PitchBook News - The top criticisms of ESG

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The Research Pitch

March 11, 2023

Presented by Allvue Systems

The venture debt landscape: Silicon Valley Bank's collapse has left many in the VC ecosystem wondering what's next. Our research explores how the venture debt industry—in which SVB was very active—has been adapting to market changes. Read it here.

Digital health debut: We're excited to announce new full-time analyst coverage of the digital health vertical, where VC investment dropped precipitously in 2022 but opportunities persist. Read a free preview of the research.

VR and healthcare: Virtual reality is making major strides toward revolutionizing healthcare in a variety of ways. Our new Emerging Spaces Brief tells how VR is reimagining areas like pain management and medical training—but obstacles to wide adoption remain. Read it here.

The facts and fiction of anti-ESG rhetoric

Politicization and polarization around ESG have increased exponentially in recent years, with the first few months of 2023 suggesting that this trend will only intensify in the coming year.

As discourse has moved from boardrooms and investment committees to C-SPAN and Twitter, misinformation and absolutism have proliferated, and nuance has been stripped from the ESG conversation.

In our new analyst note, we dissect some of the most frequently cited concerns about and criticisms of ESG, and in doing so, highlight where efforts must be directed for ESG to bring the most value—and least harm—to the markets and to stakeholders.

The sentiments explored in this note were surfaced in the open-ended responses to our 2022 Annual Sustainable Investment Survey. They encompass the following ideas:

ESG is subjective, and ESG performance is difficult to substantiate through measurement and comparison.
ESG requires sacrificing returns and constitutes a breach of fiduciary duty.
ESG is redundant because it is already part of best practice.
ESG distracts from the highest-priority issues and areas of potential Impact.
ESG is mostly virtue signaling and rarely involves follow-through on the actions stated or implied by practitioners.

Download the full note to learn more about the trouble with aggregating and comparing ESG performance information, what we know about how ESG influences investment returns, where greenwashing is headed, and more: Concerns About and Criticisms of ESG

Best,

Anikka Villegas
Analyst, Fund Strategies & Sustainable Investing

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Emerging Tech Research

VCs invested a record-breaking $16.2 billion in clean energy startups last year.

That bullish sentiment resulted in an annual increase in capital invested—a rare feat across the venture industry as the market turned—but activity slowed markedly in Q4.

Our new Clean Energy Report dives into the major trends and emerging opportunities in the sector.

Two key areas of focus? Renewables-coupled batteries and green hydrogen:

read a free preview

The fintech industry remains one of the most well-funded spaces in the VC landscape.

With the digitization of financial products and services brought about by the pandemic, the fintech ecosystem continues to present plenty of opportunities for growth.

In our debut Enterprise Fintech Report, we explain why investors are paying close attention to this segment, as B2B startups capture more of the fintech funding pie—up to 61% last year compared to 48% in 2020:

read a free preview

Foodtech funding is finally on the road to recovery.

After three quarters of decline, VC deal value stabilized in Q4, and the sector notched its second-largest quarterly deal count on record.

Bioengineered foods represented the only segment to see positive year-over-year growth in Q4, but we expect investment across foodtech to fully recover as broader market conditions improve.

Our new Foodtech Report details recent VC activity within the vertical and also highlights emerging opportunities in sugar alternatives, generative AI in the food industry, and food production in space:

read a free preview

Thematic Research

Transit Tech Transforms Public Transportation

The time is ripe to disrupt mass transit.

Global public transit came to a near standstill during the pandemic, with ridership and revenue falling dramatically. But today, flush with federal funding and renewed attention, transportation agencies see an opportunity for change.

Transit tech has the potential to transform public transportation—and in some places, it already is—through startups addressing mandates to reduce carbon emissions, mobility-as-a-service, and more.

Our analyst note explores the key players, deals, and trends to watch:

read the free research

Market Updates

Nordic private capital has been standing its ground in a tough market.

The region was remarkably resilient to the mix of rising interest rates and geopolitical turmoil that hit European deals last year.

Nordic PE notched a more than 6% increase in deal volume YoY, while VC recorded its second-best year for deal value.

Our 2023 Nordic Private Capital Breakdown details how the region remained steadfast:

get the free report

Webinars & Events

A handful of upcoming events this month:

March 11-13: We're sponsoring the Inc. Founders House during SXSW in Austin and our lead VC analyst will participate in a panel discussion on the future of fundraising. Request an invite.

March 15: How has compensation at investment firms changed over the years? Our webinar with J.Thelander Consulting will examine the latest data and what to expect going forward. Register here.

March 21: We're hosting our Private Credit Forum in London, where you can learn about the latest trends in private credit and network with peers and experts. More details here.

March 22: How much capital is really available to startups? Our analysts will review the macroeconomic landscape and its impact on VC dealmaking. Register here.

In the News

Our insights and data featured in the press:

VCs invested $5.4 billion into healthcare IT startups in 2022, down nearly 35% YoY. The big drop was in Q4, off 75% from 2021's quarterly average. [Forbes]

PitchBook analysis shows a remarkably consistent equity stake available to investors coming in at seed financing rounds. [Fortune]

Generative AI startups raised $1.3 billion last year, close to the total amount of capital raised over the previous five years combined. [WSJ Pro]

China's companies make up a shrinking share of US-based PE firms' global dealmaking. [Bloomberg]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

Highlights from our other recent research:

Market updates

Global Markets Snapshot
US Public PE Roundup
Global Private Market Fundraising Report
Quantitative Perspectives: US Market Insights
Global Fund Performance Report

Thematic research

Industry & tech research

Coming next week (subject to change)

US PE Middle Market Report
Global Private Debt Report
Quantitative Perspectives: Putting the Pieces Back Together
Agtech Taxonomy Update

A message from Allvue Systems

Start here when tracking your portcos

Portfolio monitoring is a key process that decodes what’s driving performance. But such a simple idea isn’t so simple in practice – from understanding which metrics to capture, to capturing them on a regular basis, to organizing them for proper analysis and insight.

Allvue’s Fund Performance and Portfolio Monitoring solution has dozens of pre-built KPIs ready for tracking, and also offers managers the option to add their own custom trackable metrics.

Check out Allvue’s list of more than 80+ KPIs for tracking portfolio company and fund-level performance to help you get started.

Download the list of 80+ PE portco KPIs here

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PitchBook News - The top criticisms of ESG

Older messages

SVB's crisis rocks tech world

Dissecting the ESG debate

Foodtech's road to recovery

VC's investor friendliness spikes

B2B fintech startups draw VC favor

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