PitchBook-2024年私人市場ESG和影響力投資狀況 The State of Private Market ESG and Impact Investing in 2024

Data

CollinAnderson

DataAnalyst

pbinstitutionalresearch@

Publishing

DesignedbyJuliaMidkiff

PublishedonMarch21,2024

Contents

Keytakeaways

1

TrendsinprivatemarketESG

2

TrendsinprivatemarketImpactinvesting9

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TheStateofPrivate

PitchBookData,Inc.

JohnGabbertFounder,CEO

MarketESGandImpactInvestingin2024

Identifyingthekeytrendsshapingthesustainableinvestingspacein2024andbeyond

PitchBookisaMorningstarcompanyprovidingthemostcomprehensive,most

accurate,andhard-to-finddataforprofessionalsdoingbusinessintheprivatemarkets.

NizarTarhuniVicePresident,Institutional

ResearchandEditorial

DanielCook,CFAHeadofQuantitativeResearch

InstitutionalResearchGroup

Analysis

HilaryWiek,CFA,CAIA

SeniorStrategist

hilary.wiek@

AnikkaVillegas

SeniorAnalyst,FundStrategies&

Keytakeaways

SustainableInvesting

anikka.villegas@

?SomeassetmanagersarepullingbackfrompublicESGcommitmentswhileothersareleaningintoESGasavaluecreationandprotectiontoolinthe

challengingmacroeconomicenvironment.

?ThefinancialperformanceofESG-committedassetmanagersvaries,but

quantitativeevidencethattheuseofESGintheprivatemarketsnecessitatessacrificingreturnshasnotemerged.

?RegulationofESG-relatedclaimsandactivitiesremainsdifficulttoimplementandcomplywith,butSFDRinstillshopethatpublicdisclosureswillimproveaccesstobetter-qualitydataonprivatefunds.

?Thematerialityofenvironmentalissueshascomeintofocusforsomeindustriesandgeographiesmorethanothers.Thepandemic-eraemphasisondiversity,

equity&inclusionhasreversed,atleastintheUS,andgovernanceisinthe

spotlightfollowingaseriesofhigh-profileincidentsandwiththeevolutionofAI.

?Investorsarestilldebatingwhetheritisbettertobringtomarketafocusedofferingorbemoregeneralintheimpacttheyareseeking.

?FundraisingforImpactfundsappearstobedowndramaticallyfor2023,but

emergingImpactmanagershavehadahighersuccessratethaninthegeneralfundspopulation.

?WhilethetopImpactasset-gatherersalsohavestrategiesthatarenotdedicatedtoImpactinvesting,namebrandsmaynotbeaspowerfulintheImpactspace.

?Impactfundstargetingclimatesolutionshavebeentakingever-largersharesofImpactfundcommitments,asdeterminationtotakeactionhasreceivedbothgovernmentalandprivatesectorsupport.

?FundreturndatadoesnotsupportthenarrativethatImpactinvestingisequivalenttoconcessionaryreturns.

1

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PitchBookAnalystNote:TheStateofPrivateMarketESGandImpactInvestingin2024

AnikkaVillegas

SeniorAnalyst,FundStrategies&

SustainableInvesting

anikka.villegas@

TrendsinprivatemarketESG

SomeassetmanagersarepullingbackfrompublicESGcommitmentsasprogramsaredeprioritizedandgreenhushingproliferates.

Thepastfewyearshaveseenextremebacklashagainsttheuseofenvironmental,

social&governance(ESG)analysisintheUS,withpoliticiansandotherpublicfigurescallingforitsabolitionandsomeevenproposingthatitsusebecomeafelony.1

Simultaneously,themacroeconomicenvironment,particularlyelevatedinterest

ratesandrecentuncertaintyaboutapotentialrecession,havemadethepathtohighinvestmentreturnsmoredifficult,forcingassetmanagerstoreevaluatetheirstrategicpriorities.Thesefactorshaveledtotwooutcomes.First,someGPshavechosento

forgoordecreasetheirfocusonESGstrategiesbecauseofthebacklashortofocus

moreoninvestmentfundamentalsandfinancialperformance,giventhepressures

facedbyprivatefundsin2022and2023,perour

2023SustainableInvestmentSurvey

.Second,aportionoftheassetmanagersthathaveESGprogramsorareconsideringimplementingthemisshiftingthelanguageusedtodiscussthemordecreasinganymentionofthementirely,apracticesometimescalled“greenhushing.”

