Private capital firms in Spain are increasingly committed to responsible investment. In fact, 84% already include environmental, social and governance (ESG) criteria in their management and investment decisions. This is one of the main conclusions of the Guide to Responsible Investment in the Private Equity and Venture Capital Sector, made by PwC and the Spanish Venture Capital & Private Equity Association (ASCRI), with the collaboration of the PwC Foundation. The document includes the results of a survey made to the main private equity and venture capital companies operating in Spain regarding their sustainability practices.
The report shows that, progressively, Private Equity and Venture Capital firms in Spain perceive responsible investment as a clear element of value creation: 75% of those surveyed claim to have a Responsible Investment Policy in place and 50% have publically expressed their commitment to this area. This situation is also in line with what is currently happening in the international sphere, where these percentages are 91% and 79%, respectively.
Additionally, the survey indicates that new global trends such as the Sustainable Development Goals (SDGs), climate risks and human rights are having a significant impact on responsible investment in Spain. Specifically, 56% of those interviewed already take into account SDGs in their approach or investment strategy and 63% say they are concerned about climate change.
Despite the evident progress, there is still some room for improvement. For example, only 28% of the firms surveyed in Spain monitor ESG performance indicators: and -only 14% have a team or person dedicated exclusively to ESG issues.
Good practice guidance.
The Responsible Investment Guide for the Private Equity and Venture Capital sector highlights several challenges faced by organizations in general and the financial sector in particular that make it essential to integrate non-financial aspects in the management and development of their activities, such as: commitment to transparency; shareholder engagement; management of the climate crisis; the need to understand their activities as part of a global value chain; the need to evolve towards a circular economy; and the role of the private sector in achieving SDGs.
In this context, the guide arises as a tool to articulate,in a structured way the answers to these challenges throughout the different activities of the the Private Equity and Venture Capital sector, from fundraising to divestment, including instruments such as policy development, regular reporting or the creation of scorecards of non-financial indicators to measure the performance of entities and its portfolios.
Miguel Zurita, President of Ascri, states that “responsible investment is essential in private equity and, as the study we are presenting today shows, the level of implementation of these policies in our activity is very high. As long-term investors it is essential to build companies that are sustainable in all ways. Investors and society as a whole are demanding ethical an ethical behaviour from firms and companies. Only by being at the forefront of responsible investment we will be able to achieve our goals”.
Ignacio de Garnica, partner responsible for Private Equity at PwC, considers that “the economic implications of environmental and social challenges are increasingly evident and investors are aware of their importance for the evolution of their investments in the long term. In this sense, the private equity sector is naturally adapted to the integration of environmental, social and governance issues in both its management and its investments”.
For Pablo Bascones, partner in charge of Sustainability at PwC, “the integration of extra financial criteria in the decision-making process in a systematic way is increasingly perceived as an element capable of generating value in the long term both internally and externally. This guide aims to be a useful tool with which to systematise this process and also to do so in a way that responds to the demands of investors”.