New data indicates private capital-backed businesses are beginning to embrace ESG

• A survey of over 2,700 private capital-backed businesses shows an increase in Environmental impact tracking and engagement

The BVCA’s annual ESG survey, now in its third year, sets out a series of metrics which private equity and venture capital firms use to track progress within their investee companies.

The survey found that over the past three years, there has been a significant increase in the proportion of private capital-backed businesses which are able to track their carbon emissions. Data showed that in 2023, one third (33%) of energy used by private capital-backed businesses came from renewable sources, up from 30% in 2021.
 

Increase in emissions tracking

The BVCA found that the proportion of private capital-backed businesses tracking environmental emissions has increased over time, notably across all scopes and sizes of firm. In 2023, three quarters (75%) of large PE backed firms employing more than 250 people which responded to the survey, indicated that they track Greenhouse Gasses (GHG) Scope 1 emissions. A similar proportion (76%) report Scope 2 emissions, while six in 10 (62%) stated that they track Scope 3 emissions from businesses in their supply chain.

Nearly three in 10 (28%) of large private capital-backed firms have a net zero target, up from 24% in 2021. For the first time, the BVCA asked its members whether they took into account biodiversity considerations as part of their investment process and found that 15% did.
 

Representation remains static

The BVCA found that representation of women on the boards of private capital-backed businesses is largely static, at 17% in 2023 vs 16% in the prior year. By comparison, the FTSE 350 reached its 40% target for Women on Boards in January 2023.
 

Private capital-backed firms benefit from strong governance and procedures

The BVCA asked member-backed firms a range of questions about their governance practices, finding that the vast majority have clear cyber security, customer privacy and anti-corruption procedures in place. This continues a trend from previous surveys, indicating PE ownership encourages good governance practices across their portfolios.

Michael Moore, BVCA chief executive said:

“With rising pressure to tackle carbon emissions and build resilience coming from investors, regulators, consumers and the environment itself, getting a grip of these issues is just good business sense. Our latest member survey shows that private capital-backed firms are increasingly engaging with this agenda and building it into their plans.

“One area where the industry clearly still has to improve is its representation of women on boards, with slow progress in recent years. If FTSE 350 businesses can reach 40%, private capital-backed firms can strive for the same.

“Governance is an area where private capital firms have traditionally been strong so it comes as no surprise that a very large portion of firms have policies on cybersecurity, customer privacy and anti-corruption.”

Media contacts

James Gribben, BVCA: [email protected]
 

Notes to Editors

About the ESG Factsheet

All data presented in this factsheet is taken from the BVCA member survey on ESG data which ran between July and September 2024. The survey collected portfolio level information on environmental, social and governance metrics together with fund level sustainability regulation data. The information was collected alongside other European venture capital associations, using a common platform, the European Data Cooperative (‘EDC’). Further information about the EDC can be found here.

For the 2024 survey, the BVCA received 122 GP submissions from our General Partner members. In total our members provided us with data on over 2,700 companies.

The ESG Factsheet is available to view here.
 

About the British Private Equity and Venture Capital Association

The British Private Equity and Venture Capital Association (BVCA) is the industry body and public policy advocate for the private equity (PE) and venture capital (VC) (private capital) industry in the UK. With a membership of over 600 firms, we represent the vast majority of all UK-based private capital firms, as well as their professional advisers and a large base of UK and global investors. The private equity and venture capital industry has a vital role to play in driving national and regional growth. Currently over 12,000 companies, employing more than 2.2 million people, are backed by private equity and venture capital investment in the UK.