The increasing importance of ESG in investment markets was reiterated at the recent AVCJ Private Equity and Venture Capital Forum by two major government sector super funds and private equity investment specialists.
At a time of debate about the appropriate level of shareholder activism by super funds, representatives of both Local Government Super (managing $11 billion FUM) and First State Super (managing $90 billion FUM) said ESG was a key and growing issue in assessing the risk of any prospective investment in the private equity sphere.
Meanwhile, Anthony Kerwick, managing director of Adamantem Capital, said all potential limited partners, that is potential super fund investors, in his private equity fund ask questions about Adamantem’s position and policies on ESG as it relates to private companies they invest in or may invest in.
The super fund representatives said they “would not” or “probably would not” invest in a possible new high-tech coal fired power station mooted last week for a Hunter Valley site at Kurri Kurri in the NSW Hunter Valley location, north of Sydney.
“We know we have to transition away from carbon,” ERM’s Shiva Tyagi said, referring to “the carbon time bomb” all investors must confront.
“Don’t underestimate the power of Millennials and the power of social media” was another theme in the session referring to the younger investors increasing interest in social and environmental issues and the ability of this cohort to have their voice heard and acted upon in the management of companies.
“Along with diversity, technology is seen as a fast-growing ESG issue – for example, the expected impact of AI (artificial intelligence) on the employment market,” added Tim Burroughs, managing editor of the Asian Venture Capital Journal.