Tesi’s review of sustainability in venture capital and private equity investment – Sustainability is a cornerstone of VC & PE investment, so more will be required of startups and growth financing applicants

This is Tesi’s first review of the subject. Altogether 33 Finnish general partners of venture capital and private equity funds responded to the questionnaire. This represents some 90% of the players, almost the entire market. The aim of the review was to provide an overview and offer investors comparison data to support their development efforts. The results also serve growth companies and startups as the sustainability of business operations will affect the availability of follow-on financing.
Addressing responsibility and sustainability is a cornerstone in the activities of Finnish VC & PE investors. The most widespread sustainability targets are the ESG and impact evaluations of portfolio companies, and a common theme is the wellbeing and diversity of personnel. A good 60% of VC & PE investors conduct ESG evaluations for all initial investments before the actual investment decision.
There is still much to do, though. Only slightly less than one-fifth of VC & PE investors monitor the development of sustainability in all their investments during their ownership, while almost 60% do so for some. Going forward, most VC & PE investors will conduct more systematic and more comprehensive evaluations of companies’ sustainability. This will be reflected, in practice, in selecting investees and, on the other hand, in supporting the sustainability targets of portfolio companies.
“Startups and growth companies must be prepared to address the sustainability aspects of their own business far more widely than earlier. At stake, also, is which companies will receive follow-on financing in the future,” says Tesi’s CEO Pia Santavirta.
“VC & PE investors started, quite naturally, to evaluate sustainability for their investment decisions. The evaluation of sustainability during ownership will now become widely adopted and will also require investors to be better prepared for it. Developing sustainability is value creation at its best,” comments Matias Kaila, who heads Tesi’s Fund Investments team.
Finnish VC & PE investors and sustainability
- 94% have sustainability integrated with the company’s strategy
- 97% have sustainability targets
- 61% conduct an ESG evaluation before the investment decision for all initial investments, while 88% conduct an evaluation for at least some
- 18% require monitoring from all companies of their sustainability meters, while 58% monitor at least some
- 73% plan to start SFDR Article 8 or 9 reporting in future, while 27% currently do so
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Contacts
Pia Santavirta, +358 40 546 7749, pia.santavirta@tesi.fi
Matias Kaila, +358 40 720 1324, matias.kaila@tesi.fi
Susanna Aaltonen, +358 40 593 4221, susanna.aaltonen@tesi.fi, Communications Director
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About Tesi
Tesi wants to raise Finland to the forefront of transformative economic growth. We develop the market, and work for the success of Finnish growth companies. We invest in private equity and venture capital funds, and also directly in growth companies. We provide long-running support, market insights, patient capital, and skilled ownership. tesi.fi | Twitter | LinkedIn | Newsletter
Tesi’s background:
- A venture capital and private equity company founded in 1995
- Officially Finnish Industry Investment Ltd
- 100% owned by the Finnish state
- Investments under management EUR 2.4 billion (30.6.2022)
- EUR 11 billion in net sales and more than 70,000 jobs in Finland through those growth companies that have received financing directly from Tesi or indirectly through its portfolio funds
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