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The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Environmental, social, and governance (ESG) factors are critical business issues for public and private companies alike. In our view, understanding and incorporating material ESG factors as early as possible enables more informed and strategic business decisions (Figure 1). Yet less than half of private company boards assess ESG-related risks and opportunities.1 We therefore believe it is essential to work with our portfolio companies to proactively tackle their distinct ESG issues.
Importantly, many private companies are well positioned to address ESG factors, as they’re already tracking relevant metrics and working toward improving specific issues. We hope our insights as public and private market investors can help our portfolio companies leverage that work and adapt to growing ESG expectations — so they can remain focused on their core businesses.
We believe ESG matters in private markets for the same reasons it matters in public markets. In our view, strong ESG practices can potentially help private companies:
When companies go public today, there’s much greater scrutiny of their ESG practices than ever before. Yet just 20% of companies say they are “very ready” to talk to investors about ESG issues.4 In our view, the earlier boards and management teams start to think about and address the ESG factors that are material to their businesses, the better.
The market often refers to ESG as being one thing, but in reality, there are many different factors that fall under the ESG umbrella. For instance: How is a company positioned to mitigate climate-related risks? Does it monitor working conditions across its supply chains? How does it look to build a diverse, inclusive, and equitable workforce, and how does its culture help…
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1Source: National Association of Corporate Directors, 2022 Private Company Board Practices and Oversight Survey. | 2Source: GreenPrint, Business of Sustainability Index, June 2022. | 3Source: ISS Governance Analytics, data for Russell 3000 companies compares January to June 2021 and January to June 2022. | 4Source: “The Purpose Action Gap: The Business Imperative of ESG,” Barkley & Jefferies, July 2021.
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Governance best practices in public markets
For private companies approaching the public markets, we highlight the corporate governance best practices that can help pave strong relationships with public market investors.
WellSaid: Partnering with portfolio companies
Co-head of private investing Michael Carmen explores how we partner with portfolio companies to help them along the "last mile from the private market to the public market" including on key ESG issues for private companies to consider.
Understanding private equity performance
We dive deep on best practices for measuring and benchmarking private equity performance. In addition, we outline the J-curve and the impact of fund lifecycle on returns.
Biotech for the next decade: Private market innovations
We explore our latest research in private biotech innovation across immunomodulatory therapies, precision oncology, antibody drug conjugates, radiopharmaceuticals, genetic medicines, and a range of other novel treatment modalities.
The state of venture capital markets
Co-head of private investments Michael Carmen shares his outlook for venture capital markets, including the state of deal flow, valuations, and the IPO market.
Private biotech market: Innovation, valuations, and capital efficiency
Co-heads of biotech private investments I-hung Shih and Nilesh Kumar join host Thomas Mucha to explore today's private biotech market, highlighting the state of deal flow, valuations, and innovation.
How do bank failures impact fintech?
Global Industry Analyst Matt Ross analyzes the ways in which recent US bank failures could impact the fintech sector in public and private markets.
Cybersecurity for private companies
We highlight today's rising cybersecurity risks, explore how they impact private companies, discuss key regulatory considerations, and share best practices for companies facing these threats.
Private biotech: Innovation amid disruption
We explore the state of the private biotech market, highlight key areas of innovation, and share three themes we expect to continue.
ESG integration in public and private markets
Two ESG leaders discuss why ESG matters for investors, and how their teams help inform the investment process. They also share their priority research and engagement topics for 2023.