ThisisasignificantdeparturefromtherapidadoptionandbrandingaroundESGintheprivatemarketsthattranspiredatthebeginningofthepandemic.Caseinpoint,the

numberofnewGPsmakingpubliccommitmentstoESGeachquarterviathePrinciplesforResponsibleInvestment(PRI)rosesubstantiallythroughout2020and2021but

madeasteepdeclinein2022,whichcontinuedinto2023.Whilesomemayarguethattherateofgrowthwasboundtosloweventually,asthereweremorethan2,000GP

signatoriesattheendof2021,weknowofmorethan20,000investorsthathaveraisedaprivatefundinthetimethatPRIhasexisted,sothereisstillaconsiderablepopulationofnon-signatoriesthatcouldhavebecomesignatories.

NewGPPRIsignatoriesbyquarter

180

160

140

120

100

80

60

40

20

0

Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4

201820192020202120222023*

Source:PitchBook?Geography:Global?*AsofDecember31,2023

1:“It’saFelony:N.H.BillWouldMakeItaCrimetoKnowinglyUseESGCriteriainInvestingTaxpayerDollars,”Pensions&Investments,RobertSteyer,

January16,2024.

2

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PitchBookAnalystNote:TheStateofPrivateMarketESGandImpactInvestingin2024

Thesedynamicshaveraisedquestionsaboutwhethertheindustrywillforcetheterm“ESG”intoextinctionandifso,whetheritwillbereplacedbyanothersynonymousbutlesspoliticizedterm.Somesignspointtoyes.Forinstance,once-outspokenadvocateofESGandCEOofBlackRockLarryFinkhasnowstoppedusingthe“weaponized”

term.2Still,thisphasingoutislikelytooccuronlyamongsomeassetmanagersin

somegeographies—inEurope,forexample,whereitislesscontroversial,thetermwillprobablyendure.WhiletherearecertainlynegativeaspectsofthepullbackfromESG,itmayalsohavesomepositiveeffectsonthespace.AssetmanagerswiththemostlegitimateandsophisticatedESGprogramswillbelessinclinedtoeliminate

ordownsizethem.So,shouldotherfundmanagerschoosetomoveawayfromESG,theremaybeanincreaseintheoverallqualityoftheremainingESGprograms.

However,othersareleaningintoESGasavaluecreationandprotectiontoolinthechallengingmacroeconomicenvironment.

Ontheoppositeendofthespectrumfromthosethatarepullingawayfromit,there

areassetmanagersthataredoublingdownontheirESGefforts.Fundmanagers

havenotedthatthenumberofopportunitiestiedtoESGfactorsthatgobeyondrisk

mitigationtocreatethepotentialforinvestmentupsidehavegrown,astheyindicatedinour

SustainableInvestmentSurvey

.Manyoftheseareenvironmentalopportunitiesrelatedtoadvancingtheenergytransitionandmeetingclimatechangeadaptation

andresilienceneeds,whichrespondentstothesurveyfrequentlymentionedin

connectionwiththeabilitytotakeadvantageofgovernmentpoliciesandspending.

