The potential of esg investment criteria in early-stage venture capital funds in Europe

Abstract

This paper studies the potential of ESG investment criteria as financial markets are no longer primarily driven by financial returns. Hence, SRI and ESG are becoming an integral part in the investment decision. VC firms have the opportunity to finance global market leaders who will drive the sustainable transformation. Considering the limited number of scientific publications in this field, this paper aims to demonstrate the status quo of ESG investment and portfolio management in VC funds. This paper finds evidence that VC firms are increasingly recognizing the significance of ESG integration and are shifting to responsible and impact driven investments.