Suggested by4 months ago
The LPs that invest in venture funds are starting to have ESG mandates. Currently (Jun 2022), this is a minority of LPs but this will likely continue to grow rapidly.
These mandates impose additional criteria on which funds LPs invest in and how those funds report ESG metrics back to LPs.
For large/public companies, there are a number of ESG frameworks - e.g. MSCI - and vendors providing solutions, e.g. Sustainalytics.
However, for venture funds, and the startups they invest in, there is not yet a clear solution to allow LPs to push down ESG mandates and for startups to report back up on ESG metrics.
A key challenge for startups is to decide what is material to report on and then to understand how to measure it.
ESG is a meta-trend that will likely continue.