters/podcasts.When it came to specific sources,Europeans had a diverse list.One person noted the Springer Sustainable Finance book series,a couple of individuals selected Impact VC and France Invest,and one mentioned the Sustainable Blockchain Summit.362023 SUSTAINABLE INVESTMENT SURVEYSTAYING
255、INFORMEDNorth Americans had less agreement on their sources,with only investment industry publications and white papers getting a vote from more than half of respondents.Sources that received more than one mention included ImpactAlpha,PitchBook,Morningstar,UN PRI,McKinsey,and Bloomberg.Doughnut Econ
256、omics from Kate Raworth also received a mention.Regulators continue to rise in prominence as information sources for our respondents.This is unsurprising,given the European SFDR disclosure requirements and the noise the SEC has been making regarding disclosures to ferret out greenwashing.In 2021,onl
257、y 19%said regulators were a source of information,but that stepped up to 25%in 2022 and 27%in 2023.European respondents said regulators 41%of the time,in contrast to only 20%of North Americanrespondents.We also asked which organizations respondents belonged to,endorsed,or participated with,and provi
258、ded a long list of groups from which to choosea list that has grown over the years as weve added in open-ended responses from each prior years survey.Some of these are regional(European Venture Philanthropy Network)or have specific areas of focus(Climate Action 100+),so few selected them.Adding to t
259、he perception of a lack of convergence on sustainable investment topics is that the organization that garnered the most selections(and respondents were allowed to make multiple selections)was the UN Sustainable Development Goals,which was chosen by only 35%of respondents.The second-most-recorded opt
260、ion was“None.”The Principles for Responsible Investment and the Global Impact Investing Network were the only other groups to pass a 25%global selection rate.9 Europe differed from North America by picking Principles of Responsible Investment(PRI)and the Sustainable Finance Disclosure Regulation in
261、its top three,while North America,which selected None most often,had a 25%hit rate on the GIIN.Both had the UN SDGs as the top non-None response.Open-ended Other responses included Intentional Endowments Network,Operating Principles for Impact Management,1000 Ocean Startups,Net-Zero Asset Owner Alli
262、ance,and Corporate Knights.Looking at the major respondent types and geographies,differences emerged in how often the top groups were selected.In general,LPs and North Americans were least likely to select anything,but respondents most often associated themselves with the UN SDGs,PRI,and the GIIN.Th
263、e only exception was Europe,which has embraced,perhaps involuntarily,the SFDR as a major force in the sustainable investing landscape.With which sustainability-related groups or programs do you belong,endorse,or participate?26%UN SDGsLP18%GIIN16%35%PRINone45%UN SDGs32%25%GIINNone38%PRI43%UN SDGs37%2
264、7%PRINone41%SFDR31%UN SDGs23%36%PRINone25%GIINNorth AmericaGPEuropeSource:PitchBook Geography:Global Respondents:AllQuestion 30Regulators continue to rise in prominence as information sources for our respondents.9:In the Glossary of this report,as a resource for readers,we provide links to the organ
265、izations that received nods from at least 10%of our respondents.372023 SUSTAINABLE INVESTMENT SURVEYGLOSSARY OF TERMS AND RESOURCES USED IN THIS REPORTGlossary of terms and resources used in this reportB CorpBoth:“Both”is a respondent type representing GPs that have LPs.This group is mostly made up
266、of FoF.Climate Action 100+CSAC:Central&South America and the Caribbean.Doughnut EconomicsESG:Environmental,social&governance.For the purposes of this survey,a framework for incorporating nonfinancial risks into an investment strategy.ESG Data Convergence ProjectEU Green Deal Industrial PlanEuropean
267、Venture Philanthropy NetworkFrance InvestGIIN:Global Impact Investing Network.GP:General partner.May refer to the asset manager or its staff that makes the investment decisions for a private market fund.GRI:Global Reporting Initiative.IFC:International Finance Corp.IFRS:International Financial Repor
268、ting Standards.An organization that develops sustainability disclosure standards.It has two standard-setting boards:the International Accounting Standards Board(IASB)and International Sustainability Standards Board(ISSB).ILPA:Institutional Limited Partners Association.This group released an ESG asse
269、ssment framework as a resource for LPs looking to evaluate and understand ESG integration among GPs.IMP:Impact Management Project.This project ran from 2016 to 2028 and developed the Five Dimensions of impact.ImpactAlpha:Impact investing media offerings.ImpactAssets 50Impact investing:For the purpos
270、es of this survey,an investment approach that seeks to receive both financial and social and/or environmental returns.Impact Measurement and Management(IMM):Now managed by the GIIN.Impact VCIPCC:Intergovernmental Panel on Climate ChangeIRIS+:Impact Reporting and Investment Standards.LP:Limited partn
271、er.An entity that commits capital to a GPs fund.LPs provide the majority of the funding to a private market fund.McKinseyMorningstar Sustainalytics:Provider of ESG research,ratings,and data.Sister organization to PitchBook.Other:The respondent type for this survey that was not a GP,LP,or Both.Typica
272、lly,individuals working in advisory or consulting.382023 SUSTAINABLE INVESTMENT SURVEYGLOSSARY OF TERMS AND RESOURCES USED IN THIS REPORTPRI,or UN PRI:Principles for Responsible Investment.SASB:Sustainability Accounting Standards Board.The organization merged with the IIRC in June 2021 to form the V
273、alue Reporting Foundation,though the SASB Standards retain their name.SEC:Securities and Exchange Commission.This regulator has a number of initiatives related to ESG,some of which may be found here.SFDR:Sustainable Finance Disclosure Regulation introduced in Europe to improve transparency in the ma
274、rket for sustainable investment products.Springer Sustainable Finance SeriesSustainable Blockchain SummitSustainable Investing:For the purposes of the survey,we used this term as an umbrella overarching both Impact investing and the incorporation of ESG risk factors into the investment process.TCFD:
275、Task Force on Climate-related Financial Disclosures.UK Sustainability Disclosure Requirements:An article on what is being proposed and the timelines.UN SDG:United Nations Sustainable Development Goals.US Bipartisan Infrastructure LawUS Inflation Reduction ActVC:Venture capital,venture capitalist.A t
276、ype of private equity investing that focuses on startups and early-stage companies with long-term,high-growth potential.VentureESG:A global group of VCs pushing for VC-specific ESG standards.World Central KitchenAdditional researchCOPYRIGHT 2023 by PitchBook Data,Inc.All rights reserved.No part of t
277、his publication may be reproduced in any form or by any meansgraphic,electronic,or mechanical,including photocopying,recording,taping,and information storage and retrieval systemswithout the express written permission of PitchBook Data,Inc.Contents are based on information from sources believed to b
278、e reliable,but accuracy and completeness cannot be guaranteed.Nothing herein should be construed as any past,current or future recommendation to buy or sell any security or an offer to sell,or a solicitation of an offer to buy any security.This material does not purport to contain all of the informa
279、tion that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.Sustainable investingQ2 2023 Analyst Note:Are“ESG Investors”Underperforming?Download the report hereQ1 2023 Analyst Note:Concerns About and Crit
280、icisms of ESG Download the report hereQ4 2022 Analyst Note:Impact Investing Update Download the report hereQ1 2023 Analyst Note:Sustainable and Digital Infrastructure in the Private Markets Download the report hereMore research available at 2023 Carbon&Emissions Tech Report Download the report hereQ4 2022 Clean Energy Report Download the report here