Changing Attitudes of Stakeholders in Venture Capital ESG

Changing Attitudes of Stakeholders in Venture Capital ESG

Johannes Lenhard

ESG & VC Specialist

We've explored the regulators, LPs and asset owners pushing for ESG in venture capital. What about the founders? Join Johannes Lenhard as he explores the different attitudes between founders, incumbent VC investors and new-generation VC investors when it comes to ESG.

We've explored the regulators, LPs and asset owners pushing for ESG in venture capital. What about the founders? Join Johannes Lenhard as he explores the different attitudes between founders, incumbent VC investors and new-generation VC investors when it comes to ESG.

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Changing Attitudes of Stakeholders in Venture Capital ESG

7 mins 38 secs

Overview

Founders are increasingly riding a general wave of societal shifts towards better business. ESG can be seen as an added requirement or distraction from the goal of survival. However, recent scandals from Uber, Facebook, WeWork, Deliveroo have highlighted the need for stricter considerations of ESG principles. In Europe, VC investors are increasingly aligned around the fact that ESG can’t just be a regulatory requirement. In the US however, heavyweight VCs are so far bluntly not interested in ESG.

Key learning objectives:

  • Outline how founders are pushing ESG

  • Understand how incumbent and new investors are pushing ESG

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Summary

How are founders advancing the ESG agenda? 

Founders are increasingly riding a general wave of societal shifts towards better business. Founders of startups have one goal to begin with: survive and grow the company. ESG can be seen as an added requirement or distraction from the goal of survival. However, a turn towards more responsible technology is trickling through the ecosystem. The recent scandals from Uber, Facebook, WeWork, Deliveroo have highlighted the need for stricter considerations of ESG principles. 

How are VC investors advancing the ESG agenda? 

In Europe, VC investors themselves are increasingly aligned around the fact that ESG can’t just be a regulatory requirement, but must be part and parcel of building a good company. The German startup Verband as well as Invest Europe and the British Venture Capital Association have task forces on the topic. 

The National Venture Capital Association in the US recently hosted its first substantial panel conversation on ESG for VC, too. VCs like Balderton Capital and Atomico have explicitly announced ESG-themed initiatives with their Sustainable Future Goals and Conscious Scaling respectively. The heavyweight American VCs are so far bluntly not interested in ESG, with the exception of firms like General Catalyst or Norwest Venture Partners. 

One reason is straightforward: they don’t see the value because of a lack of data, and other stakeholders can’t force them to engage. 

The investors and companies VCs are passing the baton to buyout funds, big asset managers, retail investors and big corporates. All of them, without exception, are incorporating ESG criteria in their investment decision-making. 

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Johannes Lenhard

Johannes Lenhard

Johannes teaches and researches homelessness and the social science of venture capital at the Max Planck Cambridge Centre for Ethics, Economy and Social Change at the University of Cambridge. Johannes is also a co-founder of the not-for-profit VentureESG, a global community of almost 300 VC funds and asset owners committed to advancing ESG practises in VC.

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