NotallESGvaluecreationopportunitiesareenvironmental,though.IntheUS,a

resurgenceofsocialjusticemovementssuchasBlackLivesMatterhasincreased

consumerattentiontohowcompanieshandlesocialissues,withasmanyastwo

inthreeAmericansmakingtheirshoppingchoicesbasedpartiallyontheirsocial

valuesin2021.3Assuch,thepayoffofcapitalizingonthedemandforproductsand

servicescreatedbyandfordiversegroupshasalsobecomemoreattractive.More

recently,consumershaveboycottedbrandstheyperceivetobesupportingIsraelinitsconflictwithPalestine,harmingthesalesgrowthofcompaniessuchasMcDonald’s,Starbucks,Coca-Cola,andDomino’s,thusreinforcingthepowerofconsumer

sentimentaroundthealignmentofcompanies’valuestotheirown.4

TootherproponentsofESG,programsfocusedonriskmitigationhavebecome

especiallyvaluablebecauseofthecurrenteconomicconditions.TheyreasonthatcompaniesthatmitigatematerialESGrisksarelikelytoperformbetteronalongertimehorizon,includingthroughblackswaneventssuchastheCOVID-19pandemicandgeopoliticaltensions,marketturbulence,andinflationaryperiods.When

ESGrisksmanifest,theycancompoundthoseexternaldownwardpressures,so

companiesthatmitigateESGrisksarethoughttobemoreresilient.Forexample,manufacturingcompaniesthatimplementresourceefficiencymeasurestoreducetheirenvironmentalfootprintwillbelessnegativelyimpactedbyrisingmaterials

pricescomparedtotheircounterpartsthatdonot.Or,onthesocialside,companieswithstrongemployeeengagementandretentionpracticesareunlikelytosufferas

dramaticofvoluntaryturnoverspikesfollowinglayoffsconductedduringrecessionaryperiods,5preventingundesirabletalentloss.

2:“BlackRock’sFinkSaysHe’sStoppedUsing‘Weaponised’TermESG,”Reuters,IslaBinnie,June26,2023.

3

:“TheRiseoftheInclusiveConsumer,”McKinsey&Company,PamelaBrownetal.,February8,2022.

4:“Israel’sWaronGaza:AreBoycottsHurtingUSBrands?”Aljazeera,February6,2024.

5:“LayoffsCanCauseContagionThatPushesWorkersWhoAreLeftBehindtoQuit,”BusinessInsider,RebeccaKnight,February27,2023.

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PitchBookAnalystNote:TheStateofPrivateMarketESGandImpactInvestingin2024

ThefinancialperformanceofESG-committedassetmanagersvaries,but

quantitativeevidencethattheuseofESGintheprivatemarketsnecessitatessacrificingreturnshasnotemerged.

ThereremainsawidearrayofapproachestoESGin2024,withthecaliberand

maturityofESGprogramshighlyvariablefromfirmtofirm.MeaningfulconvergencearoundonesetofdefinitionsandstandardsforwhatqualifiesasESGinpracticehasnotyetoccurred,andthetransparencyofprivatemarketparticipantsaroundwhat

theirprogramsentailislimited.Assuch,determininghowdifferentapproachesto

ESGaffectthefinancialperformanceofprivatefundshascontinuedtobeextremelychallenging.However,answeringthequestionofhowpubliclycommittingtoESG,

intheaggregate,relatestoreturnsismorefeasible.InJuneof2023,wepublisheda

reportcalled

Are“ESGInvestors”Underperforming?

ontheperformanceoffunds

raisedbysignatoriestothePRI,attemptingtoaddressthatquestionthroughthe

analysisoffundreturndata.WeexaminedthedispersionofIRRandTVPIforPRI

signatoryfundsandnon-signatoryfundsinprivateequity,realestate,realassets,andprivatedebtwith2010to2018vintagesusinglinearandlogisticregressions.

Ultimately,therewasnostatisticallysignificantdifferenceinperformanceamongPRIsignatoriescomparedtotheirpeers.Werecentlyupdatedtheperformancedatafor

thesamevintageyearsthroughQ22023,withtherefreshedanalysisalsoshowingnoindicationofconcessionaryreturnsforPRIsignatoryfunds.Therearesomecaveats

tothesefindings.Forone,therequirementsoutlinedbythePRImaynothavebeen

rigorousenoughtoinfluencereturns,hencethesimilarityinaggregatedperformancewhencontrollingforotherfactorssuchasgeography,fundsize,andvintageyear.

