Private equity funds are beginning to flow into sustainable investing

If you want to determine future investment trends, watch the smart money. Private equity investors are making increasingly large bets on the future of ESG.

Interest in sustainable investment is ramping up in the alternative investment space, most recently with CVC Capital Partners’ $200m investment in EcoVadis SAS, a provider of sustainability solutions for global supply chains. This represents one of the largest ESG-focused investments by an investment firm to date.

CVC is a leading private equity and credit company, with over $80 billion assets under management.  The investment was the first made through CVC’s newly closed CVC Growth Partners Fund II, which focuses on middle-market high growth technology-related companies in North America and Europe.

EcoVadis is a leader in business sustainability ratings, intelligence and collaborative performance improvement tools for global supply chains. EcoVadis intends to use the funds from the investment to further scale its business, promoting sustainability into enterprise supply chains and commerce globally.

Highlighting the importance of ESG as an emerging investment focus, Aaron Dupuis, Senior Managing Director at CVC, stated, “We have followed EcoVadis for several years as part of our long-standing efforts in supply chain risk management, where we identified ESG as a particular area of focus for best-in-class companies, and are incredibly excited about the immense opportunities that lie ahead for the company, as it continues to establish itself as the gold standard for ESG ratings.”

ESG is increasingly top of mind in the investment world, including the private equity space, with both KKR and TPG in the process of raising billions of dollars for their own impact investment funds. Interest in the space by these firms may be viewed as a positive sign for investors in the ESG space broadly. Private equity is often seen as the “smart money” in determining long-term investment trends, as PE firms make large investments in areas they consider to have greater future value in years ahead when they will have to harvest their investments.