That said, we’ve seemingly reached a point where there’s more data than what’s necessary to make an informed decision. Predicting the direction of markets is a difficult task, but the tools and data available to investors is growing at a rapid rate and the accuracy of data is improving. Thomas Hyldahl Filholm Kjærgaard, Head of ESG at Velliv.Nowadays, data is also focused on measuring the societal outcome of a business activity.” When the ESG wave came in 2010, 2011, and 2012, we began to use ESG related data that gave us insights into the risks of the company. When we talk about data in 2008, it was always an exclusion game. “We have a task at demonstrating that our investments support societies. Now more than ever, investors can make a link between ESG issues that will impact the company’s financial materiality while simultaneously delivering impact.īe careful what you wish for: too much of a good thing Companies that can protect or even grow their enterprise value may become more attractive on exit, through an IPO or even a strategic buyer. An increasing recognition that many of these issues, notably climate, have material financial implications for portfolio companies, especially upon exit. It probably comes as no surprise that, until recently, there’s been less pressure on private companies to disclosure ESG information…simply due to the law of small numbers!ĭue to the institutional nature of private markets, it’s no surprise we have seen universal owners like endowments, pensions, and sovereign wealth funds begin to flex their influence through capital allocation on ESG-related matters. This makes sense, as most private companies operate on a much smaller scale than public companies. In most cases, listed companies have far more shareholders than their unlisted counterparts, and there are far more stakeholders as well. Of course, there are some structural differences worth noting, especially the differences in stakeholder and shareholder models. Therefore, both public and private companies can use frameworks and standards in a way that helps GPs and LPs make better decisions. These risks only converge further when looking at them through an industry specific lens. Therefore, both sets of companies face similar economic and financial risks regarding growing or protecting their enterprise value. Perhaps one of the most obvious statements from the discussion was the fact that, at the end of the day, public and private companies are just that…companies. public – same issues, different stakeholders If I could summarize the punchline, it’s this: go small or go home. The big question we asked at the start of this panel was this: “While public markets have led the way in ESG adoption, what should we take with us into the private markets and, importantly, what should we leave behind?” Rapid adoption of ESG issues in private markets is coming off a small base, but still here, nonetheless. Frizzle shrinking the class down to a microscopic level to diagnose a classmate’s alleged illness really captures the essence of the discussion that took place on ESG data. I, myself, have now unlocked repressed memories of this show, but I think the visual of Ms. The session was moderated by Tulsi Byrne of Nuveen.įor those of you who now have the theme song of The Magic School Bus stuck in your head, based on the title, I’m sorry. Watch the first session, “The Evolution of ESG Data,” with Jeff Cohen, CAIA of the Value Reporting Foundation, Debarshi Basu of BlackRock, and Thomas Hyldahl Filholm Kjærgaard of Velliv.
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