Plus,noteveryfirmthatusesanESGstrategyisaPRIsignatory.Despitetheseand

otherlimitationstothedataset,itisoneofthemost—ifnotthemost—currentand

comprehensivedatasetspertainingtothisquestion.Seeingasthatisthecase,thereisinsufficientevidencetosubstantiatetheargumentsoneithersideofthedebateaboutESG’spositiveornegativeimpactonperformanceintheprivatemarkets.

RegulationofESG-relatedclaimsandactivitiesremainsdifficulttoimplementandcomplywith,butSFDRinstillshopethatpublicdisclosureswillimprove

accesstobetter-qualitydataonprivatefunds.

TheUSprovidesacasestudyonjusthowchallengingitcanbetoimplementESG-

relatedregulation.Intermsofdisclosures,theSecuritiesandExchangeCommission(SEC)delayedclimate-relatedrulemakingfornearlytwoyears,andwhentheywere

finallyapprovedonMarch6,2024,thedisclosurerequirementswerefarweakerthanwhentheywereinitiallyproposed.6Ontheothersideoftheissue,morethan60state-levelanti-ESGbillsarependingincommitteeorsettorolloverfromthelastlegislativesessionto2024,withmanyhavingbecomewatereddownandothershavingfailedincourt.7Elsewhereintheworld,ESGregulationshavealreadybeenadopted,notably

intheEUandUKwiththeSustainableFinanceDisclosureRegulation(SFDR)and

SustainabilityDisclosureRequirements(UKSDR),respectively.SFDRisthemost

comprehensiveESGregulationtodate,applicabletoallfinancialmarketparticipantsandfinancialadvisorsbasedintheEU,8aswellasthosebasedoutsideoftheEUwho

6:“SECApprovesLandmarkRuleRequiringSomeCompaniestoReportEmissions,ClimateRisks,”Time,SumanNaishadham/AP,March6,2024.

7:“Anti-ESGLegislationSeenFacingUphillStruggletoBecomeLaw,”ThomsonReuters,HenryEngler,February22,2024.

8:Checkoutourwebinaronthistopic,

SFDRwithintheESGlandscapeandcomplyingwithregulationsin2023

,foradditionalinformation.

4

PitchBookAnalystNote:TheStateofPrivateMarketESGandImpactInvestingin2024

plantoselltheirinvestmentproductstoclientsintheEU.Assuch,theregulationcoversprivatemarketvehiclesandextendstoentitiesoperatingacrossborders.

SDFRcompliancehasprovendifficult,withmanyfundmanagersupgradingor

downgradingtheirfundsacrossthespectrumofarticles6,8,and9filings,which

areessentiallycategorizationsofthesustainability-relatedactivitiesinwhicha

financialproductwillbeinvolved.Looselyspeaking,sustainableinvestmentisa

primaryobjectiveforArticle9funds,asecondaryobjectiveforArticle8funds,andnotanobjectiveforArticle6funds.9Insomerespects,theArticle8definitionismorealignedwithhowESGisoftenpracticed,whiletheArticle9definitionismorealignedwithhowImpactinvestingistypicallyexecuted.10Assuch,examinationofArticle8fundsprovidessomeinsightintothecurrentstateandfutureofESGandsustainableinvestingmorebroadly.WhilewedocollectinformationonArticle9funds,the

universeof214vehiclesismuchlesscompletethanourImpactfunddataset,sowehavebasedourdiscussionofImpacttrendsonthelatter.

WebeganactivelytrackingtheSFDRclassificationsofprivatefundsin2023and

havegatheredanoncomprehensivelistof302mostlynew-vintagefundswithan

Article8filing.Bygeography,theUKrepresentsthelargestnumberofvehicles,but

Sweden,particularlydueto11sizablefundsfromEQT,hasthelargestamountoffundcommitmentsinArticle8vehicles.Thismaynotcomeasasurprisetothosewell-

acquaintedwiththesustainabilityspace,asithaslargelybeencountrieslocated

inNorthernandWesternEuropethathaveledthechargeonESGandsustainable

investing.WhiletheregionalconcentrationofthesefilingsisoverwhelminglyamongEuropeanfundmanagers,anyfundpitchingtoEuropeanLPsmustcomplywithSFDR.Asaresult,inoursample,4%offundsareUS-domiciled,withanotherhandfullocatedinothercountriesaroundtheglobe.

