ESG Outlook Amongst Women VCs

ESG, an acronym for environmental, social and governance, has been a hot topic the last few years as firms are looking to find ways to embrace and enhance their social impact. At the recent EisnerAmper-sponsored Bridge Conference, a one-day invite-only virtual event for LPs and women-led VCs, a trio of panelists discussed “Impact Investing, Double and Triple Bottom Line and ESG.” The Bridge’s mission is to bring inclusivity, diversity and equal gender opportunities to the funding space. Panelists included:

• Lisë Stewart, EisnerAmper’s ESG Lead (moderator)
• Carmen Palafox, Founding Partner, 2045 Ventures
• Beth Richtman, Founder & Managing Partner, Cyan Capital
• Cynthia Dalagelis, Senior Vice President, Director, ESG Investments, Amalgamated Bank

Topics of discussion included:

Emerging Trends in ESG:

• All panelists agreed that it is an exciting time in the space, with high levels of interest and a wide range of diverse talent.
• ESG and impact have been seen as their own stand-alone category. Delagelis observed that everyone has been involved in ESG on some levels even if it’s not quantified.
• The way of thinking about ESG is evolving as less a stand-alone product, but rather a process that is interwoven into every business.
• Conversations on equity, inclusion, health concerns and climate justice are now topics backed by funding as social and environmental disruption -- particularly over the past year -- have impacted everyone.
• Palafox specified that due to the wealth of data which supports that diverse teams outperform, this is the time where data collection moves to action.
• As evidenced by the all-woman panel, there are many women at the forefront of ESG in prominent ESG roles, drawn to the work through their experience and expertise and bolstered by their collaborative and innovative nature.

Future of ESG:

• One of the most significant areas that the panelists noted would drive the next decade of ESG is data and statistics.
• Delagelis specified that in the public markets, there are external data providers and funds are already subject to an existing ESG framework. Over time, this framework will become more adaptive. As it relates to private capital, there is an opportunity to develop proprietary data for internal fund reporting, but there is less guidance and standards.
• The group encouraged that a void of an existing ESG framework should not deter managers from undertaking a challenge, and that all managers should take part in the building of the standards.
• The Operating Principles for Impact Management is one source that is guiding managers, while the Global Impact Investing Network (GIIN) has developed the IRIS+ system for measuring, managing and optimizing impact that continues to evolve.

In closing, the panelists advised attendees to follow ESG and “watch where the money is going.” They also encouraged investment as a way of closing gaps and empowering women and people of color.

“Every dollar that is invested is creating impact, and impact is no longer seen as a trade-off; impact is the alpha,” Richtman said.