ESG insights for private companies

The critical role of ESG for private companies

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2024-10-31
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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.

Scrutiny of newly public firms’ ESG practices is greater today than ever before. In our view, boards and management teams who proactively think about and act on these topics are strategically advantaged compared to more reactive peers.

We believe strong ESG practices for venture capital and other private companies can potentially help improve financial returns, establish stronger brands and wider competitive moats, draw a broader pool of investors post-IPO, and reduce the risk of being a target of shareholder activism. 

Partnering with Wellington for ESG insights

We aim to help our portfolio company management teams and boards navigate the complex and constantly evolving ESG landscape using our deep experience and distinct perspective, from the venture capital stage all the way to an IPO. We seek to enable ESG best practices and value creation through collaborative thought partnership with our portfolio companies — we do not view ESG as punitive or “box checking.” We hope to establish a productive two-way dialogue and draw on our firm’s broad public and private equity, fixed income, and ESG expertise to offer companies an informed, long-term view and provide valuable market- and company-specific input.

Our partnership with our portfolio companies includes access to a mix of proprietary and third-party data and resources. Regardless of where our portfolio companies are in their life cycle, we believe every company can benefit from the foundational elements of our process, including:

  • Public market ESG readiness – To help our portfolio companies proactively implement ESG best practices and be ESG-ready at IPO or exit, we provide ongoing public market insights and guidance, including access to Wellington’s public market investors, ESG Team, and proprietary ESG frameworks.
  • Private company ESG benchmarking – In collaboration with the ESG Data Convergence Initiative (EDCI), we can share differentiated private market-specific ESG insights and benchmarking analysis.
  • ESG roadmap – We offer custom analysis of our portfolio companies’ ESG strengths and areas for improvement, how they compare to public company peers, and suggestions for improving their ESG profile over time (upon request).

Continuing the ESG journey

As ESG factors become increasingly critical to private companies, especially as they approach the public markets, we look forward to partnering with our portfolio companies to try to enhance opportunities and reduce risks through early integration of ESG best practices. 

To learn more about our ESG insights for private companies, read our latest research for venture capital and broader private markets on climate, governance, DEI, and more. 

Experts

morales-andrew-7120-w316
Associate Director, Value Creation, Private Investments

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Additional ESG resources

Please see a short list of resources below. For a more comprehensive list of ESG resources or for any further questions, please contact us.

  • International Sustainability Standards Board (ISSB) – A global baseline of sustainability-related disclosure standards that provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities. 
  • Task Force on Climate-related Financial Disclosures (TCFD) – A task force formed by the Financial Stability Board (FSB) to develop voluntary and consistent climate-related financial risk disclosures for use by companies to provide information to investors, lenders, insurers, and other stakeholders.
  • Global Reporting Initiative (GRI) – A sustainability reporting standard to help businesses understand and communicate their impact on ESG issues such as climate change, human rights, and corruption.
  • Principles for Responsible Investment (PRI) – An international network of investors committed to six aspirational principles related to integrating ESG into the investment process.