TopfivecountriesfilingArticle8fundsbyrank*TopfivecountriesfilingArticle8fundsbycount*

6.6%

16.6%

9.3%

13.6%

14.6%

UK

France

Italy

Germany

Sweden

6.2%3.6%

15.8%

34.7%

21.3%

Sweden

UK

France

Netherlands

Germany

Source:PitchBook?Geography:Global?*AsofDecember31,2023Source:PitchBook?Geography:Global?*AsofDecember31,2023

LookingatthefullprivatecapitaluniverseofEuropeanvehicles,giventheskewofthedataset,PEmakesup36.5%ofcapitalraisedoverthepastdecade,andtheSFDRArticle8samplefunctionallymirrorsthatfigure.WheretheArticle8group

9:Article9fundsmustalsomeeta“donosignificantharm”principle,whichpreventsthemfromharmingtheobjectivesoftheEUTaxonomy.

10:FormoreonSFDR,exploreEurosif’sguideandlinkstoresources.

5

PrivateequityRealassets

Privatedebt

Realestate

Venturecapital

PitchBookAnalystNote:TheStateofPrivateMarketESGandImpactInvestingin2024

divergesfromthecompositionoftheEuropeanuniverseisinitsrepresentation

ofrealassetsvehicles.Overthepast10years,realassetsfundshavegarnered

13.6%ofcommitmentstoEurope-domiciledvehiclesbutreceivedmorethan

doublethatshareofcapitalamongArticle8vehicles.Becauserealassetsskews

heavilytowardinfrastructure,itattractsahostofinvestorslookingtocapitalizeonESG-relatedopportunitiesintheenergytransitionandtheprovisionofnecessary

servicessuchaspublictransportationanddigitalconnectivity.Realestateisalso

slightlyoverrepresentedamongArticle8funds,at14.2%ofArticle8commitmentscomparedtotheEuropeanuniverse’s12.1%overthepastdecade.Giventhefinancialmaterialityofclimatechangephysicalandtransitionrisksandotherenvironmentalrisksandopportunitiesinthepropertysector,11ESGismorewidelyacceptedand

implementedinrealestatethaninsomeotherassetclasses,soonemayexpectevenmorepronouncedover-representationofrealestateamongArticle8funds.However,withsomanysustainability-relatedcategorizationsandcertificationsavailablefor

realestate,fundmanagersmaynotseethevalueintakingonthecomplianceburdenassociatedwithfilingasanArticle8vehicle.

StrategyrepresentationamongArticle8fundsbynumber*

12.6%

25.8%

14.6%

PrivateequityRealestate

Privatedebt

20.5%

VenturecapitalRealassets

23.2%

Source:PitchBook?Geography:Global?*AsofDecember31,2023

StrategyrepresentationamongArticle8fundsbyassetsraised($B)*

4.4%

14.2%

34.5%

16.8%

29.9%

Source:PitchBook?Geography:Global?*AsofDecember31,2023

Thematerialityofenvironmentalissueshascomeintofocusforsomeindustriesandgeographiesmorethanothers.

Althoughenvironmentalrisks,andspecificallythoserelatedtoclimatechange,have

longbeenconsideredmaterialinsomecirclesoftheprivatemarket,thereismountingevidencethatmakesamoreairtightcasefortheirmateriality.Aswithmostrisks,someindustriesandgeographiesaremoreexposedthanothers,leadingtogreaterbuy-in

frommarketparticipantsplayinginthoseareas.Realestateisoneassetclassinwhichtheimpactsofclimatechangeandimportanceofmitigatingthoseriskshavealreadybroadlybeenacknowledgedbyinvestorsbuthaverecentlybecomemoreapparent.

Forexample,duetotheEuropeanEnergyCrisis,energyusageandefficiencyhaveimpactedreturnprofilesforEuropeanpropertiesoverthelastfewyears.12

11:“ClimateRisksintheRealEstateSector,”UNEnvironmentProgramme,DavidCarlin,MaheenArshad,andKatyBaker,n.d.,accessedMarch13,2024.

12:“TheImpactoftheEnergyCrisisonCommercialRealEstateinEurope,”SavillsResearch,March2023.

6

PitchBookAnalystNote:TheStateofPrivateMarketESGandImpactInvestingin2024

Intermsofphysicalrisks,intheUSalone,therewere28billion-dollarextreme

weatherandclimate-relateddisastersin2023,whichhadatotalcostof$92.9

billion,thehighestnumbersforeachmetriconrecord.13Whilethesecostswere

sharedamonggovernments,constituents,businesses,andinsurancecompanies,theirgrowingmagnitudedriveshometheextenttowhichentitiesoperatingacrossthecountryarevulnerabletoclimatechange’sincreasingfinancialimpacts.As

discussedinourQ42023EmergingSustainableInvestingOpportunitiesAnalyst

Note,theagriculturalsectorisdisproportionatelyaffectedbytheseevents,as

theyfrequentlyinvolvedamagetoagriculturallands,crops,andanimals.Assuch,developmentisunderwaytobuildtechnologicalsolutionstotheseproblems.Yet

notallimpactscanbeinnovatedaway,andthephysicalandtransitionrisksof

climatechangeareanticipatedtocontinuegrowing.Thus,itislikelythat2024andsubsequentyearswillyieldmoredatapointsreinforcingtheirmateriality,notfewer.

Aretractionisoccurringwithrespecttothe‘S’componentofESGasthepandemic-eraemphasisonESGhasreversed,atleastintheUS.

Inmanyways,2023markedaturningpointfortheemphasisplacedondiversity,

equity&inclusion(DEI)intheimmediatelyprecedingyears.TheCOVID-19

pandemiccatalyzedaperiodofincreasedfocusonaddressingtheseissuesinthe

USandabroad.First,speculationaroundtheoriginofthevirusstirredupanti-

Asianandxenophobicsentimentacrosstheworld,withreportsofdiscrimination

andviolencetargetingpeopleofAsiandescentincreasingincountriessuchasthe

US,14UK,15andItaly.16Then,theBlackLivesMattermovementshonealightonracialdiscriminationextendingintotheworkplace,causingmanycompaniesandinvestorstomakediversity-relatedcommitmentsaroundhiringandpromotionpracticesas

wellasotherinclusion-relatedinitiatives.Italsoreinvigoratedconversationsaboutintersectionalitythatexpandedthediscoursetoencompassothergroups.

ThewatershedmomentforDEIwasonJune29,2023,whentheUSSupremeCourtruledthatrace-consciousaffirmativeactionadmissionprogramsare

unconstitutional,17triggeringatorrentofconcernsaboutwhetherpractices

intendedtoimprovetherepresentationofdiversegroupsinotherplacestheyhavehistoricallybeenunderrepresentedwouldalsobeunderlegalattack.AccordingtotheAmericanBarAssociation,thecourt’sHarvardopiniondoesnotdirectlyapplytoprivateemployersbecause“theEqualProtectionClauseappliesonlytofederal

andstateactors,andtheprotectionsfromdiscriminationunderTitleVIapply

onlytorecipientsoffederalfunding.”18Further,“Unlikeinhighereducation,inthe

employmentcontextaffirmativeactionthatinvolvesracialorgenderpreferencestoachievediversityhasneverbeenpermissible.”Nonetheless,manyprivatemarketparticipantsarewalkingbackormodifyingDEIprogramsinanattempttoavoid

futurelitigation.19

13:“2023:AHistoricYearofUSBillion-DollarWeatherandClimateDisaster,C,AdamB.Smith,January8,2024.

14:“AsianAmericansandDiscriminationDuringtheCOVID-19Pandemic,”PewResearchCenter,November30,2023.

15:“Anti-AsianHateCrimesUp21%inUKDuringCoronavirusCrisis,”TheGuardian,JamieGrierson,May13,2020.

16:“LockedDown,LashingOut:COVID-19EffectsonAsianHateCrimesinItaly,”TheJournalofPolitics,GemmaDipoppa,GuyGrossman,andStephanie

Zonstein,January30,2024.

17:“USSupremeCourtEndsAffirmativeActioninHigherEducation:AnOverviewandPracticalNextStepsforEmployers,”Sidley,August2,2023.

18:“ImpactofSCOTUSAffirmativeActionRulingonEmployers,”ABA,EstherG.LanderandAmandaS.McGinn,September6,2023.

19:“CompaniesAreBackingAwayFrom‘DEI,’”Axios,EmilyPeck,January4,2024.

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PitchBookAnalystNote:TheStateofPrivateMarketESGandImpactInvestingin2024

Thiscomesatatimewheneffortstoincreasethediversityoftheprivatemarket

ecosystemarefinallybeginningtopayoff.Whiledataonracialdiversityintheprivatemarketsislimited,wedohavedataonVCdealcountandvaluebyfoundergender.20Againstabackdropoffallinginvestmentactivity,itshowsthatcompanieswithat

leastonefemalefounderhaveseentheirshareofVCdealvaluerise8.8%and3.4%intheUSandEU,respectively,in2023.ItremainstobeseenhowthesenumberswillchangeastherippleeffectsoftheSupremeCourtrulingarerevealed.Anecdotally,

wearealreadyhearingthatdiversefundmanagersarestrugglingtofundraiseandarenowuncomfortablemarketingaroundthegenderorracialrepresentationthatwas

drawinginterestfromallocatorsacoupleyearsago.

VCdealcountbyfoundergenderandregionasashareofallVCdeals

25%

20%

15%

10%

5%

0%

201820192020202120222023*

(US)Allfemalefounders(EU)Allfemalefounders

(US)Atleastonefemalefounder(EU)Atleastonefemalefounder

Source:PitchBook?Geography:Global?*AsofDecember31,2023

VCdealvaluebyfoundergenderandregionasashareofallVCdeals

30%

25%

20%

15%

10%

5%

0%

201820192020202120222023*

(US)Allfemalefounders(EU)Allfemalefounders

(US)Atleastonefemalefounder(EU)Atleastonefemalefounder

Source:PitchBook?Geography:Global?*AsofDecember31,2023

Aspotlighthasshoneongovernancefollowingaseriesofhigh-profileincidentsandwiththeevolutionofAI.

Governanceissuesaretypicallyamongtheleastcontroversialofthetopics

encompassedbyESGanalysis.Itisdifficulttoarguethatacompanywouldbebetteroffnotmitigatingmaterialrisksaroundbusinessethics®ulatorycompliance,

antibribery&corruption,ordataprivacy&security.Nevertheless,therearetimeswhenthemarketsenterperiodsofheightenedvigilancearoundtheserisks,oftenfollowingoneormorehigh-profileevents.Afewsucheventshaveoccurredoverthepastfewyears.PerhapsthemostpublicizedwasthedownfallofFTX,leadingtothecompanyfilingforbankruptcyandtheconvictionofitsfounderandCEO

SamBankman-FriedofsevencountsoffraudandconspiracyinNovember2023.21Itservedasaprimeexampleofwhatcanhappenwhenacompanylacksproperoversight,particularlyarobustboardofdirectors,anexperiencedmanagementteam,andindependentaccounting,humanresources,andcybersecurity

functions.22Assuch,the“unprecedentedsituation”—inthewordsofJohnJ.RayIII,thenewCEOofFTX—islikelytocontinuetoinformconversationsaboutcorporategovernanceandduediligenceinthecomingyears.23

20:Thisdataisavailableonour

US

and

European

VCfemalefoundersdashboardswithadditionaldataandanalysisinour

2023AllIn

report.

21:“SBFFacesDecadesinPrisonAfterSwiftGuiltyVerdict(4),”BloombergLaw,AnthonyAarons,November3,2023.

22:“TheFTXCollapse:TheGovernanceRedFlagsTop-TierInvestorsIgnored,”Lexology,McCulloughRobertson,September3,2023.

23:Ibid.

8

(p